With that, I’ll now turn the call over to Clay.
Clay Jones Thanks, Dan and good morning. Well today we get the opportunity to kick off the earnings season for the Aerospace and Defense Group. I have to say I’m pleased with the overall results and the general direction of our end markets. In a time of great volatility in the capital markets, uncertainty about the strength of economic recovery in the United States and around the globe and the potential impacts of tightening government budgets worldwide, predictions are very difficult to make and much more difficult to realize. However, to this point of our fiscal year, we’re performing to the guidance we set back in September 2009. And the second half of this fiscal year is on track and it has come in even stronger than the second half of 2009, as we turn the corner to recovery in our commercial markets and continue to make steady progress in our defense business. Looking to the financial highlights of the third quarter as predicted, we saw growth across both businesses, with Government Systems and Commercial Systems posting year-over-year growth in revenues. Government Systems saw a very robust year-over-year growth of 16%. And importantly, organic growth in the third quarter was 11% driven primarily by growth opportunities in our Surface Solutions portfolio. Commercial Systems’ revenue increased over 6%, its first quarter of year-over-year growth since the fourth quarter of 2008 thanks to sales increases with OEM customers and significant growth in our business and regional jet aftermarket. With an increase in revenues from the second to the third quarter, we were also able to grow total segment operating profit on a sequential basis from $219 million in the second quarter to $228 million this quarter. And as an additional financial highlight, we continue to generate very strong cash flow from operations of $440 million through the first nine months of 2010 as compared to $381 million at this point in 2009.
As a result of this strong performance and confidence in our outlook for the fourth quarter, we’re updating our guidance with expectations for full year revenues of about $4.7 billion, combined segment operating margins of about 19%, EPS of about $3.50 a share and operating cash flow of about $700 million.Now, for as many things as we correctly call this year, there have been a few areas where our predictions have not played out exactly as expected. Within Commercial Systems as an example, even prior to the beginning of our fiscal year, we made an assumption that Boeing and Airbus would reduce their narrow-body production rates. Of course, that hasn’t happened. And instead, they put in place plans to increase those production rates. And there’s been other welcome good news from the OEM market sector. We have seen the benefits of beginning 787 shipments and higher year-over-year deliveries as Boeing created lift in air transport systems. We’ve also seen shipments for Chinese aircraft and market share gains with the Cessna CJ4, creating some positive impact in an otherwise depressed business and regional OEM market. Now let me remind you, about 50% of our total commercial revenue is OEM related and the strength in this area has helped offset a delay in the recovery of our air transport aftermarket business. Now, since I know that there is both high interest and great expectations surrounding this air transport aftermarket recovery, let me add some important color from our perspective. We’ve all seen an abundance of market data that shows passenger traffic is experiencing a very robust recovery with an accelerating trend. That acceleration has led us to increase our calendar year traffic growth assumptions from about 3% previously to between 4% and 5% now. This is very good news and considering past cycle impacts should be an important leading indicator for growth in the air transport aftermarket. Read the rest of this transcript for free on seekingalpha.com