We're forecasting growth of about 10% in sales of sensors and hand pieces.

We are anticipating margin improvement in our Medical Devices business. We're now projecting operating profit of $13.5 million, up from $9.5 million this year. Margins will, therefore, come in at 11.4%.

Summary of Guidance for '08 and '09

In our last conference call, we were projecting '08 sales of $1.846 billion, operating margins of 12.4%, and net earnings of $117.3 million or $2.71 a share. Since then, we have announced our investment in LTi REEnergy, which we suggested would add about $400,000 in investment income and increase our earnings per share to $2.72. Today, we're increasing our sales forecast in all segments. We're now projecting sales of $1.887 billion. We have moderated our operating margins to 12.3%, but the result is an increase in net earnings to $119.1 million or $2.75 a share – an 18% increase in earnings per share.

For fiscal '09, we're projecting a sales range from $2.095 billion to $2.125 billion. We projected Aircraft sales between $690 million and $700 million depending on what happens in the commercial aircraft aftermarket. We've projected Industrial sales in the range between $643 million and $663 million depending on how sales materialize and what happens in exchange rates. We've projected Space and Defense at $270 million, the Components Group at $374 million and our Medical Devices Segment at $118 million. In terms of margins, we're projecting some improvement in Aircraft and Medical Devices; and some moderation of the currently very high margins in Space and Defense, Industrial, and Components. Putting the whole picture together, we're projecting operating margins ranging from 12.1% to 12.3%, depending on sales volume, net earnings, in the range of $134.3 million to $139.5 million and earnings per share in the range of $3.08 to $3.20 a share. The low end of the range would be a 12% increase in earnings per share. If we're on that trajectory, the quarters will likely be $.72, $.76, $.79 and $.81. If the commercial airplane aftermarket holds up, Industrial sales and the Euro stay strong, and we come in at $3.20 a share--that will be a 16% increase over '08. One could say that the most likely outcome would be something in the middle. Given current economic conditions, we will regard an outcome anywhere in this range as a positive result and a nice addition to our long-running record of double-digit growth in earnings per share.

Now, I'll turn you over to John Scannell, who will talk about cash flow, the balance sheet, and our recent financial transactions. Here's John.

Good Morning.

I would like to begin with a discussion of our cash flow in the quarter and reiterate our guidance for the year. I will then address our recent financing transaction. I will talk about our tax rate and share some additional items of interest from the balance sheet. I will end with an overview of what we anticipate for fiscal '09.

Q3 Cash Flow

Free cash flow in the quarter was positive $16 million. Net debt increased by $31 million, driven primarily by the purchase of CSA in California for $15 million and our investment of $28 million in LTi REEnergy in Germany. In addition we had costs associated with our bond issue.