Demand for wheel and brake overhaul and replacement business is driven primarily by the frequency of aircraft landings, rather than the number of new aircraft deliveries. The aerospace industry often uses Available Seat Miles, or ASMs, which are computed by measuring for each flight total seat capacity multiplied by the number of miles flown, as a measure that generally correlates to the number of landings. The Federal Aviation Administration, or FAA, has estimated that ASMs for U.S. mainline carriers and regional/commuter aircraft will have compound annual growth rates of 4.0% and 6.7%, respectively, from 2004 to 2016, with landings growing at a slightly reduced rate.

The commercial transport market sector includes large commercial transport aircraft (generally 120 seats or more) and regional jets (generally between 30 and 120 seats). Use of regional jets has rapidly increased since 1997, growing from 132 aircraft to 1,630 aircraft in 2004. The FAA estimates that in 2004 alone regional departures increased 24.9% from 2.4 million departures to 3.0 million departures and represented over 30% of all U.S. commercial departures. Airlines are continuing to increase their use of regional jets to add point-to-point service, as well as to drive feeder traffic to their hubs.

The general aviation market sector includes business and personal aircraft (generally 19 seats or fewer). It is believed that the market for high-end business jets (jets currently priced at approximately $10 million or higher) will experience growth due to the perception that they provide greater productivity, comfort, convenience and security. The National Business Aviation Association cites an industry study which projects approximately 14,900 business jets will be delivered between 2004 and 2023.

Military aircraft spending is driven by efforts to modernize and retrofit aging platforms and the emphasis by the U.S. Department of Defense, or DoD, on flexible force deployment. Due to reduced commitments for new aircraft, the average age of military aircraft continues to increase, with resultant increases in operations and maintenance expense.

The Company’s wheels and brakes have been selected for use on a number of high-cycle airframe designs, including the Airbus A-320 and A-321 and the Boeing MD-80 Series.

In general aviation, the Company has been selected to supply the wheels and brakes for the new Dassault Falcon 7X long-range business jet, and it supplies wheels and brakes for such general aviation aircraft in production as the Raytheon Hawker 400XP, the Dassault Falcon 900EX, the Gulfstream GS100, GS200 and GS450 and the Learjet 60. Some of the military platforms using wheels and brakes supplied by the Company are the Northrop Grumman F-14 and F-16 fighters, the Boeing B-1B bomber and the Lockheed Martin C-130 transport. The Company also supplies the wheels, brakes and brake control systems on the Korean Aerospace KAI T-50 Trainer and the Aermacchi M346.

The braking systems produced by the Company are either carbon-based or steel-based. While steel-based systems generally require more frequent replacement, carbon-based systems typically generate higher dollar contributions per aircraft.

The Company is the leading supplier of flexible bladder fuel tanks for aircraft and helicopters for the U.S. miliary, worldwide commercial transport and general aviation markets. Flexible bladder fuel tanks are manufactured by combining multiple layers of coated fabrics and adhesives.

Iceguards manufactured by the Company are heating systems made from layered composite materials that are applied on engine inlets, propellers, rotor blades and tail assemblies. Encapsulated in the material are heating elements which are connected to the electrical system of the aircraft and, when activated by the pilot, the system provides anti-icing protection when in flight. The Company also produces a variety of products utilizing coated fabrics such as oil containment booms, towable storage bladders, heavy lift bags and pillow tanks.

Gross profit decreased by $6.9 million to $28.2 million, or 31.8% of sales, for the three months ended March 31, 2005, compared with $35.1 million, or 42.2% of sales, for the three months ended March 31, 2004.

Independent research and development costs increased by $0.2 million to $3.8 million for the three months ended March 31, 2005, compared with $3.6 million for the three months ended March 31, 2004.

Net interest expense increased by $8.6 million to $18.3million for the three months ended March 31, 2005, as compared with $9.8 million for the three months ended March 31, 2004.

Net loss was $3.0 million for the three months ended March 31, 2005, compared to net income of $8.9 million for the three months ended March 31, 2004, a decrease of $11.9 million.