Our Aerospace business experienced a challenging year, due primarily to market conditions and a supplied component issue with the Joint Programmable Fuze (JPF) program. Operating income for 2010 was $67.2 million, compared to $75.0 million in 2009, a decrease of 10.5%. Excluding a $6.4 million goodwill impairment charge and a $2.0 million charge related to a contract resolution, Aerospace operating income in 2010 was $75.6 million, 15.6% of sales. Revenues for 2010 were $486.5 million, a decrease of 2.8% from 2009 revenues of $500.7 million. The lack of revenue growth was primarily the result of lower sales of bearing product lines due to a dramatic decline in the regional and business jet markets, lower commercial helicopter production and lower aftermarket sales due to reduced airline capacity. Overall, however, in a tough environment, Aerospace made progress on all fronts.

Operational performance was strong, as evidenced by our BLACK HAWK cockpit production program for Sikorsky, which grew during 2010, surpassing our expectations. By mid-year we had delivered our 500th cockpit to Sikorsky; we commemorated this achievement in a joint celebration with Sikorsky, the U.S. Military and our Jacksonville employees. We continued to ramp-up the A-10 program, including delivery of the first major A-10 structural assemblies to Boeing Defense Space & Security in support of the program. This program stretches across the organization with contributions from our Aerostructures, Helicopters and Tooling divisions. The success of this integrated program validates our strategy of offering broader solutions to our customers.

Also during 2010, our Helicopters division delivered the 1,000th BLACK HAWK rotor blade protected with an erosion-resistant coating. These deliveries for U.S. Army BLACK HAWK helicopters utilize this innovative coating system, which delivers significantly improved blade life, increased aircraft availability and reduced maintenance requirements.

As announced during the first quarter of the year, we experienced a supplied component failure during acceptance testing under our Joint Programmable Fuze program. This prevented us from making planned JPF shipments in the first half of the year. Working with the supplier and our customer, we resolved this issue and resumed JPF deliveries. In fact, JPF performance during the second half of 2010 was outstanding with deliveries of over 18,000 fuzes.

During 2010, we closed JPF orders from the U.S. Air Force and foreign customers totaling $126 million. This, coupled with our strong recovery and operational performance in the second half of the year, further underscored our customers’ confidence in both Kaman and the JPF program. The JPF continues to demonstrate strong system reliability and operational flexibility, further emphasizing its status as a critical program to U.S. and allied militaries around the world.

We also continued to successfully capture key business around the world from both new and existing customers to add to our backlog. In our bearings product lines, we established new content on a broad base of important new platforms, including the Agusta Westland 169, Sukhoi Superjet100, Boeing 787 Dreamliner, and the Airbus A350. We also won a significant contract to produce composite doors for the Learjet 85 program. Programs that we expect to ramp up during the year, including the F-35 Joint Strike Fighter and A-10 re-wing program, will provide additional incremental growth as they reach the production stage.

During 2010, we moved through several hurdles in qualifying a new Tufflex® application for the F-35/B (Joint Strike Fighter), the Short Take Off and Vertical Landing variant. We still have additional steps to complete, but our progress has been encouraging and the Joint Strike Fighter represents a significant opportunity for us.

We expanded relationships with several customers during 2010 in part due to our strong performance on existing programs. We leveraged our successful performance on the Bell Helicopter blade component manufacturing program to secure a contract to manufacture cabins for the AH-1Z helicopter. We value our growing relationship with Bell and are working with them across our aerospace business on a number of platforms.

We advanced the unmanned K-MAX® program with a successful demonstration to the Marine Corps early in the year of the capability to resupply troops by unmanned aircraft at forward operating bases. In December, the U.S. Naval Air Systems Command awarded Lockheed Martin and Kaman a $45.8 million contract for K-MAX unmanned aircraft systems for a U.S. Marine Corps evaluation of unmanned cargo resupply in an operational forward deployed environment in late 2011. These developments underscore the very attractive long-term opportunity represented by the unmanned K-MAX program.

Aerospace continued to invest in its future while winning new business and fulfilling current contracts. We acquired Global Aerosystems, LLC of Everett, Washington, a provider of aerostructure engineering design analysis and FAA certification services to the aerospace industry. This acquisition, which brings more than 120 aerospace engineers to Kaman, expands our capabilities in the fields of aircraft design and stress analysis. In combining Global’s expertise with Kaman’s manufacturing capability and experience, we have formed a formidable team to compete for higher-margin life-of-program opportunities across the aerospace industry. Also late in 2010, Kaman formally inaugurated a new state-of-the-art manufacturing facility in the Mexican city of Chihuahua. The new facility will initially manufacture extrusions and sheet metal details to support the aerospace industry worldwide. Once components are completed in Mexico, the parts will be shipped either to our manufacturing operations in the U.S. for final assembly into structures or directly to end customers. The new plant is part of our ongoing strategy to grow our global footprint and enhance sourcing, manufacturing, engineering and business development capabilities around the world in support of our customers.