Laura L. Siegal – Vice President & Corporate Controller Eric M. DeMarco – President, Chief Executive Officer & Director Deanna H. Lund – Chief Financial Officer & Executive Vice President

Mike Crawford – B. Riley & Company, Inc. Michael Ciarmoli – Keybanc Capital Markets Analyst for Mark Jordan – Noble Financial Capital Markets Bhakti Pavani – C.K. Cooper & Company David Sagalov – Jefferies & Company Josephine Millward – Benchmark Company Analyst for Yair Reiner – Oppenheimer & Co. [Aneal Wasched – Inaudible]

Welcome to the Kratos Defense & Security Solutions second quarter 2012 earnings conference call. At this time all participants are in a listen only mode. Later we will conduct a question and answer session and instructions will follow at that time. (Operator Instructions) As a reminder, this conference call is being recorded. I would now like to introduce your host for today’s conference Ms. Laura Siegal, Vice President & Corporate Controller. LL Thank you for joining us for the Kratos Defense & Security Solutions second quarter earnings conference call. With me today is Eric DeMarco, Kratos’ President and Chief Executive Officer and Deanna Lund, Kratos’ Executive Vice President and Chief Financial Officer. Before we begin the substance of today’s call I’d like to make some brief introductory comments. Earlier this afternoon we issued a press release which outlined the topics we planned to discuss today. If anyone has not yet seen a copy of this press release it is available on the Kratos’ corporate website at www.KratosDefense.com. Additionally, I’d like to remind our listeners that this conference call is open to the media and we are providing a simultaneous webcast of this call for the public. A replay of our discussion will be available on the company’s website later today. During this call we will discuss some factors and matters that are likely to influence our business going forward. Any matters discussed today that are not historical fact, particularly comments regarding our future plans, objectives, and expected future performance constitute forward-looking statements. These forward-looking statements may include comments about our plans and expectations of future performance. These plans and expectations are subject to risks and uncertainties which could cause actual results to differ materially from those adjusted by our forward-looking statements. We encourage all of our listeners to review our…

Kratos’ second quarter 2012 results came in pretty much as expected with revenue increasing sequentially over the first quarter with 100% of its growth being organic. The primary reasons for the sequential second quarter 2012 organic growth include: Kratos’ business today is primarily specialty product based focused on niche United States National Security C5ISR priority areas; our critical infrastructure security business which comprises approximately 15% to 20% of the company is not funded by DOD budgets and it continues to grow organically, sequentially, and year-over-year and this is being driven by the increasing homeland related asymmetric threat profile we’re experiencing right now; and also, demand for Kratos’ ISR electronic attack and electronic warfare related products including internationally continue to generate strong organic growth for the company. Additionally, our legacy traditional government services business, which as you know, is in a marketplace that has been commoditizing over the past few years, today comprises only approximately 10% to 12% of the company’s revenue base. Although it is continuing to contract, it’s less of a drag on our corporation’s overall growth than it has been the past few years as obviously it’s a much smaller and shrinking piece of our business. Looking forward to Q3 and Q4 of 2012, based on the significant amount of specialty product orders we have received during the first six months of the year, we continue to expect a significant second half 2012 sequential organic revenue and EBITDA increase as a substantial portion of this business is currently in backlog, it’s in the manufacturing process, and it’s scheduled for second half delivery. A specific area where we expect sequential organic growth in the second half 2012 over the first six months include ISR, EWEA, missile systems, cyber products, and certain specialty national security related programs. Additionally, Kratos’ hyper…

As a reminder, all financial performance data discussed and presented today reflects the integral systems non-core businesses that we decided to divest as discontinued operations. Accordingly, all prior quarter and prior year data has been similarly classified to present the discontinued operations in a comparative format. The second quarter financial performance remained solid in what continued to be a very difficult, challenging and changing Department of Defense, national security, and overall federal government budgetary environment. Our revenues of $219 million were up sequentially approximately 4.9% from the first quarter 2012 revenues of $209.5 million primarily reflecting sequential organic growth in our critical infrastructure business of 8.4% as well as in our electronic attack and electronic warfare products business and our satellite communications business which both grew 2.7% sequentially from the third quarter. On a year-over-year basis our revenues increased $48.7 million from $171.1 million in the second quarter of 2011 to $219.8 million in 2012. Approximately $71.5 million of this increase was generated by the acquired businesses of Integral Systems, SecureInfo, and the acquired Critical Infrastructure Business. This growth was offset by a reduction of approximately $12.4 million in traditional services revenues that continued to be compressed as Eric discussed earlier as well as a reduction of $10 million in shipment of our ground equipment business and other legacy weapons systems due to delays in shipments Eric touched on earlier as well. As Eric had mentioned, our traditional services business was greater than $250 million in annual revenues in 2009 and has contracted 22% to 32% each year since that time. For 2012 it is down to an annual run rate of approximately $100 million. Fortunately, this business now comprises a much smaller portion of our overall revenues down from over 75% of our total revenues several years ago to…

Quickly in closing, in the current environment that we are operating in forecasting precisely is obviously extremely difficult but overall trajectories is what we believe is very important. Kratos’ current trajectory is demonstrated by our Q1, Q1, and overall first half of 2012 results it is clearly that of an increasing organic growth and overall growth trajectory. As Deanna and I referred to several times in our prepared remarks, we believe that Kratos today is well positioned in these challenging times strategically, operationally, and financially. The second half of 2012 is currently shaping up for Kratos to be significantly stronger than the first half with increased year-over-year and sequential revenue, EBITDA, and cash flow growth organically which the management team is obviously committed to. We’ll now turn the call over to the operator for questions.

(Operator Instructions) Your first question comes from Mike Crawford – B. Riley & Company, Inc. Mike Crawford – B. Riley & Company, Inc.: Just broad picture, in the current environment where are you seeing the most demand for your programs and where is that visibility the least? What is more likely to be funded in a CR type environment versus what are the things that are more likely to be cut?

What we’ve been seeing and what we think we’re going to continue to see ties directly into the strategic update the Pentagon put out in January of this year and it has to do with the strategic pivot which is tying in the strategic platforms. We are seeing weakness primarily in the army area and the marine area on tactical systems. We are seeing strength on strategic platforms that have to do with anti access and area denial, air force systems, navy systems, and space based systems. Programmatically we are seeing strength right now, and it looks like it’s going to continue on some of the ones that I mentioned Trident, EA G-18, Patriot, [AMRAM]. Internationally with Iron Dome, Arrow, and Sling of David and several satellite communication areas and programs, one I can mention is RAIDRS, I can’t get into the other ones and in certain unmanned systems areas. Mike Crawford – B. Riley & Company, Inc.: Relative to composite engineering, I believe you’re expecting a step up in revenue with the navy in the back half of this year, or at least you had been with the more significant increase next year. I’m wondering if that time table has changed at all? And then anything you can say regarding the prospects of winning business with the army?

We continue to expect a significant step up in overall CEI revenue in the second half and we continue to expect a significant step up in 2013. The second half of this year is being driven by MALD, two air force contracts, and three international contracts. The second half of next year it’ll include what I just mentioned and in addition to navy when it should become more meaningful. Mike Crawford – B. Riley & Company, Inc.: Prospects for the army?

The army, I don’t want to get ahead of myself, but they are on the original expectation timeline, nothing has changed there.

Your next question comes from Michael Ciarmoli – Keybanc Capital Markets. Michael Ciarmoli – Keybanc Capital Markets: I guess maybe just for clarity what is the expected revenue for CEI?

That was the $60 million that I had denoted in my long comments. It probably got lost in there but it’s $60 million. Michael Ciarmoli – Keybanc Capital Markets: One other housekeeping, just the pro forma EPS of $0.63 to $0.73 were there any other changes in that from the $95 to $125 besides just the higher share count for the remainder of the year?

Obviously with the change in the range on the EBITDA so the tightening of that $120 to $125, that’s the other driver. Michael Ciarmoli – Keybanc Capital Markets: Obviously there’s a lot of moving parts and uncertainty here but I think Eric you said the portfolio is now complete with the addition of CEI. Can you give us a sense of what we can expect on a go forward basis here in terms of a target model? Certainly it looks like the second half of ’12 your EBITDA margins should be at the 14% range. I know we’ve got sequestrations hanging out there but is that the right level to think about going into next year in the absence of a sequestration trigger or is there further upside that we could see in terms of the margin profile?

That’s a very good question. It absolutely, absolutely should be 13% to 14%, 13% plus absolutely. The upside potential that we have is primarily in three areas and God willing we’ll see some of this in the second half because we expect to. Our cyber business, a substantial portion of that is product software products and as I mentioned in the prepared remarks it comes in ebbs and flows. The first half we had some, it wasn’t significant. The second half is shaping up right now, it could be very significant. We are putting a significant amount of money in this area especially in a new type of cyber product which we announced a couple of months ago. We’re not making a big deal out of this but these are cyber products relative to MIL-SAT Com where we have the customer, we know what the issues are, and in 2013 if we just get a little bit of that because of the profit margins on software, that could be a driver for us. So there are those areas. Additionally, in certain of the international weapons systems areas, particularly in EW, EA, and missile systems, I talked about some of those in the prepared remarks. That is an area where if those come to fruition in blocks so we get leverage on the G&A, that could drive it as well. Michael Ciarmoli – Keybanc Capital Markets: On those cyber software sales, anything different with those actual sales in terms of revenue recognition? Are those typical of commercial sales where we’ve got sort of licensing revenue and is there a benefit there to cash flows?

It’s two-fold so as we ship the product then there is the revenue recognition as the product is shipped and then there typically is a maintenance stream over the following 12 months as well.

One other thing I should mention is in our critical infrastructure and strategic asset security business today approximately 15% of that is the service. We are awarded a contract, we design the system, we deploy it, we integrate it into a command and control system, that’s the deployment piece. Then we typically get a contract to run it or maintain it. Those annuity stream type contracts can be much more profitable than the deployment so obviously as we’re building out this business if that grows along with it that can help the margins as well. Michael Ciarmoli – Keybanc Capital Markets: Last question, if we think about it I guess it looks like Washington Congress is making pretty good progress on a continuing resolution here for six months. Is there anything that could happen between now, end of year with either the CR, election noise that introduces more risk to you guys achieving your kind of financial objectives for the remainder of ’12 or is it going to be more 2013 of an impact?

I would say Q3 I feel pretty good about. Obviously, calendar Q4 is the beginning of federal fiscal ’13. Obviously, as you have, I’ve seen supposedly the Congress, the House, Boehner, Reid, and Obama have come to some type of an agreement for a six month extension. I see that but you know it’s very, very fluid so I would say fingers crossed. We’re trying to be conservative for the next six months but we’re obviously in unchartered waters here.

Your next question comes from Analyst for Mark Jordan – Noble Financial Capital Markets. Analyst for Mark Jordan – Noble Financial Capital Markets: Two questions, first for each of the business segments I was wondering if you could just talk briefly about the levels of competition you’re seeing for each of the businesses?

I’ll give you it in some of the business lines so you can get a feel for it. In the critical infrastructure area the two primary competitors that we had had for several years they had some major issues and they kind of went away last year and so our two primary competitors have exited the field for all practical purposes. There is one primary large guy left, these are system integrators, and then from time-to-time the product guys will show up and try and push their products and integrate their products. In the electronic products, the EW, the EA, and the missile system electronic areas there are two primary players. We’re one of them and then there’s another guy and then from time-to-time smaller peripheral players show up. So that approximately $200 million business of business, the first million was $200 million, in that approximate $200 million of business it’s us and one other guy for all practical purposes with a couple of other smaller guys that show up from time-to-time. In the MIL-SAT Com, in the satellite communication area and again, I’m rounding here, another couple hundred million, it’s typically us and one other guy, one other guy. From time-to-time one or two small guys show up but it’s really typically a two horse race. What is driving this is what’s happening budgetarialy and the funded R&D dollars are drying up. So if you are designed in today you’re in and it’s very difficult if not impossible for somebody to come and compete with you unless they’re going to try to acquire somebody and exploit it. In the cyber business in the product area it’s us and like three other guys. In the cyber services area it is a mess and there are lots, and lots of people in the cyber services area. In that area there right now is a significant supply/demand imbalance whether it be huge demand for services there is not a supply of people that we can hire or anybody can hire. There just aren’t enough people to do the work right now and so it’s very hard to get any traction in that area to grow. In our services business which I had previously said I thought was around $80 million Deanna scrubbed it and it’s about $100 million and shrinking and it’s a free for all. Any of these traditional services contractors when a contract comes out 100 people show up and then if it’s a MAC 100 people show up and then 20 people are awarded the contract and you get to bid against 20 of your best friends. So that’s kind of the lay of the land right now. Analyst for Mark Jordan – Noble Financial Capital Markets: One more question just relative again to each of the business segments, how is the visibility of demand looking longer term out to 2013 2014?

It’s very, very program specific. Let me give you an example, one of the largest programs in the company that we are on is the EA G-18. The visibility on that as we sit here today is fantastic through 2015/2016 because what’s happening with the F-35, what the build is on the F-18, you can take a look at Boeing and you can see it. It’s just fantastic. One of the next biggest contracts in our company is the Trident 2D5. Its successor was cancelled it’s gotten C slip, and S slip, a service life extension program through 2052, we’re sole source, it’s fantastic. I’ll give you one more fantastic one and then I’ll talk about the not so fantastic ones. PA Poseidon, it’s coming out of [inaudible] it’s going to full rate production. I think there’s around 115 that are going to be procured by the navy to replace the P3. It looks like India is going to buy 20 or so, Australia is going to. It’s fantastic for us. I mean, it’s just fantastic you can see way out. Now let’s go to the not so fantastic. Command post platform, it’s a calm platform for the army and we build specialty products that have high altitude electrical magnetic pulse protection for this. It’s clear as mud right now. We thought we were going to get some big orders in the first half, we didn’t. I don’t know if we’re going to get them in the second half, I would say right now we’re not and I don’t think we’re going to have any clarity on that until maybe mid next year. There’s a lot of discussion going on not just budgetarily and with the strategic shift but also what was going on with the JLTV and the Hummer recap which ties into the command post platform. So it is program specific, some are really good, some are real murky. The critical infrastructure side is very clear right now because there’s so much demand because of the asymmetric threat profile that is happening in this company relative to strategic assets.

Your next question comes from Bhakti Pavani – C.K. Cooper & Company. Bhakti Pavani – C.K. Cooper & Company: I had a question, I think I misunderstood the information, the $35 million in revenues that is going to come from the divested business and the revised revenue guidance is $950 to $1 billion so does that $35 million is included in that or it’s additional?

That is excluded. When we discontinue an operation, for those businesses that are discontinued, they come out of the revenue line and out of everything on the income statement except for on the line discontinued operations. So that is excluded from that guidance because it will no longer be counted for in revenue. Bhakti Pavani – C.K. Cooper & Company: So excluding that $35 million the new guidance is $950 to $1 billion?

That’s correct. Bhakti Pavani – C.K. Cooper & Company: Also there was a comparative increase in the R&D, would that be a fair run rate to expect going forward in Q3 and Q4 or is that going to pick up in Q3 and Q4?

We think it will probably be around that same level, probably drop a little bit by the end of the year as we complete some of the investment efforts. Bhakti Pavani – C.K. Cooper & Company: My next question was related to the M&A and integration expenses, how much of the integration expenses are expected to be accounted going forward in Q3 and Q4?

Mergers and acquisition expenses, it should be the final transaction expenses for the CEI transaction which closed in our third quarter. That will be probably around $1.5 million to $2 million. Bhakti Pavani – C.K. Cooper & Company: I also had a question on the amortization. Now that the acquisition of CEI is completed what should be the expected amortization expense to be assumed going?

That was what I gave in my prepared remarks. The total amortization which includes the CEI transaction is estimated at $42 million for the full year with $12 million in Q3 and with $11 million in Q4. That already includes the anticipated impact of CEI. Bhakti Pavani – C.K. Cooper & Company: I was also confused about the numbers that you gave out that was $43 million for Q3 and $44 for Q4. I’m sorry, I did not get what exactly that was when you were giving out the guidance.

The guidance I gave was for the full year of $950 to $1 billion in revenue, $120 to $125 in adjusted EBITDA so I’m not quite sure what you’re referring to as far as the $42. Bhakti Pavani – C.K. Cooper & Company: $43 for Q3 and $44 for Q4, I couldn’t jot that down.

The only thing that I gave around that range was the $42 million anticipated for the full year amortization expense. Bhakti Pavani – C.K. Cooper & Company: My last question was regarding to the tax payment. If I understood it correctly the tax payments are expected to be $5 million for the second half of the year?

No, for the full year. On an average basis by quarter about $1.2 million.

Your next question comes from David Sagalov – Jefferies & Company. David Sagalov – Jefferies & Company: There was a contract last quarter that was pushed out, it was protested, the protestors subsequently dismissed. Can you comment if that revenue has come in?

There’s very, very good news on this. The contract has been awarded and we got it. We’re building it, we’re getting ready to ship it, and knock on wood it looks like it’s been doubled. David Sagalov – Jefferies & Company: When would that impact come into the results?

Late this year, Q1 ’13. David Sagalov – Jefferies & Company: Regarding the discontinued operations, can you tell us what the EBITDA contribution would have been from those operations if there are any?

That’s a very good question, let me explain to you why that’s a question, a very good question. This business was embedded in some business that’s continuing and so it’s in some of the same facilities with shared skiffs, secured compartmentalized information facilities, and shared cost structures, etc. I can tell you the contribution margin, and I’m not trying to be cute but I’m giving you the contribution margin of this business is around 20% to 25% and I’m telling you that because depending on who the buyer is whether it’s a strategic or a financial buyer then it just depends on what type of G&A infrastructure they have because it’s embedded in some of the contracts are cost plus fixed fee that absorb the costs so it’s not an easy answer, you see what I mean? It depends, but the contribution margin 20% to 25%. David Sagalov – Jefferies & Company: Regarding the second half any commentary as far as where the waiting would be? More a third quarter, four quarter, pretty even between the two?

As Deanna routinely says in her prepared remarks and as she routinely tells me not to get too precise, we have delivery schedules, we know what those delivery schedules say so we know what we think that is but we have learned that we can have something that’s ready to go on September 25th and the customer will say, “Ship it on October 5th.” So we’re just going to go with our annual guidance and we’re very comfortable with what second half looks like. David Sagalov – Jefferies & Company: Lastly, regarding the critical infrastructure and the public safety division, I think I heard you guys say 0% is from the federal government, did you ever break down how much is from municipals and state and local governments?

We don’t in detail.

We don’t in detail but what I did in my customer mix was I believe it was 5% went to state and local and that can be either on the critical infrastructure side or on the government business side. That’s our total percentage for our consolidated revenues for the quarter.

The big drivers in that business right now are commercial oil companies, petrochemical companies, power transmission lines, energy generation platforms, data networks, and switching networks, transportation including rail, underground, ports, and we’re on one of the largest programs that may be the largest program in there now it’s several tens of millions, has to do with a skyscraper complex somewhere.

Your next question comes from Josephine Millward – Benchmark Company. Josephine Millward – Benchmark Company: Can you give us an update on the two major public safety bids that you submitted earlier this year? Are you still anticipated awards before year end?

We are absolutely anticipated submitting the bids in Q3 and we just got updated on that so it’s tracking. The bids are going to be submitted in Q3 and the current plan is late this year very early next year but both of them are still very active. Josephine Millward – Benchmark Company: I don’t know if you have updated growth assumptions on the different parts of your business? Previously I think you talked about a growth rate north of 10% for public safety and if you can just give us an update on what you’re assuming for the updated guidance?

So big picture public safety definitely 10% plus; fiber 5% to 10% growth; EW and EA flat; Sat Com 0% to 5%; traditional services minus big time, big, big, big time; and those are the big pieces. Oh, DMD Aegis is going to continue to grow hyper sonic, significant growth north of 10%. Josephine Millward – Benchmark Company: What about weapons sustainment, is that roughly flat?

0% to 5% down. Josephine Millward – Benchmark Company: Do you have a target EBITDA margin for the critical infrastructure business and can you talk about how you will get there?

I’ll tell you how we’ll get there and then Deanna will help me with the target. The way this business, if you look back last year and the year before, has traditionally been one of the strongest profit generators in the company. As you know we made a strategic decision at the end of last year to acquire that critical infrastructure business because we paid virtually nothing for it but we knew we had some integration to do. That integration process we’re in the middle of it and we made the absolute right decision pushing out the plan. It’s easy to buy companies, it’s easy, integrating them is the art and we had a plan, we were going to reduce certain people, etc., on a timeline and we could have done it in near term, our margins would have been up and life would have been great but it would have impacted some long term programs and certain key customer relationships and the collection of those receivables. So as we talked about, we made the decision to push it out a quarter or two which was again, one of the smartest things we could have done because it’s all coming together and the bookings there are showing that. So by integrating that business over the next nine months we are extremely confident, because we can control this, that those margins are going to continue to significantly go up to where they used to be.

In the past it’s been in that 12% to 14% range so that would be where our target would be to get back there. With the progress we made in the second quarter we were at 8.5% so we made some great strides since the first quarter of 4.9% EBITDA and we’re about on par with where we were at this time last year so we’re expecting to continue to see that margin expansion in the second half just not at the accelerated rate that we had originally anticipated.

Your next question comes from Analyst for Yair Reiner – Oppenheimer & Co. Analyst for Yair Reiner – Oppenheimer & Co.: Just looking in terms of the PSS margins, you mentioned that it’s going to be 10% plus but at the same time it’s going to be lower than you previously guided. Are we still going to see the step function occur in the back half of the year or is it going to be more gradual?

You will absolutely see a significant ramp in the back half of the year. All we basically did – what we did by making the decision not to eliminate some costs on the initial plan is we reduced the margin in Q2. The margins are going to continue to go up because we pushed out the cost reduction plan. Analyst Yair Reiner – Oppenheimer & Co.: Can you just quantify what that cost reduction headwind in second quarter and then for the back half of the year?

Well, for the first half it was about $5 million as we talked about in the prepared remarks. In the first we took out a significant amount of costs but we left in the first half $4 to $5 million on the table that we did not take out that is going to come out in the next nine months. Analyst Yair Reiner – Oppenheimer & Co.: Then just a housekeeping question, in terms of the R&D expense, if I heard correctly you expect it to ramp up and then to start trending back down I’m assuming around fourth quarter of the year. Are you still looking for R&D expense to be around $20 million for the full year or is it going to be a bit lower than that now?

We are expecting a ramp up and that ramp up would include the acquisition of CEI which there are some select investments we are making related to that business as well. Our R&D for $20 million for the year is probably on the high side since we were at $4.7 this quarter and year-to-date closer to just over $8 million at $8.3 million so I would say the second quarter run rate is about where we’ll be at or give or take a little plus or minus from that range.

I also want to add, and I know you know this, but I want to make sure we’re clear, we have a significant amount of funded R&D. It is significant and it is not in a customer funded, it’s not in IR&D, it’s in revenue but that’s a fairly sizeable number in this company. Analyst Yair Reiner – Oppenheimer & Co.: Then just one final thing, in terms of the share count, is there a number you could guide us towards? In terms of your 10Q filing for the first half of the year it ends at 52.5 million but then as of July 27th it was 57 million. I just want to make sure at least I get that number correct.

It’s closer to that 52 in change. I would say to be safe about 53 million.

Your next question comes from David Sagalov – Jefferies & Company. David Sagalov – Jefferies & Company: Quickly just when you were giving the broad commentary on growth expectations was CEI baked into that anywhere or is that going to be separate from those broader categories you mentioned?

The way I was talking was excluding CEI. I was trying to give an apples-to-apples, that was just excluding CEI. David Sagalov – Jefferies & Company: Going forward where would CEI pretty much be baked into?

As we talked about before and as Deanna mentioned historically recently the company has been generating 20% year-over-year organic growth rate. We expect that from ’11 to ’12 and we expect that to continue ’12 to ’13. David Sagalov – Jefferies & Company: Lastly just on the commoditized services business, previously you said down 15% to 20% so now you’re expecting worse than that?

No, I’m expecting it to be down around 10% to 15%. David Sagalov – Jefferies & Company: So it is not worse than previous?

No, it’s just still terrible. It’s terrible, it’s very difficult to win a recompete in this environment. I mean, lowest cost technically acceptable is ruling the day. It’s ruling the day today.

And as I said in the prepare remarks David, the pure government services businesses over the last several years has been declining at an annual rate of 22% to 32% from 2009, ’10, ’11, and into ’12 so we believe that it will be less than that 22% to 32% but probably closer to the low end of that reduction rate.

Your next question comes from [Aneal Wasched – Inaudible]. [Aneal Wasched – Inaudible]: This is a housekeeping question, do you have the LTM pro forma EBITDA by any chance?

I actually do not have that with me, I know I usually do. [Aneal Wasched – Inaudible]: I wanted to follow up on the $10 million delay in shipments this quarter for revenues I missed the color behind it, what was it? And, will this impact next quarter?

Are you referring to what we had discussed last quarter or in my prepared remarks? [Aneal Wasched – Inaudible]: Your prepared remarks this quarter.

What I was actually walking through was on a year-over-year basis. That’s what I was referring to so it was a reduction year-over-year in shipments relating to certain ground equipment and related to certain weapon systems. [Aneal Wasched – Inaudible]: So that’s the first Q impact?

Yes. [Aneal Wasched – Inaudible]: Then on the discontinued operations, I know that the EBITDA is difficult for you to isolate but what’s the revenue? Is it the $1.8 million?

The revenue that was originally expected for this year was $25 million.

Based on what it looks like for second half shipments and backlog revenue in that business we’re discontinuing and selling is going to be particularly strong in the second half. It’s ironic, it’s ironic. It’s good for the process we’re going through but Q3 and Q4 right now backlog and bookings are really strong in that business. [Aneal Wasched – Inaudible]: What was it for the second Q do you know? The $35 is for the year what was it for the second Q?

That is what we had discussed in our press release, it was $1.8 million for the second quarter. [Aneal Wasched – Inaudible]: Is there a pipeline of buyers? Do you expect this to close sometime this year or is it difficult to say at this point?

There is a target list of buyers. We have already engaged with buyers and as I said in the prepared remarks the plan is to have it disposed of by the end of this calendar year. [Aneal Wasched – Inaudible]: You said that the revolver draw that should be paid down by the quarter end as I understand?

In the second half.

Your next question comes from Michael Ciarmoli – Keybanc Capital Markets. Michael Ciarmoli – Keybanc Capital Markets: Just a quick follow up, I missed it on the share count what should we be using for an average share count for this year? And, I think you commented on next year as well?

I just commented for this year and it’s $47 million for the year weighted average.

(Operator Instructions) I’m not showing any additional questions in the queue at this time. I’d like to turn the call back over to management for closing remarks.

Thank you all for joining us this afternoon and our next scheduled communication with the group will be when we report Q3. Thank you.

Ladies and gentlemen thank you for participating in today’s conference. This does conclude the program and you may all disconnect. Everyone have a great day.