The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements. The Company makes forward-looking statements in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of this Quarterly Report on Form 10-Q, which represent the Company's expectations or beliefs about future events and financial performance. When used in this report, the words "expect," "believe," "anticipate," "goal," "plan," "intend," "estimate," "may," "will" or similar words are intended to identify forward-looking statements. These forward-looking statements are based on estimates, projections, beliefs and assumptions and are not guarantees of future events or results. Such statements are subject to known and unknown risks, uncertainties and assumptions, including those referred to in the "Risk Factors" section of the Company's Annual Report on Form 10-K and otherwise described in the Company's periodic filings and current reports filed with the Securities and Exchange Commission.

In light of these risks, uncertainties and assumptions, the forward-looking events discussed may not occur. In addition, actual results could differ materially from those suggested by the forward-looking statements. Accordingly, investors are cautioned not to place undue reliance on the forward-looking statements. Except as required by law, the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Investors should, however, review additional disclosures made by the Company from time to time in its periodic filings with the Securities and Exchange Commission.

This Quarterly Report on Form 10-Q should be read completely and with the understanding that the Company's actual future results may be materially different from what the Company expects. All forward-looking statements made by the Company in this Quarterly Report on Form 10-Q and in the Company's other filings with the Securities and Exchange Commission are qualified by these cautionary statements.

The condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America, which require the Company to make estimates and assumptions. (See Note 1 of the Condensed Consolidated Financial Statements included as part of this Quarterly Report on Form 10-Q.)

The Company believes that certain significant accounting policies have the potential to have a more significant impact on the financial statements either because of the significance of the financial statements to which they relate or because they involve a higher degree of judgment and complexity. A summary of such critical accounting policies can be found in the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2007.

Overview

We are a leading provider of design engineering services, structural components, assemblies and kits to the aerospace, defense and technology industries. We primarily sell our products to the large commercial aircraft, military, corporate and regional aircraft, and technology markets within the aerospace and technology industries. Historically, our business was primarily dependent on the large commercial aircraft market, with Boeing as our principal customer. In order to diversify our product and customer base, we implemented an acquisition and marketing strategy in the late 1990's that has broadened the number of industries to which we sell our products and services, and, within the aerospace industry, diversified our customer base to reduce our dependence on Boeing.

Beginning in 2001, we began an aggressive acquisition campaign that resulted in the consummation of several acquisitions. On July 31, 2007, we acquired all of the capital stock of D3 Technologies, a premier design and engineering services firm based in San Diego, California, for $65.0 million in cash plus transaction fees (see Note 2 of the Condensed Consolidated Financial Statements). With our acquisition of D3 Technologies, we now provide a complete range of design, engineering and program management services for the aerospace and defense industries.

As a result of acquiring D3 Technologies and in accordance with the criteria set forth in SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information," we are now organized into two reportable segments: the Aerostructures segment and the Engineering Services segment. The Aerostructures segment fabricates, machines, assembles and kits formed, close tolerance aluminum and specialty alloy components and sheet metal products for use by the aerospace, semiconductor and medical products industries. The Engineering Services segment provides engineering solutions to commercial and military aviation, aerospace, military weapons systems, marine and industrial markets.

The results for the third quarter of 2008 were negatively impacted by the Boeing machinists strike, which began on September 6, 2008 and was settled on November 3, 2008. This strike reduced Boeing's production requirements from its suppliers, which in turn negatively impacted our shipments relating to large commercial aircraft. We believe that the impact of this recently settled strike will continue into and could be more significant in the fourth quarter of 2008.

Results of Operations

Three months ended September 30, 2008 compared to September 30, 2007

The following table is a summary of our operating results for the three months
ended September 30, 2008 and September 30, 2007:


                                                   Three Months Ended
                                                  September 30, 2008
                                                   ($ in millions)
                                                   Engineering
                              Aerostructures        Services         Eliminations      Total
  Net sales                  $           39.4     $        22.8     $         (0.3 )   $ 61.9
  Cost of sales                          27.6              17.7               (0.3 )     45.0
  Gross profit                           11.8               5.1                  -       16.9
  S,G & A                                 5.8               2.5                  -        8.3
  Income from operations     $            6.0     $         2.6     $            -     $  8.6


                                                   Three Months Ended
                                                  September 30, 2007
                                                   ($ in millions)
                                                   Engineering
                              Aerostructures      Services (1)       Eliminations      Total
  Net sales                  $           35.8     $        12.0     $            -     $ 47.8
  Cost of sales                          24.7               9.8                  -       34.5
  Gross profit                           11.1               2.2                  -       13.3
  S,G & A                                 5.1               1.3                  -        6.4
  Income from operations     $            6.0     $         0.9     $            -     $  6.9

(1) For the two-month period ending September 30, 2007.

Aerostructures Segment

Net Sales. The following table specifies the amount of net sales by category for
the third quarter of 2008 and 2007 and the percentage of total net sales for
each period represented by each category.

                               Three Months                    Three Months
                                   Ended                           Ended
                               September 30,       % of        September 30,       % of
    Category                       2008            Total           2007            Total
                                                     ($ in millions)
    Corporate and Regional
    Aircraft                   $        13.9          35.3 %   $        12.4          34.6 %
    Large Commercial
    Aircraft                            11.3          28.7              11.5          32.1
    Military                            10.8          27.4               9.2          25.7
    Technology                           1.9           4.8               1.7           4.7
    Other (1)                            1.5           3.8               1.0           2.8
    Total                      $        39.4         100.0 %   $        35.8         100.0 %

(1) Includes consulting services and various aerospace products.

Net sales for the third quarter of 2008 were $39.4 million, up 10.0% from $35.8 million in the third quarter of 2007.

Net sales of components for corporate and regional aircraft increased $1.5 million or 12.1% from $12.4 million for the quarter ended September 30, 2007 to $13.9 million for the quarter ended September 30, 2008. This increase was primarily attributable to increased production rates on Gulfstream aircraft.

Net sales of products used in large commercial aircraft were $11.3 million for the third quarter of 2008, a decrease of $0.2 million or 1.7% from $11.5 million in the third quarter of 2007. Net sales to this market were driven by higher production rates on certain models of Boeing aircraft, offset by the impact of the recently settled Boeing machinists' strike which began on September 6, 2008. In particular, we generated net sales for the Boeing 747 of $3.2 million in the third quarter of 2008, an increase of $1.0 million or 45.5% compared to the $2.2 million of net sales in the third quarter of 2007. Net sales for the Boeing 767 were $1.0 million for the third quarter of 2008, up $0.6 million compared to the $0.4 million net sales for the third quarter of 2007. These increases were offset by a $0.8 million decrease of net sales for the Boeing 737 from $6.4 million in the third quarter of 2007 to $5.6 million in the third quarter of 2008, a $0.5 million decrease of net sales for the Boeing 777 from $1.4 million in the third quarter of 2007 to $0.9 million in the third quarter of 2008, and a $0.6 million decrease of net sales for the Boeing 787 from $0.8 million in the third quarter of 2007 to $0.2 million in the third quarter of 2008. We estimate that the recently settled Boeing strike negatively impacted sales in the third quarter of 2008 by approximately $1.5 million, and while we expect this to continue into the fourth quarter of 2008, we are unable to estimate the magnitude of such impact until Boeing and its Tier 1 suppliers establish new order plans.

Military products generated $10.8 million of net sales in the third quarter of 2008 compared to $9.2 million in the third quarter of 2007, an increase of $1.6 million or 17.4%. New assemblies and expanding production rates on existing components and assemblies supporting the Sikorsky Black Hawk helicopter program generated $8.4 million of net sales in the third quarter of 2008, more than double the net sales of $4.0 million in the third quarter of 2007. This was partially offset by the absence of any material volume on certain Lockheed aircraft under a long term agreement with Lockheed that expired on December 31, 2007.

Technology products generated $1.9 million of net sales for the third quarter of 2008 compared to $1.7 million for the third quarter of 2007, an increase of $0.2 million or 11.8%. This increase was due to higher net sales of products used in semiconductor equipment.

Gross Profit. Gross profit for the third quarter of 2008 was $11.8 million (29.7% of net sales), compared to $11.1 million (31.0% of net sales) in the third quarter of 2007. The third quarter of 2007 included the settlement of a customer dispute that provided approximately $0.8 million of gross profit. Excluding this settlement, 2007 gross profit was $10.3 million (29.2% of net sales).

Selling, General and Administrative Expenses. Selling, general and administrative expenses for the third quarter of 2008 were $5.8 million (14.7% of net sales) compared to $5.1 million (14.5% of net sales) in the third quarter of 2007. This increase resulted from higher professional service fees and compensation and fringe benefit costs resulting from increased staffing to support our growth and was partially offset by the recovery of a previously reserved bad debt expense of $0.3 million.

Engineering Services Segment

Net Sales. This segment was created with the acquisition of D3 Technologies on
July 31, 2007. The following table specifies the amount of the Engineering
Services segment's net sales by category for the three months ending September
30, 2008 and two months ending September 30, 2007 and the percentage of the
segment's total net sales represented by each category:

                           Three Months
                              Ended                         Two Months Ended
                            September          % of           September 30,
Category                     30, 2008          Total              2007             % of Total
                                                     ($ in millions)
Commercial Aircraft        $       11.0            48.2 %   $             6.3             52.5 %
Corporate Aircraft                  7.6            33.3                   3.2             26.7
Military                            3.4            14.9                   1.7             14.2
Tooling                             0.8             3.5                   0.8              6.7
Total                      $       22.8           100.0 %   $            12.0            100.0 %

For the three months ended September 30, 2008, approximately $22.3 million, or 97.8% of net sales, was generated under engineering services reimbursement type contracts which generate net sales from labor hours incurred at varying, negotiated rates and other direct costs plus an administrative fee. Net sales under these reimbursement contracts were primarily for commercial, corporate and military markets. Net sales for engineering services for commercial aircraft were $11.0 million, or 48.2% of net sales, primarily from programs supporting the Boeing 747-8, 777-Freighter and 787 platforms. Net sales for services supporting corporate aircraft, primarily the Gulfstream G650 and G250, and various military programs were $7.6 million, or 33.3% of net sales, and $3.4 million, or 14.9% of net sales, respectively. Approximately $0.8 million, or 3.5% of net sales, was generated under contracts primarily related to design and delivery of tooling on various programs supporting commercial aircraft.

For the two months ended September 30, 2007, approximately $11.3 million, or 94.6% of net sales, was generated under reimbursement type contracts. Net sales for engineering services for commercial aircraft were $6.3 million, or 52.5% of net sales, primarily from programs supporting the Boeing 747-8, 777-Freighter and 787 platforms. Net sales for services supporting corporate aircraft and various military programs were $3.2 million, or 26.7% of net sales, and $1.7 million, or 14.2% of net sales, respectively. Approximately $0.8 million, or 6.7% of net sales, was generated under firm, fixed-price contracts, primarily related to design and delivery of tooling on various programs supporting commercial aircraft.

Gross Profit.

For the three months ended September 30, 2008, gross profit for the segment was $5.1 million (22.4% of net sales). Costs included in cost of goods sold are primarily direct labor, fringe benefits, subcontract labor, direct costs related to specific contracts, depreciation and facility costs and are part of the negotiated rate structures for reimbursement type contracts. The third quarter of 2008 benefited from retroactive purchase order changes of approximately $0.3 million and was impaired by a rework charge of $0.1 million.

For the two months ended September 30, 2007, gross profit for the segment was $2.2 million (18.3% of net sales). During the months of August and September 2007, the segment encountered overruns on certain fixed-priced tooling contracts resulting in a loss of $0.1 million.

Selling, General, and Administrative Expenses.

For the three months ended September 30, 2008, selling, general and administrative expenses for the segment were $2.5 million (11.0% of net sales). These costs primarily include salaries, wages and benefits costs of approximately $1.7 million, $0.3 million of stock based compensation relating to a restricted stock award made on July 31, 2007 and vesting over five years, and amortization of intangibles of $0.3 million valued in connection with the acquisition of D3 Technologies.

For the two months ended September 30, 2007, selling, general and administrative expenses for the segment were $1.3 million (10.8% of net sales). These costs primarily include salaries, wages and benefits costs of approximately $0.7 million, $0.3 million of stock based compensation relating to a restricted stock award made on July 31, 2007 and vesting over five years, and amortization of intangibles of $0.2 million valued in connection with the acquisition of D3 Technologies.

Non-segment Expenses

Net Interest Income (Expense). Interest expense for the third quarter of 2008 was $0.4 million compared to $0.7 million for the third quarter of 2007. The decreased expense was due to a reduced balance in our lines of credit as well as a lower interest rate during 2008.

Income Tax Expense. During the third quarter of 2008, we had income tax expense of $3.0 million compared to $2.1 million in the third quarter of 2007. We applied an effective tax rate of 36.5% to income for the third quarter of 2008 compared to 33.1% for the third quarter of 2007. Our 2008 effective tax rate was positively impacted by higher deductions available for manufacturing companies and negatively impacted by a higher effective state income tax rate.

Nine months ended September 30, 2008 compared to September 30, 2007

The following table is a summary of the Company's operating results for the nine months ended September 30, 2008 and September 30, 2007:

                                                         Nine Months Ended
                                                        September 30, 2008
                                                          ($ in millions)
                                Aerostructures     Engineering Services    Eliminations      Total
Net sales                           $      118.2         $         70.1      $      (1.0 )   $  187.3
Cost of sales                               83.7                   55.4             (1.0 )      138.1
Gross profit                                34.5                   14.7                -         49.2
S,G & A                                     17.8                    6.9                -         24.7
Income from operations              $       16.7         $          7.8      $         -     $   24.5


                                                         Nine Months Ended
                                                        September 30, 2007
                                                          ($ in millions)
                                                   Engineering Services
                                Aerostructures             (1)             Eliminations      Total
Net sales                           $      101.9         $         12.0      $         -     $  113.9
Cost of sales                               73.3                    9.8                -         83.1
Gross profit                                28.6                    2.2                -         30.8
S,G & A                                     15.0                    1.3                -         16.3
Income from operations              $       13.6         $          0.9      $         -     $   14.5

(1) For the two-month period ending September 30, 2007.

Aerostructures Segment

Net Sales. The following table specifies the amount of net sales by category for
the nine months ended September 30, 2008 and 2007 and the percentage of total
net sales for each period represented by each category:


                                    Nine Months                     Nine Months
                                       Ended                           Ended
                                   September 30,       % of        September 30,       % of
Category                               2008            Total           2007            Total
                                                        ($ in millions)
Corporate and Regional Aircraft   $          41.5        35.1 %   $          36.1        35.4 %
Large Commercial Aircraft                    34.4        29.1                33.6        33.0
Military                                     32.4        27.4                24.1        23.7
Technology                                    6.3         5.3                 5.0         4.9
Other (1)                                     3.6         3.0                 3.1         3.0
Total                             $         118.2       100.0 %   $         101.9       100.0 %

(1) Includes consulting services and various aerospace products.

Net sales for the first nine months of 2008 were $118.2 million, up $16.3 million or 16.0% from $101.9 million in the first nine months of 2007. The increase in net sales occurred in every market we serve.

Net sales of product for use on corporate and regional aircraft increased $5.4 million or 14.9% from $36.1 million in the first nine months of 2007 to $41.5 million in the first nine months of 2008. This increase was primarily attributable to increased production rates on Gulfstream aircraft.

Net sales of product used in large commercial aircraft were $34.4 million for the nine months ended September 30, 2008, an increase of $0.8 million or 2.2% from $33.6 million for the nine months ended September 30, 2007. Net sales to this market were driven by higher production rates on certain models of Boeing aircraft, offset by the impact of the recently settled Boeing machinists strike which began on September 6, 2008. Specifically, we generated $19.5 million net sales for the Boeing 737 during the nine months ended September 30, 2008, up $0.3 million or 1.6% from $19.2 million net sales for the nine months ended September 30, 2007. We generated $2.2 million net sales for the Boeing 767 during the nine months ended September 30, 2008, which doubled the net sales of $1.1 million generated for the nine months ended September 30, 2007. These increases were partially offset by a decrease of net sales on the Boeing 777 from $3.8 million for the first nine months of 2007 to $3.2 million for the first nine months of 2008. While we expect the impact of the recently settled Boeing strike to continue into the fourth quarter of 2008, we cannot estimate the magnitude of such impact until we understand how Boeing and its Tier 1 suppliers begin to reschedule delivery.

Military products generated $32.4 million of net sales in the first nine months of 2008 compared to $24.1 million in the first nine months of 2007, an increase of $8.3 million or 34.4%. This increase was primarily new awards of assemblies and expanding production rates on Sikorsky's Black Hawk program, which generated $24.4 million in the first nine months of 2008 compared to $12.4 million in the first nine months of 2007, an increase of $11.8 million or 95.2%. This was partially offset by declining volume on certain Lockheed aircraft.

Technology products generated $6.3 million of net sales for the nine months ended September 30, 2008 compared to $5.0 million for the nine months ended September 30, 2007, an increase of $1.3 million or 26.0%. This increase was due to higher net sales of products used in semiconductor equipment.

Gross Profit. Gross profit increased from $28.6 million (28.1% of net sales) for the nine months ended September 30, 2007 to $34.5 million (29.2% of net sales) for the nine months ended September 30, 2008. Gross profit was positively impacted by higher production rates which provided better coverage of fixed costs, but was reduced by slightly lower margins on newer assembly work on the Black Hawk program, as well as increased salaries and wages to support our growth.

Selling, General and Administrative Expenses. Selling, general and administrative expenses were $17.8 million (15.1% of net sales) during the nine months ended September 30, 2008 compared to $15.0 million (14.7% of net sales) for the nine months ended September 30, 2007. This increase resulted from higher professional service fees and compensation and fringe benefit costs resulting from increased staffing to support our growth.

Engineering Services Segment

Refer to the previous section for discussion of the operating results for August and September of 2007.

Net Sales. The following table specifies the amount of the Engineering Services segment's net sales by category for the nine months ending September 30, 2008 and the percentage of the segment's total net sales represented by each category.

                                          Nine Months
                                             Ended
                                         September 30,       % of
                  Category                   2008            Total
                                              ($ in millions)
                  Commercial Aircraft   $          33.2        47.4 %
                  Corporate Aircraft               23.1        33.0
                  Military                          9.8        14.0
                  Tooling                           4.0         5.7
                  Total                 $          70.1       100.0 %

Approximately $66.9 million or 95.4% of the segment's net sales for the first nine months of 2008 were recorded under reimbursement type contracts for engineering services which generate net sales from labor hours incurred at varying, pre-negotiated rates and other direct costs plus an administrative fee. Net sales under these reimbursement contracts are primarily for commercial, corporate and military markets. Net sales for services for commercial aircraft were $33.2 million or 47.4% of net sales for the nine month period ending September 30, 2008, primarily from design programs supporting Boeing's 747-8, 777-Freighter and 787 platforms. Net sales for services supporting corporate aircraft were $23.1 million, or 33.0% of net sales for the nine month period ending September 30, 2008, the majority of which were on the development of the Gulfstream G650 and other re-designed aircraft. Net sales of services for military programs were $9.8 million or 14.0% of net sales for the nine month period ending September 30, 2008. These military revenues were derived from support provided on multiple Navy programs, the F-35 aircraft and various other programs. Tooling projects represented approximately $4.0 million, or 5.7% of net sales, primarily related to design and delivery of tooling on various programs supporting commercial aircraft.

. . .