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For today’s call we have prepared a few slides to help you follow on our discussion. You can find our presentation on the Investor Relations page of the BE Aerospace website. In addition copies of the slides will be posted on our website for you to refer to after the call. Joining us for the call this morning are Mike Baughan, President and Chief Operating Officer and Tom McCaffery, Senior Vice President and Chief Financial Officer. As always, in our prepared remarks and our responses to your question we will rely on the Safe Harbor exemptions under the various Securities Acts and our Safe Harbor statements in the company's filing with the SEC. After the prepared remarks, we will address your questions. At that time, Jessica will provide instructions on how to ask questions. As in the past please limit your questions to no more than two at a time so that we’d be able to get to everyone.Now I'll turn the call over to Amin Khoury. Amin Khoury Thank you Greg. And good morning, everyone. I am pleased to report that our second quarter results were above our earlier expectations. Our earnings growth was driven by significant margin expansion at both our consumables management and commercial aircraft segment. Our consumables management segment operating margin expanded by 160 basis points while our commercial aircraft segment operating margin expanded by 140 basis points. Overall, operating earnings increased 7% on a 2% increase in revenues. Operating margin expanded 70 basis points to 16.3%. Earnings before taxes exclusive of a $2.5 million debt repayment charge increased 14.6% and earnings per share excluding the $0.02 per share debt repayment charge increased by 11.4%. In addition, our free cash flow conversion ratio was 125%. We prepaid $75 million of long term debt and for the third consecutive quarter our backlog grew. This together with recent robust increases in global passenger traffic and airline yield and profitability underscores our expectation for stronger bookings and operating results in the second half of 2010 and significant improvements thereafter.
As a result, this morning we raised our 2010 EPS guidance by $0.05 per share to approximately $1.50 per share exclusive of the $0.02 per share debt repayment charge. The $50 per share guidance is $0.10 per share better than our beginning of the year guidance and implies that our second half EPS performance is expected to be about 10% better than the first half of 2010.This morning I'd first like to discuss the current market environment. Then we will review our second quarter financial and operating results and finally, we'll discuss our updated guidance for the remainder of 2010 and our promising outlook for 2011. Let's first discuss the current market environment. The global macroeconomic environment appears to be slowly but steadily improving, albeit with occasional steps backward. And in spite of headwinds from the Icelandic volcano eruption in April and the ongoing European debt crisis, the important global airline metrics which we follow continue to improve significantly. International traffic was up a robust 7.2% in the first half of 2010 as compared to first half of 2009. Premium international passenger demand has also begun to accelerate. Through May, premium traffic expanded a strong 10.5% along with increasing traffic, fares and yields have also improved significantly. In fact, during May international airline revenues from premium traffic was up an amazing 44%. U.S. airlines are also reporting an improvement in yields which is a notable [ph] part assisted by an increase in corporate spending, for example, Delta reported that revenue from corporate sales was up 60% in the second quarter. In fact, the U.S. airline June passenger revenue was up an extremely strong 25%. Read the rest of this transcript for free on seekingalpha.com