Welcome to the Astronics Corporation first quarter 2010 financial results conference call. At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Deborah Pawlowski, Investor Relations for Astronics Corporation.

We appreciate your time and interest in Astronics. Here today with me is Pete Gundermann, President and CEO of Astronics and Dave Burney, Chief Financial Officer. They will be covering the results, outlook and prospects of the company on the call and then will follow up with a question and answer period. Should you not have the release that went out this morning, it is available on the company’s website at www.Astronics.com. As you are aware, we may make forward-looking statements during the formal presentation and the question and answer portion of this teleconference. These statements apply to future events which are subject to risks and uncertainties as well as other factors that could cause the actual results to differ materially from where we are today. These factors are outlined in our earnings release as well as in documents filed by the company with the Securities & Exchange Commission which can be found at the SEC website www.SEC.gov as well as the company’s website. With that, let me turn it over to Peter to start the discussion.

We are pretty pleased with our first quarter results. We think it provides a pretty strong start for our fiscal 2010. Revenues for the quarter were $46.9 million, that’s down quite a bit from $50 million in the first quarter last year and pretty much in line with recent quarters. $43.2 million or 92% came from our aerospace segment. For our aerospace segment, that’s the strongest shipping quarter we’ve had since the end of 2008 when we had shipments of $44 million. 2008, for those that can remember, was the tail end of the good old days it seems. Our test system segment had revenues of $3.7 million, that’s only 8% of our total for the quarter just passed. However, on that shipment level, we were fairly profitable with a net profit of $3.4 million. That’s up from $1.4 million in the first quarter of last year. The results are basically due to pretty strong efforts at cost management over the last year and the favorable product mix. We’ll talk about each of those in due course but basically on a slightly reduced revenue level we managed to make quite a bit more money and we’re pretty pleased with that result. Perhaps the most encouraging thing though, at least from my perspective was our bookings level. We took in orders during the quarter of $54.3 million, that’s up substantially from $30.8 million in the first quarter last year and in fact was our strongest booking quarter ever. We’ve never had bookings as high as $54.3 million before. It’s a book-to-bill ratio of 1.16. You don’t have to look back too long to remember that our fourth quarter of 2009 the immediately preceding quarter we only had bookings of $30 million. So to go from $30 million in one quarter to…

(Operator Instructions) Your first question comes from Tyler Hojo – Sidoti & Company, LLC. Tyler Hojo – Sidoti & Company, LLC: A question just on the E&D expense. You guys are tracking a little bit above kind of the $20 to $25 million guide that you gave for the year. I’m just wondering if you could maybe update your comments there?

You’re right Tyler, it’s a little bit higher. I expect it to be by the end of the year we’ll be in a $25 to $26 million range. First quarter was a little bit higher than we expect the last three quarters to be. But, I’ll put a caution on that, it is very program driven and if there’s some opportunities that come up during the year that we win, the number could be at the higher end. Likewise, if there’s opportunities that we don’t win or that don’t come our way it could be at the lower end. Tyler Hojo – Sidoti & Company, LLC: I mean just in regards to I think in your prepared remarks you were indicating some kind of increase conversations with customers just in regard to some of these development programs. I guess what I’m wondering is where do you think you kind of stand in this development cycle? Would you expect $25 to $26 to be kind of a go forward range from here? Any comments you can provide.

It’s a little bit speculative to go out years but I guess I would assume that is a reasonable level. I guess it’s possible that it could drop a little bit next year depending on what programs we win towards the end of this year. The other side of it is we have some internally driven development ideas that we could fill in a void with if there aren’t so many customer programs to work on instead. Part of it is we feel like we’ve got a pretty capable group on the technical side across the company right now and with the downsizing we’ve done we certainly don’t to downsize any more if we don’t have to. We’d like to retain the expertise that we have. If we win, a lot of customer driven programs that overall development number could possibly go up. If we don’t, I have a hard time seeing it going down substantially but it could go down slightly for a while. Tyler Hojo – Sidoti & Company, LLC: Then on the test systems business, would you be able to quantify what kind of benefit the warranty reserve added in the quarter?

Pre-tax it was $700,000. Tyler Hojo – Sidoti & Company, LLC: Just in regards to how you think things kind of shake out from here, you guys indicated back on the last conference call that Q1 would probably be in the $40 to $42 million range. Any idea where you think Q2 might be? What I’m trying to get at is does it seem like perhaps some business got pulled in to Q1 relative to Q2 or how should we look at that?

It’s a very good question and we’re wondering the same thing. So far we would tell you the second quarter demand from a booking perspective we’re continuing to see some of the momentum we saw in the first quarter so that’s a positive. What we don’t know is whether customers are pulling things in from Q3 and Q4 into the first half for some reason or whether this trajectory is going to continue. You’re right, just a couple of months ago, we expected that Q1 would be relatively slow and that we’d pick up momentum as the year progressed an we’re trying to get a handle on that. A fair amount of our business is in our cabin electronics side to airlines and our big IFE customer in particular. We don’t always have perfect insight in to their expectations but so far in general that part of our business demand has exceeded what they said they were going to do. So, if that continues than it will be a pretty positive boost for the year. Tyler Hojo – Sidoti & Company, LLC: Just to follow up on that thought, what was Panasonic as a percentage of sales this quarter?

It’s not at my fingertips. I can get that for you Tyler.

Your next question comes from Scott Lewis – Lewis Capital Management. Scott Lewis – Lewis Capital Management: Just a couple of questions, on the mix shift you talked about Pete, that sounds like it was more of a trend, it wasn’t just a quarter thing given it wasn’t kind of old programs dropping off, is that correct?

We have some older programs, a couple that come to mind. Historically we’re doing quite a bit of work for Eclipse and that was lower margin business for us. We had a tactical Tomahawk conditioning unit that we’re building and some pretty significant volumes. That had a little bit more touch labor than most of what we’re working on today. That kind of mix change is going to help our financials these days. Scott Lewis – Lewis Capital Management: Then secondly I wanted to ask, in one of your recent presentations you’ve got a slide with various kind of platforms you’re on from 2006 to 2016 and you added a new design business jet and I was wondering if that was a power distribution or a lighting win?

Which presentation are you talking about? Scott Lewis – Lewis Capital Management: The one from February.

February of this year? Scott Lewis – Lewis Capital Management: Yes.

Is the Lear 85 on that chart somewhere? Scott Lewis – Lewis Capital Management: The Lear 85 is on that and then you have a separate box and I think you just say new design business jet and it’s right out towards the right end.

I’m drawing a blank Scott, I’ll have to get back to you. Scott Lewis – Lewis Capital Management: I’m wondering if you guys are seeing any bookings yet on 787?

Not substantially no. Just a refresher on that one, we provide in flight entertainment power boat to Talis and Panasonic. Just the way that the mix fell, Talis had a whole bunch of the early programs, early deliveries on the 787 and when Boeing was still representing they were going to build at a certain rate they had all of their suppliers including Talis, including us providing hardware. So, we’ve already delivered, I don’t want to say something like 20 chipsets to Talis, so we’re not going to see a whole lot activity until that airplane ramps up. My guess is we’ll start building again in the second half of 2011 if they start flying and delivering at the end of 2010 like they say. Scott Lewis – Lewis Capital Management: I only ask because it seems like they’ve already produced or at least they have on the line 20 or 30 planes.

Yes.

Your next question comes from Kevin Ciabattoni – Boenning & Scattergood, Inc. Kevin Ciabattoni – Boenning & Scattergood, Inc.: A little bit of a follow up on the mix question, since it seems to be a trend do you think gross margins can stay relatively close to what they were for this quarter for the rest of the year or are those going to trend down a little bit?

They might trend down a little bit but it’s kind of a standard quarter in many respects. There wasn’t a whole lot of special stuff happening. If we continue to get the demand we did in the first quarter, even with our relatively high E&D load, we’re able to turn in some pretty good results. We’d like to think we can stay in the neighborhood. Kevin Ciabattoni – Boenning & Scattergood, Inc.: With regards to the business jet market, obviously things have been difficult there. What are you guys seeing in terms of quote activity, etc. through the second half end of the year? Are you in envisioning a pick up there or are we looking more in to 2011?

Well to us at this point seeing production forecasts from our customers that don’t show continuous and repeated declines is really, really good news and we’re excited about that. We are in some cases starting to see some increases in certain models but at this point nobody is expecting a 10% or 20% increase and it’s too early to predict what’s going to happen in 2011. I think all of our OEM business jet customers are a little gun shy about what happened to them last year in terms of forecasts.

Your next question comes from Richard Ryan – Dougherty & Company, LLC. Richard Ryan – Dougherty & Company, LLC.: Dave, on the SG& line can you kind of give us a characterization of the cuts you’ve made variable versus permanent? I mean, if we continue to see a ramp, how much may come back in to the equation?

I’ll try. A lot of the headcount reduction was not SG&A it was cost of sales touch labor. It was really across the board. But, I think it’s fair to assume that if the business comes back to where we’re growing again that we’re going to go through kind of another ramp up like we did a few years ago and that we’re running pretty hard right now with what we have in terms of headcount. Richard Ryan – Dougherty & Company, LLC.: On the tax line, where do you think that trends?

I think we vary a little bit as you know. I think 33% to 30% today is what I expect for the year. Richard Ryan – Dougherty & Company, LLC.: Pete, on the test business I think if I recall past conversations, you talked about other opportunities and I’m not sure if it was either in other branches or if it was overseas, any progress being made there?

I think so. We’re working it pretty hard. I talked about a shipment forecast of $25 to $30 million. We have an internal booking forecast that is bigger than that and it seems to be what I would call a pretty target rich environment. So it’s a question in my view of timing and what is getting urgent is we don’t have the backlog at this point in house to support $25 to $35 million of production in 2010. So there is some urgency there but, I’ll continue to maintain that I think it’s a market that has some pretty serious potential and we have some pretty strong capabilities so if we can line up the capabilities with the potential where it exists I’m hopeful of good news. You’re right, a lot of the opportunities are foreign. One way to think about this is where are all the military radios being sold these days? That’s where we think we can sell test equipment. Richard Ryan – Dougherty & Company, LLC.: Now, these opportunities are they kind of knocking down onesies, twosies or are there some large RFPs hanging out there?

I’d say fairly large. For us in our line of business something over a couple of million is pretty large and there are a number of those. Richard Ryan – Dougherty & Company, LLC.: On the cabin electronics side can you give a sense of whether it was kind of new build or retro fit opportunities there in the quarter? What you’re seeing in the retrofit side?

Well, we’re seeing higher than expected demand. In our business the part of it that is linked to air craft production is fairly predictable and fairly stable. There was a time when we were pretty good at predicting kind of where we’re going to be. It’s the aftermarket or field modification side that is a little harder for us to predict especially in our cabin electronics product line where we have an off the shelf family of products and we have some fairly significant customers including Panasonic and Talis who order as they will based on what their book of business looks like. We do get forecasts from those customers and we build those forecasts in to our forecasts and they are frankly over the first quarter here especially ordering at rates in excess of what they said they were going to do so that translates directly in to increased volume for us and it flows right through our income statement. As best we can tell, they’re not stealing from the later quarters to feed the earlier quarters and so far in to Q2 we continue to see some pretty good strength there so we’re hopeful that continues.

Your next question comes from Tyler Hojo – Sidoti & Company, LLC. Tyler Hojo – Sidoti & Company, LLC: Just on headcount you said you were down about 200 heads, do you have a number there?

More specifically than 200? Tyler Hojo – Sidoti & Company, LLC: What’s an aggregate number of employees?

Where we are today? Tyler Hojo – Sidoti & Company, LLC: That is correct.

We have your last number, Panasonic was a good 30% of our revenues in the first quarter.

We’re a little over 1,000 people. Tyler Hojo – Sidoti & Company, LLC: In terms of the cap ex budget, does that change at all? I think last time you said $2.5 to $3.5?

That remains. Tyler Hojo – Sidoti & Company, LLC: Just lastly, just more of a strategic question in regards to the test systems business, I thought it was actually quite positive that the business was profitable this quarter but just kind of wondering if given the current run rate of business even if it is a $25 to $30 million business, assuming that some of those bookings do indeed go through, does it make sense to have kind of a separate facility for this business? Is kind of moving this in to one of your other existing facilities perhaps something that is on the table today?

I would say that is probably not on the table in the sense that it is very dependent upon the people, intellectual property, that’s the entire business. You walk through that facility and largely what you see are a bunch of cubicles. It’s the people that sit in the cubicles and make the thing work. That area where that business is, in the greater Orlando area happens to be kind of a hot bed of this type of activity on a national basis so I think that facility belongs where it is. I think the bigger question is how do you get a contribution out of that company if it’s running at $25 to $35 million and I don’t know if you do really. We didn’t buy it to run at that rate and I don’t think it’s necessarily going to be real successful at that rate. That being said, it’s a high variable cost business and so once we figure out where things stabilize and what the opportunities are it’s one of those businesses that you can manage any number of a ways. If the opportunities continue to be pretty good it’s probably worth maintaining the infrastructure to handle those bigger opportunities and if it doesn’t you have to respond accordingly. But, we’re still learning. I do know that the current run rate we do not expect it to be profitable and I think if it gets up in to the $30 million rate I think we could expect some reasonable returns out of it. I think it’s proven that if we can get beyond that under the right circumstances it can be a pretty good contributor. Tyler Hojo – Sidoti & Company, LLC: Just in regards to Panasonic, did you say before that you kind of thought the booking strength thus far in the second quarter was kind of where it was in the first?

Yes, so far. Just to be clear we’ve seen solid bookings really across the entire aerospace side in the first quarter but the cabin electronics part of the business in particular seem to be the strongest and obviously Panasonic is our biggest customer in that segment. There seems to be a willingness to spend on the part of airlines that’s helping us a lot right now. Tyler Hojo – Sidoti & Company, LLC: You’re saying that basically the strength from Panasonic and I guess Talis isn’t related to any of the new wide body builds? I’m just looking and it looks like this is the highest quarterly rate that you guys have had at least since March of ’08 and it seems like it’s kind of up there in terms of what you were doing in ’07. I’m just trying to understand where the strength is coming from if current production rates are call it down 2% this year and you kind of look at the wide bodies ramping up next year where you guys seem very well positioned and with these bookings coming on line and the revenues, I’m just trying to get a feel for why?

So are we, especially in the face of our fourth quarter performance last year where bookings were among the lowest we’ve seen in a couple of years. So, it’s probably safe to blend the two together a little bit and take a little bit more of a moderate perspective on it. One of the dynamics that is happening kind of behind the scenes apparently is that some of our customers are changing their ordering habits. Instead of ordering repeated small orders, they’re ordering fewer big orders and when you think about that transition from a bunch of smaller orders to a few bigger orders you almost have to front load your ordering at least temporarily. So it could be that some of that is playing out in the first quarter also. But again, we’re watching it on a pretty close basis and we’re a third of the way through the second quarter and we’re continuing to see pretty good demand across the business. So if we put another quarter of bookings like this together given that 787 is really not in there, given that arguable 8380s is still at a pretty reduced rate, it should set us up pretty well for the end of 2010 and 2011.

Your next question comes from Richard Ryan – Dougherty & Company, LLC. Richard Ryan – Dougherty & Company, LLC.: Pete, when you look at the tactical Tomahawk is that completed now?

For the moment. Richard Ryan – Dougherty & Company, LLC.: Can you give a sense of what that contributed maybe on a run rate the past few quarters and what’s the opportunity for that program to come back?

We’ve been over the past couple of years running in the neighborhood of $6 million or so a year in revenue on that program. It was one that was won by our Seattle operation prior to our ownership of it and it was originally set up to be a fairly accelerated program in the sense that the Redman Operation wanted to deliver it as quickly as possible and set it up with the customer, ultimately Raytheon to work that way. As a result, we got ahead of production of the missile and so our part of the current build is done. We expect that as production continues that we’ll be brought back on line to build more hardware in the future although we don’t have a contract to do that today and there’s a little bit of a chance that that won’t happen. But, we’re expecting that we’ll get back in to that business over the next year or so. Richard Ryan – Dougherty & Company, LLC.: Does that program have funding in the current budget?

I believe it’s a pretty safe program.

There are no further questions at this time. I would now like to turn the floor back over to management for closing comments.

Thanks everybody for tuning in. Again, we’re pretty pleased with our first quarter results and while we’ve got a lot of moving parts, we’re cautiously optimistic that the year is going to turn out towards the higher end of our range and we look forward to updating you at the end of the second quarter. Thanks for your interest.

This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.