Aircraft Forecast for FY'08

We're looking for another strong year for Aircraft in '08. Sales of $623 million will be up 9% from the current year. We're anticipating sales increases in both Military and Commercial aircraft. On the Military side, we expect a major increase in the V-22 from $24 million to $31 million, an increase in F-18 from $26 million to $29 million and a substantial increase in the military aftermarket from $104 million to $119 million, mostly having to do with retrofit programs on both the C-5A and the F-18.

On the Commercial side, we're looking for an overall increase of about $31 million to a total of $287 million. The Boeing OEM, other than 787 production, should be pretty comparable to the '07 level. 787 revenues will be up $5 million to $25 million, but we're forecasting substantial increases in revenues on Business Jets from $42 million to over $60 million, mostly having to do with production revenues on the Hawker and the Challenger 300. We're also anticipating a 4% increase in the commercial aircraft aftermarket to a new level of $97 million. So, with commercial aircraft total of $287 million and $336 million of military, total Aircraft sales for '08 are projected to be $623 million.

We are looking for an improvement in margins from 10.5% this year to 11.4% next year. Although the volume in Aircraft sales will be up in '08, the product mix is slightly less favorable from a profitability point of view than in '07. However, a reduction in Aircraft R&D expenditures will provide an uplift in operating profit. So, that's Aircraft for '08.

Space & Defense Q3

The Space and Defense Segment had another strong quarter. Sales of $47.8 million were up 32% from a year ago. Once again, the Defense Controls product line drove the sales increase. Defense Controls sales of $17.7 million were 2½ times what they were in the similar quarter a year ago. The big increases were in production for the US Marine Corp Light Armored Vehicle, the Stryker Mobile Gun system, continued production in Europe on the CV90-35, and on a gun system we supply to Mauser in Germany. In addition, we generated over $3 million in revenue on servo-motor controllers for Future Combat systems.

The satellite and space vehicle business was up a respectable 15% to $13.7 million. Like last quarter, we see continued improvement in the commercial satellite business and increased acceptance of our mechanism product line for a variety of military satellite and scientific programs.

Our Space Shuttle program has wound down now, but we're beginning to see revenue on the Space Shuttle replacement programs, specifically Ares I, the Crew Launch Vehicle and Orion, the Crew Exploration Vehicle.

Revenue on Strategic Missiles and Missile Defense totaled just under $5 million, about the same as last year. The Tactical Missile business was down to $5.6 million reflecting completion of the last Maverick order. Tactical missile production is now mostly Hellfire, TOW, Tactical Tomahawk, Vertical Launch ASROC, and the NLOS Missile for Raytheon.
Our new initiative in naval applications was down a little bit this quarter to $1.4 million.

Space and Defense Update for '07