Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Michael Lewis – BB&T Capital Markets.
Michael Lewis – BB&T Capital Markets
On GO, can you talk about the specific milestones that hit in the second quarter and did you also say that you're expecting the $40 million to hit sometime in the third quarter to be part of the back log?
Timothy Conver
The program, the JCTD are joint technology development demonstration contract is moving along well. I think the single most significant milestone of the quarter in the development of that program was the full scale test of the propulsion system. In that case, we simulated an entire flight from take off through cruise and back to landing at simulated altitude and temperature conditions hitting performance expectations for that propulsion system which we felt was a very significant milestone.
I think the second part of your question was on the most recent funding appropriation of $40 million in the FY09 defense budget, and I think I said in the next few months, so we obviously can't predict exactly when our customer's process funding through to contracts, but every indication is that that will happen in the next few months. Whether or not it all happens in the third quarter is something we'll have to wait and see.
Michael Lewis – BB&T Capital Markets
When is the actual first flight anticipated for GO?
Timothy Conver
There's not a published flight date, but in general, if you'll recall, a three year program that includes development, flight testing, integration of payloads and then military utility demonstration. So the first two years of the three year program are development and then we'll begin flight testing.
We're a little more than a year into the program so that should put us in the front end of flight testing in about a year.
Michael Lewis – BB&T Capital Markets
With regards to the EES business, did you have any one time plus ups or other benefits in that business that caused the pretty significant up tick in that business in the quarter on a margin basis?
Stephen Wright
The margins are good. They're only slightly higher than they were in Q1. We're 54% in Q2 and 52% in Q1 and I'd say there's no significant accruals or adjustments in there.
Operator
Your next question comes from Tyler Hojo – Sidoti & Company.
Tyler Hojo – Sidoti & Company
- To read the full transcript on Seeking Alpha, click here »
