(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 10Q filed on February 8, 2007, and in certain of our other public filings with the SEC.

Good morning. Thanks for joining us today. We'll report our results for the second quarter of fiscal '07 and we'll update our guidance for the balance of the year.

I'm about to describe another very strong quarter. Sales of $385 million were up 19% from the year previous. Net earnings of $24.5 million were up 14%. Earnings per share at $.57 were up 8% compared to a very strong quarter a year ago that included an earnings pickup from the Comanche termination. You'll remember that we issued some additional shares in the early part of '06 and our average share count is now 43.1 million shares compared to 40.7 million a year ago.

This 14% increase in net earnings was achieved in spite of the fact that R&D expense in the quarter of $25.7 million was up almost $10 million from the year previous. R&D was 6.7% of sales. This is an all-time high and reflects the substantial R&D investment that our Company is making in the 787. The sizable sales increase and a slight improvement in gross margin performance provided a $24.6 million increase in gross profit which covered the increased R&D expense, the normal growth in SG&A, and a slight increase in interest. Our tax rate at 32.4% was actually up slightly from a year ago.

Performance was strong in all of our segments. Sales were up across the board. In Aircraft, margins are influenced by the heavy R&D spend. Margins in Space and Defense, and Industrial were up nicely and the Components Segment continued its strong margin performance. Taken all together, it was another very solid quarter.

Now, let me go to the segments.

Aircraft Q2

Total sales in our Aircraft business were up an impressive 14% to $146 million. Our overall sales level and the balance between military and commercial sales are very much influenced by our two major development programs, the F-35 and the 787. In the military business, our production programs, the F-18, the F-15, the V-22, and the Blackhawk are fairly stable, but Military Aircraft sales declined in the quarter by $4 million because F-35 revenues were down $6.9 million. In the quarter, Military Aircraft revenues were just over $76 million and F-35 revenue was $13.8 million. As you know, the CTOL airplane flew in the middle of December and it's flown a number of times since. All our equipment has performed "flawlessly". Every quarter, I remind you that our F-35 sales include not only revenue from work done in our Company but also work done in our partner companies, Parker, Hamilton Sundstrand, and Curtiss Wright. In this quarter, a little over half of the revenue was generated in our Company and this has been the pattern throughout the program. Given the work left to be done on the STOVL and the Navy airplane, we're expecting that F-35 revenues will increase over the next two quarters into the $16 or $17 million range.

Aftermarket in the military aircraft business increased by a little over $1 million to $26.8 million for the quarter. This is an increase of $2.5 million over the most recent quarter, but it's substantially less than the pace we experienced in the last half of '06.

The big increase in Aircraft sales was in the Commercial side. Commercial aircraft sales were up 47% in the quarter to $69.3 million. Every major category was up. Sales of OEM equipment on the Boeing 7 Series aircraft were also up 47% to over $15 million in the quarter. In addition, we received our first production order for 787 equipment and our revenue on that program was $8.3 million. So our total for OEM equipment sales to Boeing were $23.5 million compared to $10.4 million a year ago.