UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                 ---------------

                                    FORM 10-Q

(MARK ONE)

|X|     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 29, 2007

                                       OR

| |     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934

        FOR THE TRANSITION PERIOD FROM _______________ TO _______________

                          COMMISSION FILE NUMBER 1-3985

                                 ---------------

                                 EDO CORPORATION
             (Exact name of registrant as specified in its charter)


      NEW YORK                                          11-0707740
(State of Incorporation)                       (IRS Employer Identification No.)


            60 EAST 42ND STREET, 42ND FLOOR,                      10165
                NEW YORK, NEW YORK                              (Zip Code)
        (Address of principal executive offices)


                                 (212) 716-2000
              (Registrant's telephone number, including area code)

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes |X| No [ ]

     Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer (as defined in Rule 12b-2 of the Act), or a non-accelerated
filer.

Large accelerated filer [ ]   Accelerated filer |X|   Non-accelerated filer [ ]


Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Act). [ ] Yes     |X| No

     The number of shares of EDO common stock outstanding as of November 2, 2007
was 21,330,597 shares, with a par value $1 per share.

<PAGE>
<TABLE>
<CAPTION>
<S>          <C>                                                                                                 <C>
                                 EDO CORPORATION
                                TABLE OF CONTENTS

                                                                                                                Page

PART I          FINANCIAL INFORMATION
        ITEM 1  Financial Statements..............................................................................3
                Consolidated Balance Sheets - September 29, 2007 (unaudited) and December 31, 2006................3
                Consolidated Statements of Earnings - (unaudited)
                        Three months ended September 29, 2007 and September 30, 2006..............................4
                Consolidated Statements of Earnings - (unaudited)
                        Nine months ended September 29, 2007 and September 30, 2006...............................5
                Consolidated Statements of Cash Flows - (unaudited)
                        Nine months ended September 29, 2007 and September 30, 2006...............................6

                Notes to Consolidated Financial Statements (unaudited)............................................7

        ITEM 2  Management's Discussion and Analysis of Financial Condition and Results of Operations............19

        ITEM 3  Quantitative and Qualitative Disclosures about Market Risk.......................................27

        ITEM 4  Controls and Procedures..........................................................................27

PART II         OTHER INFORMATION

        ITEM 1  Legal Proceedings................................................................................28

  ITEM 1A Risk Factors...........................................................................................28

  ITEM 4    Submission of Matters to a Vote of Security Holders..................................................28

  ITEM 6    Exhibits and Reports Filed on Form 8-K...............................................................28

SIGNATURE PAGE...................................................................................................28
</TABLE>

                                       2
<PAGE>
<TABLE>
<CAPTION>
<S>                                                                   <C>                 <C>
                         PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                        EDO CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                                                                       SEPTEMBER 29,        DECEMBER 31,
                                                                           2007                 2006
                                                                      ---------------     ----------------
                                                                        (UNAUDITED)
                                                                                 (IN THOUSANDS)
                                ASSETS
Current assets:
 Cash and cash equivalents                                            $         3,418     $        25,322
 Accounts receivable, net                                                     233,116             265,298
 Inventories                                                                  118,724              56,255
 Deferred income tax asset, net                                                12,159              12,160
 Prepayments and other                                                          9,442              13,682
                                                                      ---------------     ----------------
  Total current assets                                                        376,859             372,717
                                                                      ---------------     ----------------

Property, plant and equipment, net                                             60,499              59,109
Goodwill                                                                      394,879             385,926
Other intangible assets, net                                                   86,463             103,776
Deferred income tax asset, net                                                 16,295               8,291
Other assets                                                                   18,535              20,003
                                                                      ---------------     ----------------
                                                                      $       953,530     $       949,822
                                                                      ===============     ================
                 LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
 Accounts payable                                                     $        64,456     $        63,334
 Accrued liabilities                                                           82,366              78,780
 Contract advances and deposits                                                49,006              44,323
 Postretirement benefits obligation, short-term                                 2,512               1,794
 Short-term borrowings under revolver                                         144,000             180,000
 Notes payable                                                                  7,766               7,766
                                                                      ---------------     ----------------
  Total current liabilities                                                   350,106             375,997
                                                                      ---------------     ----------------

Income taxes payable                                                           14,333               4,154
Notes payable, long-term                                                        8,766              14,533
Long-term debt                                                                201,250             201,250
Postretirement benefits obligation, long-term                                  67,232              77,734
Environmental obligation                                                        1,187               1,198
Other long-term liabilities                                                        29                  40
Shareholders' equity:
 Preferred shares, par value $1 per share, authorized 500,000 shares               --                  --
 Common shares, par value $1 per share, authorized 50,000,000 shares,
  21,451,588 issued in 2007 and 21,177,072 issued in 2006                      21,452              21,177
 Additional paid-in capital                                                   191,134             177,117
 Retained earnings                                                            148,131             129,444
 Accumulated other comprehensive loss, net of income tax benefit
  ($24,229 in 2007 and $25,814 in 2006)                                       (35,088)            (37,319)
 Treasury shares at cost (129,074 shares in 2007 and 111,499 shares in
  2006)                                                                        (2,444)             (1,966)
 Unearned Employee Stock Ownership Plan shares                                (12,558)            (13,537)
                                                                      ---------------     ----------------
  Total shareholders' equity                                                  310,627             274,916
                                                                      ---------------     ----------------
                                                                      $       953,530     $       949,822
                                                                      ===============     ================
</TABLE>
          See accompanying Notes to Consolidated Financial Statements.

                                       3
<PAGE>
<TABLE>
<CAPTION>
<S>                                                       <C>                 <C>
                   EDO CORPORATION AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF EARNINGS

                                                       FOR THE THREE MONTHS ENDED
                                                  ------------------------------------
                                                   SEPTEMBER 29,       SEPTEMBER 30,
                                                       2007                 2006
                                                  ---------------     ----------------
                                                              (UNAUDITED)
                                                             (IN THOUSANDS,
                                                       EXCEPT PER SHARE AMOUNTS)

NET SALES                                         $       256,782     $       184,393
                                                  ---------------     ----------------

COSTS AND EXPENSES
 Cost of sales                                            200,009             144,586
 Selling, general and administrative                       35,741              30,207
 Research and development                                   2,907               4,701
 Acquisition-related costs                                  2,011               1,008
 Impairment loss on other intangible assets                    --               1,487
                                                  ---------------     ----------------
                                                          240,668             181,989
                                                  ---------------     ----------------
OPERATING EARNINGS                                         16,114               2,404

NON-OPERATING INCOME (EXPENSE)
 Interest income                                              180               1,096
 Interest expense                                          (5,017)             (3,624)
 Other, net                                                   (37)                113
                                                  ---------------     ----------------
                                                           (4,874)             (2,415)
                                                  ---------------     ----------------
Earnings (loss) before income taxes                        11,240                 (11)
Income tax (expense) benefit                                  (42)              2,076
                                                  ---------------     ----------------
NET EARNINGS                                      $        11,198     $         2,065
                                                  ===============     ================

NET EARNINGS PER COMMON SHARE:
 Basic                                            $          0.60     $          0.11
                                                  ===============     ================
 Diluted                                          $          0.49     $          0.11
                                                  ===============     ================

Weighted-average common shares outstanding:
 Basic                                                     18,771              18,205
                                                  ===============     ================
 Diluted                                                   25,438              18,598
                                                  ===============     ================

Dividends declared per common share               $          0.03     $          0.03
                                                  ===============     ================
</TABLE>
          See accompanying Notes to Consolidated Financial Statements.

                                       4
<PAGE>
<TABLE>
<CAPTION>
<S>                                               <C>                 <C>
                        EDO CORPORATION AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF EARNINGS

                                                       FOR THE NINE MONTHS ENDED
                                                  ------------------------------------
                                                   SEPTEMBER 29,       SEPTEMBER 30,
                                                       2007                 2006
                                                  ---------------     ----------------
                                                              (UNAUDITED)
                                                             (IN THOUSANDS,
                                                       EXCEPT PER SHARE AMOUNTS)

NET SALES                                         $       758,218     $       456,500
                                                  ---------------     ----------------

COSTS AND EXPENSES
 Cost of sales                                            592,329             355,487
 Selling, general and administrative                      105,068              79,021
 Research and development                                   7,437              10,913
 Acquisition-related costs                                  6,314               1,455
 Impairment loss on other intangible assets                    --               1,487
                                                  ---------------     ----------------
                                                          711,148             448,363
                                                  ---------------     ----------------
OPERATING EARNINGS                                         47,070               8,137

NON-OPERATING INCOME (EXPENSE)
 Interest income                                              531               3,218
 Interest expense                                         (16,793)             (8,285)
 Other, net                                                   (49)               (144)
                                                  ---------------     ----------------
                                                          (16,311)             (5,211)
                                                  ---------------     ----------------
Earnings before income taxes                               30,759               2,926
Income tax (expense) benefit                               (7,861)              4,471
                                                  ---------------     ----------------
NET EARNINGS                                      $        22,898     $         7,397
                                                  ===============     ================

NET EARNINGS PER COMMON SHARE:
 Basic:                                           $          1.23     $          0.41
                                                  ===============     ================
 Diluted:                                         $          1.05     $          0.40
                                                  ===============     ================

Weighted-average common shares outstanding:
 Basic                                                     18,657              18,105
                                                  ===============     ================
 Diluted                                                   25,178              18,563
                                                  ===============     ================

Dividends declared per common share               $          0.09     $          0.09
                                                  ===============     ================
</TABLE>
           See accompanying Notes to Consolidated Financial Statements

                                        5
<PAGE>
<TABLE>
<CAPTION>
<S>                                                                             <C>                <C>
                        EDO CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                     FOR THE NINE MONTHS ENDED
                                                                                ------------------------------------
                                                                                 SEPTEMBER 29,       SEPTEMBER 30,
                                                                                      2007                2006
                                                                                ----------------   -----------------
                                                                                            (UNAUDITED)
                                                                                           (IN THOUSANDS)
OPERATING ACTIVITIES:
 Earnings from operations                                                       $        22,898    $          7,397
 Adjustments to earnings to arrive at cash provided by operations:
   Depreciation                                                                          10,694               8,865
   Amortization                                                                           7,713               5,121
   Impairment loss on other intangible assets                                                --               1,487
   Bad debt expense (recovery)                                                               54                  (6)
   Deferred tax provision                                                                   880                  15
   Loss (gain) on disposal of property, plant and equipment                                 162                 (59)
   Long-Term Incentive Plan compensation expense                                          5,184               2,261
   Stock option compensation expense                                                        970                 838
   Employee Stock Ownership Plan compensation expense                                     4,209               3,310
   Dividends on unallocated Employee Stock Ownership Plan shares                            156                 172
   Common shares issued for directors' fees                                                 159                 162
   Changes in operating assets and liabilities, excluding effects of
    acquisitions:
     Accounts receivable                                                                 32,128              23,065
     Inventories                                                                        (62,469)            (12,336)
     Prepayments and other assets                                                        14,444               1,630
     Accounts payable, accrued liabilities and other                                      6,243             (23,831)
     Contribution to defined benefit pension plan                                        (9,200)             (6,000)
     Contract advances and deposits                                                       4,683               1,194
                                                                                ----------------   -----------------
Cash provided by operations                                                              38,908              13,285
                                                                                ----------------   -----------------

INVESTING ACTIVITIES:
 Purchase of property, plant and equipment                                              (12,246)            (14,216)
 Proceeds from the sale of property, plant and equipment                                     --                 633
 Payments received on notes receivable                                                       --                 100
 Cash paid for acquisitions, net of cash acquired                                        (9,327)           (265,318)
                                                                                ----------------   -----------------
Cash used by investing activities                                                       (21,573)           (278,801)
                                                                                ----------------   -----------------

FINANCING ACTIVITIES:
 Short-term borrowings under revolver                                                    80,000             200,000
 Repayment of revolving debt                                                           (116,000)                 --
 Payment of short-term notes                                                             (5,767)                 --
 Proceeds from exercise of stock options                                                  3,029                 852
 Excess income tax benefit from stock options and Long-Term Incentive Plan                1,408                 429
 Proceeds from management group receivables                                                  --                 140
 Payment of common share cash dividends                                                  (1,909)             (1,830)
                                                                                ----------------   -----------------
Cash (used) provided by financing activities                                            (39,239)            199,591
                                                                                ----------------   -----------------
Net decrease in cash and cash equivalents                                               (21,904)            (65,925)
Cash and cash equivalents at beginning of year                                           25,322             108,731
                                                                                ----------------   -----------------
Cash and cash equivalents at end of period                                      $         3,418    $         42,806
                                                                                ================   =================

Supplemental disclosures:
 Cash paid for:
  Interest                                                                      $        14,516    $          3,891
                                                                                ================   =================
  Income taxes                                                                  $         4,866    $         10,937
                                                                                ================   =================
</TABLE>
          See accompanying Notes to Consolidated Financial Statements.

                                       6
<PAGE>
                        EDO CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

     The  accompanying  unaudited  consolidated  financial  statements have been
prepared in accordance  with  instructions to Form 10-Q and,  therefore,  do not
include  all  information  and  footnotes   normally  included  in  consolidated
financial statements prepared in conformity with accounting principles generally
accepted  in the United  States.  They  should be read in  conjunction  with the
consolidated  financial  statements  and notes  thereto of EDO  Corporation  and
Subsidiaries  (the  "Company") for the year ended December 31, 2006 filed by the
Company on Form 10-K with the Securities and Exchange Commission.

     The accompanying  consolidated financial statements include all adjustments
(consisting of normal recurring adjustments) that management considers necessary
for a fair  presentation of its consolidated  financial  position and results of
operations for the interim periods presented.  The results of operations for the
interim  periods  are not  necessarily  indicative  of the  results  that may be
expected for the entire year.

     Certain  reclassifications  have been made to prior year's presentations to
conform to current year's presentations.


(2)  PROPOSED SALE OF THE COMPANY

     On September 16, 2007, the Company entered into a definitive  Agreement and
Plan of  Merger  (the  "Merger  Agreement")  with ITT  Corporation,  an  Indiana
corporation ("ITT"), and Donatello Acquisition Corp., a New York corporation and
a wholly-owned  subsidiary of ITT ("Merger Sub"). The Merger Agreement  provides
that,  upon the terms and  subject  to the  conditions  set forth in the  Merger
Agreement,  Merger Sub will merge with and into the Company (the "Merger"), with
the Company continuing as a surviving corporation and a wholly-owned  subsidiary
of ITT.  Pursuant  to the Merger  Agreement,  each  common  share of the Company
issued and  outstanding  immediately  prior to the effective  time of the Merger
will be converted into the right to receive $56.00 in cash, without interest, on
the terms set forth in the Merger Agreement.  The Merger is expected to close in
early  2008.  Consummation  of the Merger is subject  to  customary  conditions,
including approval by the shareholders of the Company, expiration or termination
of the applicable  Hart-Scott-Rodino waiting period and receipt of certain other
regulatory approvals,  the absence of any Material Adverse Effect (as defined in
the Merger Agreement) with respect to the Company's business,  and certain other
customary  closing  conditions.  The  Merger  Agreement  also  contains  certain
termination  rights for both the Company and ITT upon  termination of the Merger
Agreement under specified  circumstances,  a termination  initiated by EDO could
require the Company to pay ITT a termination  fee of $47.0 million and reimburse
ITT for up to $3.0 million in transaction-related expenses.

(3) ACQUISITIONS

     On  September  15,  2006,  the Company  acquired all of the stock of Impact
Science and  Technology  Inc.,  (IST) for $123.7  million,  consisting of a cash
payment of $106.4  million and a $17.3 million  promissory  note to be paid over
three years. In addition,  certain key IST employees received retention payments
in the form of 405,103  restricted  EDO Common Shares  valued at $9 million.  We
also incurred $0.6 million of transaction  costs.  Also,  there was a subsequent
determination  of the final purchase price,  resulting in a $9.2 million accrual
at  December  31,  2006 and  payment in January  2007.  IST is a  privately-held
company providing signals intelligence  (SIGINT) systems and analysis support to
the intelligence community,  and advanced  countermeasures and electronic-attack
systems to the U.S.  Department of Defense (DoD) and other government  agencies.
The acquisition strengthened our position in specialized  communication products
and expanded the Company's business in the intelligence community.  The acquired
company  became part of the  Company's  Electronic  Systems  and  Communications
segment.  The excess of the purchase price over the net assets acquired  related
to IST is not  deductible  for income tax purposes.  During the first quarter of
2007,  the Company  finalized its  valuation for the  allocation of the purchase
price and  acquired  intangible  assets.  The final  allocation  did not  change
amortization  expense  materially  from the amounts  reported as of December 31,
2006.

     On  September 6, 2006,  the Company  acquired all of the stock of CAS Inc.,
(CAS) for $178.1  million,  consisting  of a cash payment of $173.2  million and
214,574 EDO common shares valued at $4.9 million.  We also incurred $1.6 million
in transaction costs. In addition,  there was a subsequent  determination of the
final purchase  price,  resulting in a $0.1 million payment in the first quarter
of 2007.  During the three months ended June 30, 2007,  the Company  recorded an
adjustment  to increase  goodwill by $0.2 million  related to the  resolution of
contingencies at the acquisition date. CAS is a privately-held company providing
engineering services, logistics support, and weapon-systems analysis to the DoD.
This  acquisition has  strengthened  and expanded our range of professional  and
engineering  services.  The  acquired  company  became  part  of  the  Company's
Engineered  Systems and Services segment.  The excess of the purchase price over
the net assets acquired  recorded as goodwill and other intangible assets in the
amount of $168.5  million are  deductible for income tax purposes over 15 years.
During the first  quarter of 2007,  the Company  finalized its valuation for the
allocation  of the purchase  price and  acquired  intangible  assets.  The final
allocation  did not change  amortization  expense  materially  from the  amounts
reported as of December 31, 2006.

                                       7
<PAGE>

(4) STOCK-BASED COMPENSATION

     The Company has granted  non-qualified  stock options and restricted shares
under the 2002 Long-Term  Incentive Plan (LTIP), the 2002 Non-Employee  Director
Stock Option Plan (NEDSOP) and in connection with the CAS and IST  acquisitions.
These plans are described in Note 12 to the  consolidated  financial  statements
included in the Company's Annual Report on Form 10-K for the year ended December
31, 2006.

     The  Company  records  stock-based  compensation  in  accordance  with  the
provisions  of  Statement  of Financial  Accounting  Standards  No. 123 (Revised
10/04),  "Share-Based  Payment"  ("FAS  123R").  The  Company  did not grant any
options during the three months ended September 29, 2007. During the nine months
ended  September 29, 2007,  the Company  granted  65,000 options to its Board of
Directors  that were fully  vested  upon  grant.  The  stock-based  compensation
expense  related to stock  option plans  included in operating  expenses for the
three months ended  September  29, 2007 and  September  30, 2006 were $0 and $37
thousand,  respectively,  and $1.0  million and $0.8 million for the nine months
ended  September  29, 2007 and September  30, 2006,  respectively.  Tax benefits
related to this  expense  for the three  months  ended  September  29,  2007 and
September 30, 2006 were $0 and $15 thousand,  respectively. Tax benefits related
to this expense for the nine months ended  September  29, 2007 and September 30,
2006 were $0.4 million and $0.3 million,  respectively.  The net effect of stock
based compensation expense related to stock option plans resulted in a reduction
in net income of $0 and $22 thousand for the three  months ended  September  29,
2007 and  September  30,  2006,  respectively.  The net  effect  of stock  based
compensation  expense  related to stock option plans  resulted in a reduction in
net income of $0.6 million and $0.5 million for the nine months ended  September
29, 2007 and September 30, 2006, respectively.

     The significant  weighted average assumptions used for the valuation of the
Company's  stock options using the  Black-Scholes  option  pricing model for the
nine months ended September 29, 2007 were as follows: expected dividend yield of
1%,  risk free  interest  rate of 5.09%,  expected  volatility  of 33.91% and an
expected option life of 7 years.

     As of September 29, 2007, there was no future compensation  expense related
to non-vested stock options.

     The  Company did not issue any  stock-settled  appreciation  right  options
(SSAR) for the three months  ended  September  29, 2007.  During the nine months
ended  September 29, 2007, the Company issued 243,775 SSAR to select  employees.
Stock based  compensation  expense  recognized  for  stock-settled  appreciation
rights  awards for the three and nine months ended  September  29, 2007 was $0.2
million and $0.5 million,  respectively.  There were no SSARs granted during the
three and nine months ended September 30, 2006.

     The significant  weighted average assumptions  relating to the valuation of
the Company's  SSARs using the  Black-Scholes  option pricing model for the nine
months  ended  September  29,  2007:  expected  dividend  yield of 1%, risk free
interest rate of 4.60%,  expected  volatility  of 34.79% and an expected  option
life of 5 years.

     As of September  29, 2007,  there was $2.1 million of  unrecognized  future
compensation  expense  related to  non-vested  SSARs not yet  recognized  in the
consolidated statement of earnings.

     Stock-based  compensation  expense  recognized  for  restricted/performance
share  awards for the three and nine months  ended  September  29, 2007 was $1.3
million  and $4.6  million,  respectively,  compared  to $0.7  million  and $2.3
million for the three and nine months ended  September  30, 2006,  respectively.
The    unrecognized     compensation    cost    related    to    the    unvested
restricted/performance  shares at  September  29,  2007 was  approximately  $9.9
million and will be recognized over a weighted-average period of 1.8 years.

(5) BUSINESS COMBINATIONS AND GOODWILL AND OTHER INTANGIBLE ASSETS

     Statement  of Financial  Accounting  Standard  ("SFAS") No. 141,  "Business
Combinations,"  requires that the purchase  method of accounting be used for all
business combinations  initiated after June 30, 2001. SFAS No. 141 also includes
guidance on the  initial  recognition  and  measurement  of  goodwill  and other
intangible  assets arising from business  combinations  completed after June 30,
2001.  SFAS No. 142,  "Goodwill  and Other  Intangible  Assets,"  prohibits  the
amortization  of goodwill and other  intangible  assets with  indefinite  useful
lives and  requires  that  those  assets be  reviewed  for  impairment  at least
annually.  Other intangible  assets with definite lives are amortized over their
estimated useful lives.

                                       8
<PAGE>

     In accordance with SFAS No. 142,  goodwill must be tested at least annually
for  impairment  at the  reporting  unit level.  If an  indication of impairment
exists,  the Company is required to  determine if such  goodwill's  implied fair
value is less than the carrying value in order to determine the amount,  if any,
of the impairment loss required to be recorded.  Impairment  indicators include,
among other conditions,  cash flow deficits,  an historic or anticipated decline
in revenue or  operating  profits,  adverse  legal or  regulatory  developments,
accumulation of costs  significantly in excess of amounts originally expected to
acquire the asset and/or a material decrease in the fair value of some or all of
the assets. The Company performs the required impairment tests of goodwill as of
October 1, each year. The changes in the carrying  amount of goodwill by segment
during the nine months ended September 29, 2007 were as follows:
<TABLE>
<CAPTION>
<S>                   <C>                         <C>                <C>                 <C>

                                                    ENGINEERED        ELECTRONIC
                                                      SYSTEMS         SYSTEMS AND
                                                        AND           COMMUNICATIONS
                                                     SERVICES                                  TOTAL
                                                  ---------------    ----------------    ----------------
                                                                      (IN THOUSANDS)

Balance as of January 1, 2007                     $       186,460    $        199,466    $        385,926
Purchase price adjustments                                    333                   2                 335
Reclassification from other intangibles based on
 final purchase price allocation                            7,410               1,208               8,618
                                                  ---------------    ----------------    ----------------
Balance as of September 29, 2007                  $       194,203    $        200,676    $        394,879
                                                  ===============    ================    ================


     Summarized below are other intangible assets:


                                                   SEPTEMBER 29,       DECEMBER 31,            LIFE
                                                       2007                2006
                                                  ----------------   ----------------     ---------------
                                                                      (IN THOUSANDS)
Other intangible assets subject to amortization:
 Capitalized non-compete agreements related to
  acquisitions                                    $         2,738    $          2,738        1-5 years
 Purchased technologies related to acquisitions            27,213              28,083       8-25 years
 Customer contracts and relationships related to
  acquisitions                                             81,422              87,186       6-20 years
 Trade name related to acquisitions                         5,498               8,464       3-10 years
                                                  ----------------   ----------------
                                                          116,871             126,471
   Less accumulated amortization                          (30,808)            (23,095)
                                                  ----------------   ----------------
                                                  $        86,063    $        103,376
Other intangible assets not subject to
 amortization:
  Trade name related to acquisitions                          400                 400
                                                  ----------------   ----------------
                                                  $        86,463    $        103,776
                                                  ================   ================
</TABLE>

     The amortization  expense for the three months ended September 29, 2007 and
September 30, 2006 amounted to $2.6 million and $1.7 million,  respectively. The
amortization  expense for the nine months ended September 29, 2007 and September
30,  2006  amounted  to $7.7  million  and  $5.1  million,  respectively.  Total
remaining  amortization  expense for 2007, 2008, 2009, 2010, 2011 and thereafter
related to these other intangible  assets is estimated to be $2.6 million,  $9.6
million,   $9.4  million,   $8.7  million,   $7.0  million  and  $48.8  million,
respectively.

     For the three  and nine  months  ended  September  30,  2006,  the  Company
incurred an impairment  charge of approximately  $1.5 million related to certain
other  intangible  assets  associated with the Company's rugged computer product
line. As sales and orders were not materializing to expected levels, the Company
tested for impairment and it was determined  that the future  undiscounted  cash
flows  associated with these assets were  insufficient to recover their carrying
values.  These  assets were written down to zero,  which was  determined  on the
basis of future discounted cash flows.

(6) INVENTORIES

     Inventories are summarized by major classification as follows:

                                          SEPTEMBER 29,      DECEMBER 31,
                                              2007              2006
                                          -------------     -------------
                                                   (IN THOUSANDS)

Raw material and supplies                 $      34,890     $      14,881
Work-in-process                                  47,804            52,742
Finished goods                                   39,143            15,045
  Less: Unliquidated progress payments           (3,113)          (26,413)
                                          -------------     -------------
                                          $     118,724     $      56,255
                                          =============     =============

                                       9
<PAGE>

(7) INCOME TAXES

     The Company  adopted  FASB  Interpretation  48 ("FIN 48"),  Accounting  for
Uncertainty  in Income  Taxes,  at the  beginning  of fiscal  year 2007.  FIN 48
creates a single model to address  accounting for  uncertainty in tax positions.
FIN 48 clarifies  the  accounting  for income  taxes,  by  prescribing a minimum
recognition threshold a tax position is required to meet before being recognized
in the financial  statements.  FIN 48 also provides guidance on  de-recognition,
measurement,  classification,  interest  and  penalties,  accounting  in interim
periods,  disclosure  and  transition.  As a result of the  implementation,  the
Company  recognized a $2.5 million net  increase to reserves for  uncertain  tax
positions.  This  increase was  accounted  for as an adjustment to the beginning
balance of retained earnings on the balance sheet.

     As of September 29, 2007,  the Company had  approximately  $12.5 million of
total gross unrecognized tax benefits. Of this total, approximately $5.1 million
represents  the amount of net  unrecognized  tax benefits  that, if  recognized,
would favorably affect the effective income tax rate in any future periods.  For
the three months ended  September 29, 2007, the gross  unrecognized  tax benefit
decreased by $2.5 million.  This decrease  resulted from  favorable  settlements
with taxing  authorities and the expiration of the statute of limitations net of
increases  related to  unrecognized  tax benefits  resulting  from tax positions
taken  during the current  period.  The net  favorable  effect to the  effective
income tax rate was $2.3 million.  For the nine months ended September 29, 2007,
the gross unrecognized tax benefit decreased by $3.0 million.  The net favorable
effect to the effective income tax rate was $2.6 million.

     The Company is subject to U.S.  federal income tax as well as income tax of
multiple state jurisdictions.  The Company has substantially  concluded all U.S.
federal  income tax matters for years through 2003,  except as it relates to the
Company's  amended return for 2002 claiming a federal  research and  development
credit which is  currently  under audit.  Substantially  all material  state and
local matters have been  concluded  for years  through  2003.  In addition,  the
Company is subject to income tax in various foreign  jurisdictions.  The Company
has  substantially  concluded all material tax matters in foreign  jurisdictions
for years through 2004.

     While it is reasonably  possible that a reduction in the  unrecognized  tax
benefit may occur,  based on audit  process  protocol  from the  various  taxing
authorities,  it is not  possible to  estimate  the impact of any amount of such
changes that may occur within the next twelve months.

     The Company's continuing practice is to recognize interest and/or penalties
related  to income  tax  matters in income tax  expense.  The  Company  had $4.0
million  accrued for interest and  penalties as of September  29, 2007.  For the
three  months  ended  September  29,  2007,  the gross  interest  and  penalties
decreased  by $2.2  million as a result of  favorable  settlements  with  taxing
authorities  and the expiration of the statue of  limitations  net of additional
accrued  interest and penalties.  For the three months ended September 29, 2007,
the net favorable effect to the effective income tax rate was $1.5 million.  For
the nine months ended  September  29,  2007,  the gross  interest and  penalties
decreased by $1.6 million. For the nine months ended September 29, 2007, the net
favorable effect to the effective income tax rate was $1.1 million.

(8) EARNINGS PER SHARE

     The  following  table  sets  forth the  computation  of basic  and  diluted
earnings per share:
<TABLE>
<CAPTION>
<S>                                          <C>                <C>                 <C>                 <C>
                                                 FOR THE THREE MONTHS ENDED            FOR THE NINE MONTHS ENDED
                                             ---------------------------------------------------------------------------
                                              SEPTEMBER 29,       SEPTEMBER 30,       SEPTEMBER 29,       SEPTEMBER 30,
                                                  2007                2006                2007                2006
                                             ---------------    ----------------    ----------------    ----------------
                                                                           (IN THOUSANDS)
Numerator:
 Earnings for basic calculation              $        11,198    $          2,065    $         22,898    $          7,397
 Effect of dilutive securities:
   Convertible Notes                                   1,187                  --               3,562                  --
                                             ---------------    ----------------    ----------------    ----------------
 Numerator for diluted calculation           $        12,385    $          2,065    $         26,460    $          7,397
                                             ===============    ================    ================    ================

Denominator:
 Denominator for basic calculation                    18,771              18,205              18,657              18,105
 Effect of dilutive securities:
  Stock based awards                                     781                 393                 635                 458
   Convertible Notes                                   5,886                  --               5,886                  --
                                             ---------------    ----------------    ----------------    ----------------
 Denominator for diluted calculation                  25,438              18,598              25,178              18,563
                                             ===============    ================    ================    ================
</TABLE>

                                       10
<PAGE>

     The assumed  conversion of the Convertible Notes was dilutive for the three
and nine months ended September 29, 2007 and  anti-dilutive for the three months
and nine months ended September 30, 2006.

     The following  table  summarizes,  for each year  presented,  the number of
shares  excluded from the  computation of diluted  earnings per share,  as their
effect upon potential issuance was anti-dilutive:

                                         FOR THE NINE MONTHS ENDED
                                       SEPTEMBER 29,    SEPTEMBER 30,
                                          2007              2006
                                       -------------    -------------
                                               (IN THOUSANDS)

Convertible Subordinated Notes                    --            5,886
Unexercised stock options                         --              399
                                       -------------    -------------
                                                  --            6,285
                                       =============    =============

(9) DEFINED BENEFIT PLAN

     The Company maintains a qualified  noncontributory  defined benefit pension
plan covering  approximately  twenty five percent of its employees.  In November
2002, the plan was amended whereby  benefits  accrued under the plan were frozen
as of  December  31,  2002.  The  Company's  funding  policy  is to make  annual
contributions to the extent such  contributions  are actuarially  determined and
tax  deductible.  For the three and nine months ended  September  29, 2007,  the
Company  contributed  $9.2  million to the plan.  For the three and nine  months
ended September 30, 2006, the Company contributed $6.0 million to the plan.

     For the three months ended  September 29, 2007 and September 30, 2006,  the
Company recorded pension expense of $0.6 million and $1.2 million, respectively.
For the nine months ended September 29, 2007 and September 30, 2006, the Company
recorded  pension  expense  of $2.2  million  and  $3.6  million,  respectively.
Summarized below are the components of the expense for each period presented:
<TABLE>
<CAPTION>
<S>                                    <C>              <C>             <C>             <C>
                                         FOR THE THREE MONTHS ENDED       FOR THE NINE MONTHS ENDED
                                       ------------------------------   -----------------------------
                                       SEPTEMBER 29,    SEPTEMBER 30,   SEPTEMBER 29,   SEPTEMBER 30,
                                           2007             2006            2007            2006
                                       -------------    -------------   -----------------------------
                                                                  (IN THOUSANDS)

Interest cost                          $       3,078    $       3,038   $       9,234   $       9,115
Expected return on plan assets                (3,544)          (3,209)        (10,230)         (9,628)
Amortization of unrecognized net loss          1,076            1,365           3,229           4,095
                                       -------------    -------------   -------------   -------------
                                       $         610    $       1,194   $       2,233   $       3,582
                                       =============    =============   =============   =============
</TABLE>

(10) EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST

     The Company sponsors an employee stock ownership plan (ESOP) which provides
retirement  benefits  to  substantially  all  employees.  The cost  basis of the
unearned/unallocated   shares  was   initially   recorded  as  a  reduction   to
shareholders' equity. Compensation expense is recorded based on the market value
of the Company's common shares as they are  committed-to-be-released  quarterly,
as payments are made under the related indirect loan. The difference between the
market value and the cost basis of the shares was recorded as additional paid-in
capital. Dividends on unallocated shares are recorded as compensation expense.

(11)  COMPREHENSIVE INCOME

     As of September 29, 2007,  accumulated other comprehensive loss included in
shareholders'  equity in the accompanying  consolidated balance sheets primarily
represents  additional  minimum  liabilities  on benefit plans and the effect of
adopting FASB  Statement No. 158 (SFAS 158),  Employers'  Accounting for Defined
Benefit  Pension  and  Other   Postretirement   Plans,  on  December  31,  2006.
Comprehensive  income for the three  months ended  September  29, 2007 was $11.3
million  compared to  comprehensive  income for the three months ended September
30,  2006 of $2.1  million.  Comprehensive  income  for the  nine  months  ended
September 29, 2007 was $23.0 million  compared to  comprehensive  income for the
nine months ended September 30, 2006 of $7.8 million.

                                       11
<PAGE>

(12)  BUSINESS SEGMENTS

     The Company determines its operating segments based upon an analysis of its
products  and  services,  production  processes,  types of  customers,  economic
characteristics and the related regulatory environment, which is consistent with
how management operates the Company.  The Company's  operations are reflected in
two business  segments:  Engineered  Systems and Services and Electronic Systems
and  Communications.  The Engineered  Systems and Services segment addresses the
Integrated Systems and Structures,  Undersea Warfare, and Professional  Services
markets.   Primary  products  include  aircraft  armament  systems,   integrated
composite structures, mine countermeasure systems, sonar systems and components,
and  flight  line  products.   This  segment  also  includes  a  wide  range  of
professional and engineering services. The Electronic Systems and Communications
segment  includes  products  that serve the  Electronic  Warfare,  C4  (Command,
Control,  Communications and Computers)  products and systems,  and Intelligence
and Information  Warfare  markets.  Primary  products  include  electronic force
protection systems,  interference  cancellation technology,  airborne electronic
warfare systems,  electronic intelligence (ELINT) and electronic support measure
(ESM) systems,  intelligence and information  warfare  systems,  C4 products and
services, and antenna products.

         The following table sets forth net sales, operating earnings, and
earnings before income taxes for each period presented.
<TABLE>
<CAPTION>
<S>                                    <C>              <C>             <C>             <C>
                                         FOR THE THREE MONTHS ENDED      FOR THE NINE MONTHS ENDED
                                       ------------------------------   -----------------------------
                                       SEPTEMBER 29,    SEPTEMBER 30,   SEPTEMBER 29,   SEPTEMBER 30,
                                           2007             2006            2007           2006
                                       -------------    -------------   -------------   -------------
                                                                  (IN THOUSANDS)
Net Sales:
Engineered Systems & Services..........$     117,974    $      79,409   $     353,954   $     204,462
Electronic Systems & Communications....      138,808          104,984         404,264         252,038
                                       -------------    -------------   -------------   -------------
                                       $     256,782    $     184,393   $     758,218   $     456,500
                                       -------------    -------------   -------------   -------------
Operating earnings:
Engineered Systems & Services..........        7,335              646          25,902           4,069
Electronic Systems & Communications....        8,779            1,758          21,168           4,068
                                       -------------    -------------   -------------   -------------
                                              16,114            2,404          47,070           8,137
Net interest expense...................       (4,837)          (2,528)        (16,262)         (5,067)
Other, net.............................          (37)             113             (49)           (144)
                                       -------------    -------------   -------------   -------------

Earnings (loss) before income taxes....$      11,240    $         (11)  $      30,759   $       2,926
                                       =============    =============   =============   =============
</TABLE>

(13)  RECENT ACCOUNTING PRONOUNCEMENTS

     In September 2006, the Financial Accounting Standards Board ("FASB") issued
Statement No. 157, "Fair Value  Measurements"  (SFAS 157). SFAS 157 defines fair
value,  establishes  a  framework  for using fair  value to  measure  assets and
liabilities,  and expands disclosure requirements about fair value measurements.
SFAS 157 is effective for fiscal years  beginning  after  November 15, 2007, and
early  application is permitted.  SFAS 157 becomes  effective for the Company on
January 1, 2008.  The  Company  does not  believe  SFAS 157 will have a material
impact on our results from operations or financial position.

     In February  2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial  Assets and  Financial  Liabilities  - Including  an Amendment of FASB
Statement No. 115." SFAS No. 159 permits  entities to choose to measure eligible
items at fair value at specified  election dates and report unrealized gains and
losses on items for which the fair value  option has been elected in earnings at
each  subsequent  reporting  date.  SFAS No. 159 is  effective  for fiscal years
beginning  after  November 15, 2007.  The Company is  currently  evaluating  the
impact of adopting this Statement; however, the adoption is not expected to have
an effect on EDO's consolidated results of operations or financial position.

(14)  GUARANTOR AND NON-GUARANTOR SUBSIDIARIES

     The Company  may,  from time to time,  issue  indebtedness,  a condition of
which  would  be  the  guarantee  of  this   indebtedness   by  certain  of  its
subsidiaries.  Presented below is condensed  consolidating financial information
for the Company and the contemplated subsidiary guarantors and non-guarantors at
September  29,  2007 and  December  31,  2006 and for the three  and nine  month
periods  ended  September 29, 2007 and  September  30, 2006.  Each  contemplated
subsidiary guarantor is 100% owned, directly or indirectly,  by the Company. Any
guarantees that may be issued will be full and  unconditional,  as well as joint
and several.  In connection  with the  Company's  credit  facility,  the Company
cannot declare or pay any dividend on its outstanding  common stock in an amount
that exceeds fifty percent of its  consolidated  net income for the  immediately
preceding four quarters.

                                       12
<PAGE>
<TABLE>
<CAPTION>
<S>                                         <C>            <C>            <C>            <C>            <C>
EDO CORPORATION
CONDENSED CONSOLIDATING BALANCE SHEET
SEPTEMBER 29, 2007
(IN THOUSANDS)
(UNAUDITED)

                                              EDO
                                          Corporation
                                             Parent       Subsidiary
                                          Company Only    Guarantors   Non-Guarantors  Eliminations   Consolidated
                                        ----------------------------------------------------------------------------
ASSETS
Current assets:
Cash and cash equivalents                   $     1,409    $     (3641)   $     5,650    $        --    $     3,418
Accounts receivable, net                         48,747        179,886          4,483             --        233,116
Inventories                                      12,203        102,367          4,154             --        118,724
Deferred income tax asset, net                   12,159             --             --             --         12,159
Prepayments and other                             5,100          4,020            322             --          9,442
                                        ----------------------------------------------------------------------------
Total current assets                             79,618        282,632         14,609             --        376,859

Investment in subsidiaries                      658,009             --             --       (658,009)            --
Property, plant and equipment, net               29,298         27,814          3,387             --         60,499
Goodwill                                             --        386,169          8,710             --        394,879
Other intangible assets, net                         --         77,854          8,609             --         86,463
Deferred income tax asset, net                   16,295             --             --             --         16,295
Other assets                                     16,209          2,326             --             --         18,535
                                        ----------------------------------------------------------------------------
                                            $   799,429        776,795         35,315       (658,009)       953,530
                                        ----------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities    $    22,203    $   118,477    $     6,142    $        --    $   146,822
Contract advances and deposits                   20,398         28,608             --             --         49,006
Postretirement benefits obligation,
 short-term                                       2,512             --             --             --          2,512
Short-term borrowing under revolver             144,000             --             --             --        144,000
Notes payable                                     7,766             --             --             --          7,766
                                        ----------------------------------------------------------------------------
Total current liabilities                       196,879        147,085          6,142             --        350,106

Income taxes payable                             14,333             --             --             --         14,333
Notes payable, long-term                          8,766             --             --             --          8,766
Deferred income taxes                              (438)            --            438             --             --
Long-term debt                                  201,250             --             --             --        201,250
Postretirement benefits obligation,
 long-term                                       67,232             --             --             --         67,232
Environmental obligation                          1,187             --             --             --          1,187
Other long-term liabilities                          29             --             --             --             29
Intercompany accounts                                --        464,808         20,667       (485,475)            --
Shareholders' equity:
Preferred shares                                     --             --             --             --             --
Common shares                                    21,452             98             --            (98)        21,452
Additional paid-in capital                      191,134         60,152          6,418        (66,570)       191,134
Retained earnings                               148,131        108,703          1,214       (109,917)       148,131
Accumulated other comprehensive (loss)
 income, net of income tax benefit              (35,524)            --            436             --        (35,088)
Treasury shares                                  (2,444)        (4,051)            --          4,051         (2,444)
Unearned ESOP shares                            (12,558)            --             --             --        (12,558)
                                        ----------------------------------------------------------------------------
Total shareholders' equity                      310,191        164,902          8,068       (172,534)       310,627
                                        ----------------------------------------------------------------------------
                                            $   799,429    $   776,795    $    35,315    $  (658,009)   $   953,530
                                        ============================================================================
</TABLE>

                                       13
<PAGE>
<TABLE>
<CAPTION>
<S>                                     <C>           <C>            <C>            <C>            <C>
EDO CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF
EARNINGS FOR THE THREE MONTHS ENDED
SEPTEMBER 29, 2007
(IN THOUSANDS)
(UNAUDITED)

                                            EDO
                                        Corporation
                                          Parent
                                         Company     Subsidiary
                                            Only     Guarantors   Non-Guarantors  Eliminations   Consolidated
                                        -----------------------------------------------------------------------
Net Sales                               $   55,284    $   198,059    $     8,676    $    (5,237)   $   256,782
                                        -----------------------------------------------------------------------
Costs and expenses:
Cost of sales                               44,220        155,648          5,378         (5,237)       200,009
Selling, general and administrative          4,833         28,910          1,998             --         35,741
Research and development                       932          1,922             53             --          2,907
Acquisition-related costs                       --          2,011             --             --          2,011
                                        -----------------------------------------------------------------------
                                            49,985        188,491          7,429         (5,237)       240,668
Operating earnings                           5,299          9,568          1,247             --         16,114

Non-operating income (expense):
Interest income                                 54             60             66             --            180
Interest expense                            (5,010)            --             (7)            --         (5,017)
Other, net                                     (82)            45             --             --            (37)
                                        -----------------------------------------------------------------------
                                            (5,038)           105             59             --         (4,874)
Earnings before income taxes                   261          9,673          1,306             --         11,240
Income tax benefit (expense)                 5,160         (4,785)          (417)            --            (42)
                                        -----------------------------------------------------------------------
Earnings after income taxes                  5,421          4,888            889             --         11,198
Equity in undistributed earnings of
 subsidiaries                                5,777             --             --         (5,777)            --
                                        -----------------------------------------------------------------------
Net earnings                            $   11,198    $     4,888    $       889    $    (5,777)   $    11,198
                                        =======================================================================


EDO CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF
EARNINGS FOR THE NINE MONTHS ENDED
SEPTEMBER 29, 2007
(IN THOUSANDS)
(UNAUDITED)

                                            EDO
                                        Corporation
                                           Parent     Subsidiary
                                        Company Only  Guarantors    Non-Guarantors    Eliminations  Consolidated
                                        ------------------------------------------------------------------------

Net Sales                               $   166,772   $   576,227    $    24,651     $    (9,432)   $  758,218
                                        ------------------------------------------------------------------------

Costs and expenses:
Cost of sales                               132,874       452,412         16,475          (9,432)      592,329
Selling, general and administrative          13,619        85,948          5,501              --       105,068
Research and development                      2,231         5,032            174              --         7,437
Acquisition-related costs                        --         6,314             --              --         6,314
                                        ------------------------------------------------------------------------
                                            148,724       549,706         22,150          (9,432)      711,148
Operating earnings                           18,048        26,521          2,501              --        47,070

Non-operating income (expense):
Interest income                                 173           184            174              --           531
Interest expense                            (16,748)          (38)            (7)             --       (16,793)
Other, net                                     (245)          126             70              --           (49)
                                        ------------------------------------------------------------------------
                                            (16,820)          272            237              --       (16,311)
Earnings before income taxes                  1,228        26,793          2,738              --        30,759
Income tax benefit (expense)                  5,549       (12,392)        (1,018)             --        (7,861)
                                        ------------------------------------------------------------------------
Earnings after income taxes                   6,777        14,401          1,720              --        22,898
Equity in undistributed earnings of
 subsidiaries                                16,121            --             --         (16,121)           --
                                        ------------------------------------------------------------------------
Net earnings                            $    22,898   $    14,401    $     1,720     $   (16,121)   $   22,898
                                        ========================================================================
</TABLE>

                                       14
<PAGE>
<TABLE>
<CAPTION>
<S>                                               <C>           <C>             <C>           <C>            <C>
EDO CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED
SEPTEMBER 29, 2007
(IN THOUSANDS)
(UNAUDITED)

                                                       EDO
                                                   Corporation
                                                      Parent       Subsidiary
                                                   Company Only    Guarantors   Non-GuarantorsEliminations Consolidated
                                                  ----------------------------------------------------------------------
OPERATING ACTIVITIES:
Earnings from operations                          $    22,898   $    14,401     $    1,720    $   (16,121)   $   22,898
Adjustments to earnings to arrive at cash (used)
 provided by operations:
Depreciation                                            3,915         6,153            626             --        10,694
Amortization                                               --         7,140            573             --         7,713
Bad debt expense                                            7            47             --             --            54
Deferred tax provision                                    880            --             --             --           880
Loss on sale of property, plant and equipment               8           154             --             --           162
Long-term Incentive Plan compensation expense           5,184            --             --             --         5,184
Stock option compensation expense                         970            --             --             --           970
Employee Stock Ownership Plan compensation expense      4,209            --             --             --         4,209
Dividends on unallocated Employee Stock Ownership
 Plan shares                                              156            --             --             --           156
Common shares issued for directors' fees                  159            --             --             --           159
Changes in operating assets and liabilities,
 excluding effects of acquisitions:
Equity in earnings of subsidiaries                    (16,121)           --             --         16,121            --
Intercompany                                           39,402       (38,818)          (584)            --            --
Accounts receivable                                      (513)       32,258            383             --        32,128
Inventories                                            (1,387)      (60,347)          (735)            --       (62,469)
Prepayments and other assets                           13,400         1,060            (16)            --        14,444
Accounts payable, accrued liabilities and other       (30,369)       35,006          1,606             --         6,243
Contribution to defined benefit pension plan           (9,200)           --             --             --        (9,200)
Contract advances and deposits                          6,817        (2,134)            --             --         4,683
                                                  ----------------------------------------------------------------------
Cash (used) provided by operations                     40,415        (5,080)         3,573             --        38,908
                                                  ----------------------------------------------------------------------

INVESTING ACTIVITIES:
Purchase of property, plant and equipment              (5,745)       (6,149)          (352)            --       (12,246)
Cash paid for acquisitions, net of cash acquired       (9,327)           --             --             --        (9,327)
                                                  ----------------------------------------------------------------------
Cash used by investing activities                     (15,072)       (6,149)          (352)            --       (21,573)
                                                  ----------------------------------------------------------------------

FINANCING ACTIVITIES:
Proceeds from exercise of stock options                 3,029            --             --             --         3,029
Excess income tax benefit from stock options and
 Long-term Incentive Plan                               1,408            --             --             --         1,408
Short-term borrowings under revolver                   80,000            --             --             --        80,000
Repayment of revolving debt                          (116,000)           --             --             --      (116,000)
Payment of short-term notes                            (5,767)           --             --             --        (5,767)
Payment of common share cash dividends                 (1,909)           --             --             --        (1,909)
                                                  ----------------------------------------------------------------------
Cash used by financing activities                     (39,239)           --             --             --       (39,239)
                                                  ----------------------------------------------------------------------
Net (decrease) increase in cash and cash
 equivalents                                          (13,896)      (11,229)         3,221             --       (21,904)
Cash and cash equivalents at beginning of period       15,305         7,588          2,429             --        25,322
                                                  ----------------------------------------------------------------------
Cash and cash equivalents at end of period        $     1,409   $    (3,641)    $    5,650    $        --    $    3,418
                                                  ======================================================================
</TABLE>

                                       15
<PAGE>
<TABLE>
<CAPTION>
<S>                                               <C>                <C>            <C>                           <C>
EDO CORPORATION
CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2006
(IN THOUSANDS)

                                                        EDO
                                                    Corporation
                                                       Parent       Subsidiary
                                                    Company Only    Guarantors   Non-Guarantors  Eliminations   Consolidated
                                                  ----------------------------------------------------------------------------
ASSETS
Current assets:
Cash and cash equivalents                         $        15,305    $     7,588    $     2,429             --    $    25,322
Accounts receivable, net                                   48,241        212,191          4,866             --        265,298
Inventories                                                10,816         42,020          3,419             --         56,255
Deferred income tax asset, net                             12,160             --             --             --         12,160
Prepayments and other                                      10,312          3,064            306             --         13,682
                                                  ----------------------------------------------------------------------------
Total current assets                                       96,834        264,863         11,020             --        372,717

Investment in subsidiaries                                678,997             --             --       (678,997)            --
Property, plant and equipment, net                         27,476         27,974          3,659             --         59,109
Goodwill                                                       --        377,216          8,710             --        385,926
Other intangible assets, net                                   --         94,594          9,182             --        103,776
Deferred income tax asset, net                              8,291             --             --             --          8,291
Other assets                                               17,387          2,616             --             --         20,003
                                                  ----------------------------------------------------------------------------
                                                  $       828,985    $   767,263    $    32,571    $  (678,997)   $   949,822
                                                  ----------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities          $        52,769    $    84,685    $     4,660             --    $   142,114
Contract advances and deposits                             13,581         30,742             --             --         44,323
Postretirement benefits obligation, short-term              1,794             --             --             --          1,794
Short-term borrowing under revolver                       180,000             --             --             --        180,000
Notes payable                                               7,766             --             --             --          7,766
                                                  ----------------------------------------------------------------------------
Total current liabilities                                 255,910        115,427          4,660             --        375,997

Income taxes payable                                        4,154             --             --             --          4,154
Notes payable                                              14,533             --             --             --         14,533
Deferred income tax                                          (427)            --            427             --             --
Long-term debt                                            201,250             --             --             --        201,250
Postretirement benefits obligation                         77,734             --             --             --         77,734
Environmental obligation                                    1,198             --             --             --          1,198
Other long-term liabilities                                    40             --             --             --             40
Inter-company accounts                                         --        501,335         21,249       (522,584)            --
Shareholders' equity:
Preferred shares                                               --             --             --             --             --
Common shares                                              21,177             98             --            (98)        21,177
Additional paid-in capital                                177,117         60,403          6,418        (66,821)       177,117
Retained earnings                                         129,444         94,052           (506)       (93,546)       129,444
Accumulated other comprehensive loss, net of
 income tax benefit                                       (37,642)            --            323             --        (37,319)
Treasury shares                                            (1,966)        (4,052)            --          4,052         (1,966)
Unearned Employee Stock Ownership Plan shares             (13,537)            --             --             --        (13,537)
                                                  ----------------------------------------------------------------------------
Total shareholders' equity                                274,593        150,501          6,235       (156,413)       274,916
                                                  ----------------------------------------------------------------------------
                                                  $       828,985    $   767,263    $    32,571    $  (678,997)   $   949,822
                                                  ============================================================================
</TABLE>

                                       16
<PAGE>
<TABLE>
<CAPTION>
<S>                                               <C>           <C>                 <C>           <C>           <C>
EDO CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF
EARNINGS FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 2006
(IN THOUSANDS)
(UNAUDITED)

                                                      EDO
                                                  Corporation
                                                    Parent
                                                   Company     Subsidiary
                                                      Only     Guarantors   Non-Guarantors   Eliminations   Consolidated
                                                  -----------------------------------------------------------------------
Net Sales                                         $   53,878    $   126,808  $       6,687    $    (2,980)  $    184,393
                                                  -----------------------------------------------------------------------
Costs and expenses:
Cost of sales                                         43,901         99,740          3,925         (2,980)       144,586
Selling, general and administrative                    7,513         20,658          2,036             --         30,207
Research and development                               1,076          3,446            179             --          4,701
Acquisition-related costs                                 --          1,008             --             --          1,008
Impairment loss on other intangible assets                --             --          1,487             --          1,487
                                                  -----------------------------------------------------------------------
                                                      52,490        124,852          7,627         (2,980)       181,989
Operating earnings (loss)                              1,388          1,956           (940)            --          2,404

Non-operating income (expense):
Interest income                                          918            103             75             --          1,096
Interest expense                                      (3,590)           (34)            --             --         (3,624)
Other, net                                                (1)           167            (53)            --            113
                                                  -----------------------------------------------------------------------
                                                      (2,673)           236             22             --         (2,415)
(Loss) earnings before income taxes                   (1,285)         2,192           (918)            --            (11)
Income tax benefit (expense)                           4,066         (1,723)          (267)            --          2,076
                                                  -----------------------------------------------------------------------
Earnings (loss) after income taxes                     2,781            469         (1,185)            --          2,065
Equity in undistributed earnings of subsidiaries        (716)            --             --            716             --
                                                  -----------------------------------------------------------------------
Net earnings (loss)                               $    2,065    $       469  $      (1,185)   $      716    $     2,065
                                                  =======================================================================


                                                   EDO
                                               Corporation
                                                  Parent       Subsidiary
                                               Company Only    Guarantors   Non-Guarantors Eliminations  Consolidated
                                             -------------------------------------------------------------------------
Net Sales                                    $       151,218  $     294,779   $     19,098   $   (8,595)  $   456,500
                                             -------------------------------------------------------------------------
Costs and expenses:
Cost of sales                                        125,091        226,766         12,225       (8,595)      355,487
Selling, general and administrative                   17,206         55,169          6,646           --        79,021
Research and development                               2,891          7,565            457           --        10,913
Acquisition-related costs                                 --          1,455             --           --         1,455
Impairment loss on other intangible assets                --             --          1,487           --         1,487
                                             -------------------------------------------------------------------------
                                                     145,188        290,955         20,815       (8,595)      448,363
Operating earnings (loss)                              6,030          3,824         (1,717)          --         8,137

Non-operating income (expense):
Interest income                                        2,933            103            182           --         3,218
Interest expense                                      (8,285)            --             --           --        (8,285)
Other, net                                               (23)            15           (136)          --          (144)
                                             -------------------------------------------------------------------------
                                                      (5,375)           118             46           --        (5,211)
Earnings (loss) before income taxes                      655          3,942         (1,671)          --         2,926
Income tax benefit (expense)                           8,610         (3,940)          (199)          --         4,471
                                             -------------------------------------------------------------------------
Earnings (loss) after income taxes                     9,265              2         (1,870)          --         7,397
Equity in undistributed earnings of
 subsidiaries                                         (1,868)            --             --        1,868            --
                                             -------------------------------------------------------------------------
Net earnings (loss)                          $         7,397  $           2   $     (1,870)  $    1,868   $     7,397
                                             =========================================================================
</TABLE>

                                       17
<PAGE>
<TABLE>
<CAPTION>
<S>                                          <C>               <C>          <C>            <C>          <C>
EDO CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF
EARNINGS FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 2006
(IN THOUSANDS)
(UNAUDITED)

                                                   EDO
                                               Corporation
                                                  Parent      Subsidiary
                                               Company Only   Guarantors  Non-Guarantors  Eliminations  Consolidated
                                             -------------------------------------------------------------------------
OPERATING ACTIVITIES:
Earnings (loss) from operations              $         7,397   $        2   $     (1,870)  $     1,868  $      7,397
Adjustments to earnings (loss) to arrive at
 cash (used) provided by operations:
Depreciation                                           3,722        4,454            689            --         8,865
Amortization                                              --        4,370            751            --         5,121
Impairment loss on other intangible assets                --           --          1,487            --         1,487
Bad (recovery) debt expense                              (75)          69             --            --            (6)
Deferred tax provision                                (2,591)       2,606             --            --            15
Loss (gain) on sale of property, plant and
 equipment                                                15          (74)            --            --           (59)
Long-term Incentive Plan compensation expense          2,261           --             --            --         2,261
Stock option compensation expense                        838           --             --            --           838
Employee Stock Ownership Plan compensation
 expense                                               3,310           --             --            --         3,310
Dividends on unallocated Employee Stock
 Ownership Plan shares                                   172           --             --            --           172
Common shares issued for directors' fees                 162           --             --            --           162
Changes in operating assets and liabilities,
 excluding effects of acquisitions:
Equity in earnings of subsidiaries                     1,868           --             --        (1,868)           --
Intercompany                                         (36,188)      36,053            135            --            --
Accounts receivable                                   16,110        7,079           (124)           --        23,065
Inventories                                            6,300      (17,744)          (892)           --       (12,336)
Prepayments and other assets                           8,454       (6,831)             7            --         1,630
Accounts payable, accrued liabilities and
 other                                               (18,561)      (6,285)         1,015            --       (23,831)
Contribution to defined benefit pension plan          (6,000)          --             --            --        (6,000)
Contract advances and deposits                         9,885       (8,691)            --            --         1,194
                                             -------------------------------------------------------------------------
Cash (used) provided by operations                    (2,921)      15,008          1,198            --        13,285
                                             -------------------------------------------------------------------------

INVESTING ACTIVITIES:
Purchase of property, plant and equipment             (5,221)      (8,048)          (947)           --       (14,216)
Payments received on notes receivable                    100           --             --            --           100
Proceeds from sale of property, plant and
 equipment                                                --          633             --            --           633
Cash paid for acquisitions, net of cash
 acquired                                           (265,318)          --             --            --      (265,318)
                                             -------------------------------------------------------------------------
Cash used by investing activities                   (270,439)      (7,415)          (947)           --      (278,801)
                                             -------------------------------------------------------------------------

FINANCING ACTIVITIES:
Proceeds from exercise of stock options                  842           10             --            --           852
Excess income tax benefit from stock options
 and Long-term Incentive Plan                            429           --             --            --           429
Proceeds from management group receivables               140           --             --            --           140
Short-term borrowings under revolver                 200,000           --             --            --       200,000
Payment of common share cash dividends                (1,830)          --             --            --        (1,830)
                                             -------------------------------------------------------------------------
Cash provided by financing activities                199,581           10             --            --       199,591
                                             -------------------------------------------------------------------------
Net (decrease) increase in cash and cash
 equivalents                                         (73,779)       7,603            251            --       (65,925)
Cash and cash equivalents at beginning of
 period                                               99,067        4,232          5,432            --       108,731
                                             -------------------------------------------------------------------------
Cash and cash equivalents at end of period   $        25,288   $   11,835   $      5,683   $        --  $     42,806
                                             =========================================================================
</TABLE>

                                       18
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

INTRODUCTION

     EDO Corporation (the "Company") designs and manufactures a diverse range of
products with core  competencies  in critical  defense  areas.  We are a leading
supplier of sophisticated,  highly engineered  products and systems for defense,
aerospace and  intelligence  applications.  We believe our advanced  systems are
mission-critical  on a wide range of  military  programs  and are at the core of
transforming defense  capabilities.  We have two reporting segments:  Engineered
Systems and Services and Electronic Systems and  Communications.  Our Engineered
Systems and Services segment comprises of aircraft armament systems,  integrated
composite   structures,   undersea  warfare  sonar  systems,   and  professional
engineering services. Our Electronic Systems and Communications segment provides
highly-engineered  electronic systems and equipment including electronic warfare
systems,   reconnaissance  and  surveillance  systems,  and  command,   control,
communications,  and  computers  (C4)  products and  systems.  The Company has a
disciplined  acquisition  program  which  is  diversifying  its  base  of  major
platforms and customers.

     The Company's Annual Report on Form 10-K,  quarterly  reports on Form 10-Q,
current  reports on Form 8-K and all amendments to those reports,  and the Proxy
Statement for its Annual Meeting of  Shareholders  are made  available,  free of
charge, on its Web site www.edocorp.com, as soon as reasonably practicable after
such reports have been filed with or  furnished to the  Securities  and Exchange
Commission.

Additional Information and Where to Find It

     On September 17, EDO announced that it has entered into a definitive merger
agreement  with ITT  Corporation,  pursuant to which ITT will acquire all of the
outstanding shares of EDO for $56.00 per share in cash.

     In connection with the proposed merger, EDO filed with the SEC a definitive
proxy statement and other relevant materials on November 5, 2007. The definitive
proxy  statement will be mailed to EDO's  shareholders of record at the close of
business  on November  2, 2007,  the record date for the special  meeting of our
shareholders  to consider and vote on a proposal to approve and adopt the merger
agreement.  EDO's  shareholders are urged to read the definitive proxy statement
and other  relevant  materials  carefully  because they will  contain  important
information about EDO and the merger.

     Shareholders, investors and other interested parties may obtain a free copy
of the definitive  proxy  statement and any other relevant  documents (when they
become  available)  that  EDO  files  with  the  SEC at the  SEC's  web  site at
www.sec.gov. The definitive proxy statement and any other relevant documents may
also be  accessed  at  www.edocorp.com  or  obtained  free from the  Company  by
directing a request to EDO  Corporation,  60 East 42nd Street,  42nd Floor,  New
York, NY 10165, Attn: Investor Relations.

DISCUSSION OF CRITICAL ACCOUNTING POLICIES

     We make estimates and  assumptions in the  preparation of our  consolidated
financial statements in conformity with accounting principles generally accepted
in the United  States.  Actual  results  could differ  significantly  from those
estimates  under  different  assumptions  and  conditions.  We believe  that the
following discussion addresses our critical accounting policies, which are those
that are most important to the portrayal of our consolidated financial condition
and results of operations  and which require our most  difficult and  subjective
judgments,  often as a result of the need to make estimates  about the effect of
matters  that  are  inherently  uncertain.  Except  for  the  treatment  of  tax
contingency  accruals,  there have been no material changes from the methodology
applied  by  management  for  critical  estimates  previously  disclosed  in the
Company's most recent Annual Report on Form 10-K. Effective January 1, 2007, the
company began to measure and record tax contingency  accruals in accordance with
FIN 48 - Accounting for Uncertainty in Income Taxes - an  Interpretation of FASB
Statement No. 109. The expanded disclosure  requirements of FIN 48 are presented
in Note 6 of this  report.  FIN 48  prescribes  a  threshold  for the  financial
statement  recognition and measurement of a tax position taken or expected to be
taken in a tax  return.  Only tax  positions  meeting  the  more-likely-than-not
recognition  threshold at the effective date may be recognized or continue to be
recognized upon adoption of this  Interpretation.  FIN 48 also provides guidance
on accounting for de-recognition, interest and penalties, and classification and
disclosure of matters related to uncertainty in income taxes. The following is a
brief discussion of the critical accounting policies employed by us:

REVENUE RECOGNITION

     Sales under long-term,  fixed-price contracts,  including pro-rata profits,
are generally  recorded based on the  relationship  of costs incurred to date to
total  projected  final  costs  or,  alternatively,   as  deliveries  and  other
milestones are achieved or services are provided.  These projections are revised
throughout  the lives of the contracts.  Adjustments  to profits  resulting from
such revisions are made  cumulative to the date of change and may affect current
period  earnings.  Sales on other than long-term  contract  orders  (principally
commercial  products)  are recorded as shipments  are made.  Our gross profit is
affected by a variety of factors,  including  the mix of  products,  systems and
services sold production  efficiencies,  price  competition and general economic
conditions.   Estimated   losses  on  long-term   contracts  are  recorded  when
identified.

                                       19
<PAGE>
INVENTORIES

     Inventories under long-term  contracts and programs reflect all accumulated
production costs, including factory overhead,  initial tooling and other related
costs (including general and administrative  expenses relating to certain of our
defense contracts), less the portion of such costs charged to cost of sales. All
other  inventories  are  stated  at the  lower  of cost  (principally  first-in,
first-out  method) or market.  Inventory costs in excess of amounts  recoverable
under  contracts and which relate to a specific  technology or  application  and
which  may not have  alternative  uses are  charged  to cost of sales  when such
circumstances are identified.

     From time to time, we manufacture  certain products prior to receiving firm
contracts in anticipation  of future demand.  Such costs are inventoried and are
incurred to help maintain stable and efficient production schedules.

     Several  factors  may  influence  the  sale  and  use of  our  inventories,
including our decision to exit a product line, technological change, new product
development  and/or revised  estimates of future product demand. If inventory is
determined to be overvalued due to one or more of the above factors, we would be
required to recognize such loss in value at the time of such determination.

     Under the contractual arrangements by which progress payments are received,
the  United  States  Government  has a title to or a  security  interest  in the
inventories identified with related contracts.

PROPERTY, PLANT AND EQUIPMENT AND OTHER LONG-LIVED ASSETS

     Property,  plant and equipment is recorded at cost and is  depreciated on a
straight-line  basis over the estimated  useful lives of such assets.  Leasehold
improvements  are amortized over the shorter of their estimated  useful lives or
their respective lease periods.

     In those cases where we determine  that the useful life of property,  plant
and equipment should be shortened, we depreciate the net book value in excess of
salvage  value  over  its  revised  remaining  useful  life  thereby  increasing
depreciation  expense.  Factors such as technological  advances,  changes to our
business model,  changes in our capital strategy,  changes in the planned use of
equipment,  fixtures, software or changes in the planned use of facilities could
result in shortened useful lives.  Long-lived assets,  other than goodwill,  are
reviewed  by us for  impairment  whenever  events or  changes  in  circumstances
indicate that the carrying amount of any such asset may not be recoverable.  The
estimate of cash flow, which is used to determine recoverability, is based upon,
among other things, certain assumptions about future operating performance.

     Our  estimates of  undiscounted  cash flow may differ from actual cash flow
due to such factors including  technological  advances,  changes to our business
model, or changes in our capital  strategy or planned use of long-lived  assets.
If the sum of the undiscounted cash flows,  excluding interest, is less than the
carrying value, we would recognize an impairment loss, measured as the amount by
which the carrying value exceeds the fair value of the asset.

     In accordance with SFAS No. 142,  goodwill must be tested at least annually
for  impairment  at the  reporting  unit level.  If an  indication of impairment
exists,  we are required to determine if such  goodwill's  implied fair value is
less than the unit carrying  value in order to determine the amount,  if any, of
the  impairment  loss required to be recorded.  Impairment  indicators  include,
among other conditions,  cash flow deficits,  an historic or anticipated decline
in revenue or  operating  profits,  adverse  legal or  regulatory  developments,
accumulation of costs  significantly in excess of amounts originally expected to
acquire the asset and/or a material decrease in the fair value of some or all of
the assets.

     To determine  the fair value of our  reporting  units,  we generally  use a
present value technique  (discounted cash flow) corroborated by market multiples
when  available  and  as  appropriate,  for  all  of the  reporting  units.  The
discounted  cash  flow  method  measures  intrinsic  value  by  reference  to an
enterprise's  or an asset's  expected annual free cash flows. We applied what we
believe  to be the  most  appropriate  valuation  methodology  for  each  of the
reporting  units.  If we had established  different  reporting units or utilized
different valuation methodologies, the impairment test results could differ.

PENSION AND POST-RETIREMENT BENEFITS OBLIGATIONS

     We sponsor defined benefit  pension and other  retirement  plans in various
forms covering all eligible  employees.  Several  statistical  and other factors
which attempt to anticipate  future events are used in  calculating  the expense
and liability related to the plans. These factors include  assumptions about the
discount rate and expected  return on plan assets within certain  guidelines and
in  conjunction  with our  actuarial  consultants.  In addition,  our  actuarial
consultants  also use subjective  factors such as withdrawal and mortality rates
to estimate  the expense and  liability  related to these plans.  The  actuarial
assumptions   used  by  us  may  differ   significantly,   either  favorably  or
unfavorably,  from actual results due to changing market, economic or regulatory
conditions,  higher or lower withdrawal rates or longer or shorter life spans of
participants.

                                       20
<PAGE>
     We used the building block approach to the estimation of the long-term rate
of return on assets.  Under this  approach,  we reviewed the publicly  available
common  source  data for the range of returns on basic types of equity and fixed
income  instruments  and the  differential  to those  rates  provided  by active
investment  management.  In  consultation  with our  actuarial  and active asset
management consultants and taking into account the funds' actual performance and
expected  asset  allocation  going  forward,  we selected an overall return rate
within the resulting range.

RESULTS OF OPERATIONS

     The  following   information   should  be  read  in  conjunction  with  the
Consolidated Financial Statements as of September 29, 2007.
<TABLE>
<CAPTION>
<S>                                     <C>              <C>                  <C>
THREE MONTHS ENDED SEPTEMBER 29, 2007 COMPARED WITH THREE MONTHS ENDED SEPTEMBER 30, 2006

     Net sales by segment were as follows:

                                                     THREE MONTHS ENDED            INCREASE/
                                                ------------------------------     (DECREASE)
                                                SEPTEMBER 29,    SEPTEMBER 30,       FROM
SEGMENT                                             2007             2006         PRIOR PERIOD
-------                                         -----------------------------------------------
                                                             (IN THOUSANDS)

Engineered Systems & Services                   $   117,974      $      79,409        48.6%
Electronic Systems & Communications                 138,808            104,984        32.2%
                                                -----------------------------------------------
Total                                           $   256,782      $     184,393        39.3%
                                                ===============================================
</TABLE>

     In the Engineered  Systems and Services  segment,  the increase in sales is
attributable primarily to the contribution of sales of CAS which was acquired on
September 6, 2006, and higher sales on aircraft armament products. This increase
was partially  offset by lower sales in our flight-line test systems product and
various undersea warfare programs.

     In the Electronic Systems and Communications segment, the increase in sales
is attributable to deliveries associated with the Transition Switch Module (TSM)
program,  sales  contributed  by IST which was acquired on  September  15, 2006,
increased sales on our force protection systems as well as spares related to ESM
systems.

     Operating earnings by segment were as follows:

                                                     THREE MONTHS ENDED
                                                SEPTEMBER 29,    SEPTEMBER 30,
SEGMENT                                             2007             2006
                                                ------------------------------
                                                       (IN THOUSANDS)

Engineered Systems & Services                   $       7,335    $         646
Electronic Systems & Communications                     8,779            1,758
                                                ------------------------------
Total                                           $      16,114    $       2,404
                                                ==============================

     Operating earnings for the three months ended September 29, 2007 were $16.1
million or 6.3% of net sales. This compares to operating  earnings for the three
months ended September 30, 2006 of $2.4 million or 1.3% of net sales.

     Items of note  affecting  operating  earnings are  summarized  here to help
clarify the comparison of results.

                                                      THREE MONTHS ENDED
                                                SEPTEMBER 29,    SEPTEMBER 30,
                                                    2007             2006
                                                --------------------------------
                                                       (IN THOUSANDS)

Pension                                         $         610    $       1,194
ESOP Compensation expense                       $       1,725    $         975
Other intangible asset amortization             $       2,562    $       1,707
                                                ------------------------------
                                                $       4,897    $       3,876
                                                ==============================

                                       21
<PAGE>

     The decrease in pension expense in 2007 compared to 2006 is attributable to
changes in actuarial assumptions such as discount rate and return on plan assets
as well as the contributions made by the Company in 2007 for the 2006 plan year.
The higher ESOP  compensation  expense for the three months ended  September 29,
2007 is  attributable  to our higher  average stock price  compared to the three
months  ended  September  30,  2006.  The  increase  in other  intangible  asset
amortization  expense is attributable to the  acquisitions of CAS and IST in the
third quarter of 2006.

     The Engineered  Systems and Services  segment's  operating earnings for the
three  months  ended  September  29,  2007  were  $7.3  million  or 6.2% of this
segment's  net sales  compared to operating  earnings of $0.6 million or 0.8% of
this  segment's  net sales for the three months ended  September  30, 2006.  The
increase is attributable the increased sales on aircraft armament programs,  the
mix of programs in our services  division,  and the  contributions of CAS, which
was acquired on September 6, 2006.  These  increases were partially  offset by a
$3.2  million  cost growth on the ALOFTS  sonar  program and the  aforementioned
lower sales on flight line test systems.

     For the three months ended  September 30, 2006,  operating  earnings in the
Engineering  Systems and  Services  segment were  negatively  impacted by a $2.2
million cost growth on an aircraft  armament  systems program and a $0.4 million
cost growth on an undersea warfare program as well as lower margins due to lower
sales  volume of  composite  structures,  primarily  the  Joint  Air to  Surface
Standoff Missile units (JASSM) and the attendant  higher  absorption of overhead
costs. In addition,  operating earnings for Engineered Systems and Services were
impacted by a write-down of unamortized  other intangible assets of $1.5 million
related to the Company's rugged computer product line.

     The Electronic Systems and Communications  segment's operating earnings for
the three  months  ended  September  29, 2007 were $8.8  million or 6.3% of this
segment's  net sales  compared to operating  earnings of $1.8 million or 1.7% of
this  segment's net sales for the three months ended  September  30, 2006.  This
increase is mainly  attributable to sales on our TSM program,  increased sale of
our  Antenna  Products,  and  higher  sales of ESM  systems.  This  increase  is
partially  offset by unabsorbed  overhead  costs at two of our  facilities as we
prepare for increased production of force protection systems.

     For the three months ended  September 30, 2006,  operating  earnings in the
Electronic  Systems and Communications  segment were negatively  impacted by the
significantly  lower sales volume of electronic  force  protection  systems.  In
addition,  earnings were negatively  impacted by a charge of approximately  $2.1
million related to the settlement of a contract dispute during the third quarter
of 2006.

     Selling,  general and  administrative  expenses  for the three months ended
September  29, 2007 were $35.7  million or 13.9% of net sales  compared to $30.2
million or 16.4% of net sales for the three months ended September 30, 2006. The
increase is primarily  attributable  to the  acquisitions of CAS and IST made in
the third quarter of 2006 and includes the other intangible assets  amortization
expense associated with these acquisitions.

     During the three months ended  September  29,  2007,  the Company  recorded
acquisition-related  costs  of  $2.0  million  for  "stay-pay"  related  to  the
acquisitions  in 2005 and 2006  compared to $1.0  million  for the three  months
ended September 30, 2006. We expect to incur similar  amounts related  primarily
to the CAS and IST acquisitions over the next 2 years.

     Research and  development  expense for the three months ended September 29,
2007 decreased to $2.9 million or 1.1% of net sales from $4.7 million or 2.5% of
net sales for the three months ended September 30, 2006, during which time there
was higher than usual spending on electronic force protection and ESM Systems.

     Interest  expense,  net of  interest  income,  for the three  months  ended
September  29, 2007  increased  to $4.8  million from $2.5 million for the three
months ended September 30, 2006,  primarily due to interest on borrowings  under
our credit  facility.  Also included in interest expense is interest on our 4.0%
Convertible  Subordinated Notes ("Notes") which were issued in November 2005 and
due in 2025, interest on the promissory note associated with the IST acquisition
made in  September  2006  and  due in  2009,  interest  on the  promissory  note
associated  with the NexGen  acquisition  made in 2005 and due in 2008,  and the
amortization of deferred debt issuance costs associated with the offering of the
Notes and  amortization of deferred  financing costs  associated with our credit
facility.

     For the three  months ended  September  29, 2007 we recorded a discrete net
income  tax  benefit  of  $4.7  million  primarily  related  to  changes  in tax
contingencies and the claim for the federal research and development  credit for
2003 not previously  claimed This compares to a $2.3 million discrete net income
tax benefit  recorded  for the three  months  ended  September  30, 2006 related
primarily  to  claims  for the  federal  research  and  development  credit  and
extraterritorial income (ETI) exclusion tax benefits not previously claimed.

                                       22
<PAGE>

     For the three months ended  September  29,  2007,  net earnings  were $11.2
million  or $0.49  per  diluted  common  share on 25.4  million  diluted  shares
compared to net  earnings of $2.1  million or $0.11 per diluted  common share on
18.6 million  diluted shares for the three months ended  September 30, 2006. The
convertible  Notes were dilutive for the third quarter of 2007 and anti-dilutive
in the third quarter of 2006.
<TABLE>
<CAPTION>
<S>                                             <C>              <C>                  <C>
NINE MONTHS ENDED SEPTEMBER 29, 2007 COMPARED WITH NINE MONTHS ENDED SEPTEMBER 30, 2006

Net sales by segment were as follows:

                                                       NINE MONTHS ENDED            INCREASE/
                                                ------------------------------     (DECREASE)
                                                SEPTEMBER 29,    SEPTEMBER 30,        FROM
SEGMENT                                             2007             2006         PRIOR PERIOD
                                                ------------------------------------------------
                                                              (IN THOUSANDS)

Engineered Systems & Services                   $     353,954    $     204,462        73.1%
Electronic Systems & Communications                   404,264          252,038        60.4%
                                                ------------------------------------------------
Total                                           $     758,218    $     456,500        66.1%
                                                ================================================
</TABLE>

     In the Engineered  Systems and Services  segment,  the increase in sales is
attributable primarily to the contribution of sales of CAS which was acquired on
September 6, 2006,  increased sales of our flight line test systems products and
higher sales in undersea warfare products.

     In the Electronic Systems and Communications segment, the increase in sales
is attributable to deliveries associated with the Transition Switch Module (TSM)
program, deliveries of force protection systems and the sales contributed by IST
which was acquired on September 15, 2006.

     Operating earnings by segment were as follows:

                                                       NINE MONTHS ENDED
                                                SEPTEMBER 29,    SEPTEMBER 30,
SEGMENT                                             2007             2006
                                                ------------------------------
                                                       (IN THOUSANDS)
Engineered Systems & Services...................$      25,902    $      4,069
Electronic Systems & Communications.............       21,168           4,068
                                                ------------------------------
Total...........................................$      47,070    $      8,137
                                                ==============================

     Operating  earnings for the nine months ended September 29, 2007 were $47.1
million or 6.2% of net sales.  This compares to operating  earnings for the nine
months ended September 30, 2006 of $8.1 million or 1.8% of net sales.

     Items of note  affecting  operating  earnings are  summarized  here to help
clarify the comparison of results.

                                                       NINE MONTHS ENDED
                                                SEPTEMBER 29,    SEPTEMBER 30,
                                                    2007             2006
                                                --------------------------------
                                                          (IN THOUSANDS)

Pension.........................................$       2,233    $       3,582
ESOP Compensation expense.......................$       4,209    $       3,310
Other intangible asset amortization.............$       7,713    $       5,121
Stock-based compensation expense re: options....$         970    $         838
                                                --------------------------------
                                                $      15,125    $      12,851
                                                ================================

     The decrease in pension expense in 2007 compared to 2006 is attributable to
changes in actuarial assumptions such as discount rate and return on plan assets
as well as the contributions made by the Company in 2007 for the 2006 plan year.
The  higher  ESOP  compensation  expense  for the first  nine  months of 2007 is
attributable to our higher average stock price compared to the first nine months
of 2006.  The  increase  in  other  intangible  asset  amortization  expense  is
attributable  to the  acquisitions  of CAS and IST in the third quarter of 2006.
The increase in  stock-based  compensation  expense  relates to the higher share
price on the dates of grant compared to 2006.

                                       23
<PAGE>

     The Engineered  Systems and Services  segment's  operating earnings for the
nine  months  ended  September  29,  2007  were  $25.9  million  or 7.3% of this
segment's  net sales  compared to operating  earnings of $4.1 million or 2.0% of
this  segment's  net sales for the nine months ended  September  30, 2006.  This
increase is  attributable to cost  reductions on an aircraft  armament  program,
increased  sales on flight line test equipment,  the  contribution of CAS, which
was acquired on September 6, 2006 and the mix of sales in our services business.
These increases were partially offset by cost growth on the ALOFTS sonar program
and an aircraft armament program.

     For the nine months ended  September  30, 2006,  operating  earnings in the
Engineered  Systems Services segment were negatively  impacted by a $2.5 million
cost growth on ALOFTS,  $1.4 million and $2.2  million on two aircraft  armament
systems  programs,  $1.2 million  related to the conclusion of a legal action as
well as a write-off  of  unamortized  other  intangible  assets of $1.5  million
related to the Company's rugged computer product line.

     In the Electronic  Systems and Communications  segment,  operating earnings
for the nine months ended  September 29, 2007 were $21.2 million or 5.2% of this
segment's  net sales  compared to operating  earnings of $4.1 million or 1.6% of
this  segment's  net sales for the nine months ended  September  30,  2006.  The
increase is  attributable  to  increased  sales on our TSM  program,  electronic
warfare products, and antenna products.  This was partially offset by unabsorbed
overhead costs at two of our  facilities as we prepare for increased  production
of force  protection  systems,  as well as cost growth on a close-out of an open
contract issue on a long standing contract that is now complete.

     For the nine months ended  September  30,  2006,  operating  earnings  were
negatively  impacted by less  recovery of overhead  expenses  due to lower sales
volume of electronic force protection systems, cost growth of $2.5 million on an
interference    cancellation   program,    lower   milestone   achievements   of
reconnaissance and surveillance systems, and approximately $5.0 million in legal
costs and provisions for liabilities in respect of concluded legal matters.

     Selling,  general and  administrative  expenses  for the nine months  ended
September 29, 2007 were $105.1  million or 13.9% of net sales  compared to $79.0
million or 17.3% for the nine months ended  September 30, 2006.  The increase is
primarily attributable to the acquisitions of CAS and IST made in 2006 including
the  other  intangible  assets   amortization   expense  associated  with  these
acquisitions.

     During the nine months  ended  September  29,  2007,  the Company  recorded
acquisition-related  costs  of  $6.3  million  for  "stay-pay"  related  to  the
acquisitions made in 2005 and 2006, compared to $1.5 million for the nine months
ended September 30, 2006. We expect to incur similar  amounts related  primarily
to the CAS and IST acquisitions over the next 2 years.

     Research and  development  expense for the nine months ended  September 29,
2007  decreased to $7.4 million or 1.0% of net sales from $10.9  million or 2.4%
of net sales for the nine months ended  September  30,  2006,  during which time
there was higher spending on electronic force  protection and aircraft  armament
systems.

     Interest  expense,  net of  interest  income,  for the  nine  months  ended
September  29, 2007  increased  to $16.3  million from $5.1 million for the nine
months ended  September 30, 2006  primarily due to interest on borrowings  under
our credit  facility.  Also included in interest expense is interest on our 4.0%
Convertible  Subordinated Notes ("Notes") which were issued in November 2005 and
due in 2025, interest on the promissory note associated with the IST acquisition
made in  September  2006  and  due in  2009,  interest  on the  promissory  note
associated  with the NexGen  acquisition  made in 2005 and due in 2008,  and the
amortization of deferred debt issuance costs associated with the offering of the
Notes and  amortization of deferred  financing costs  associated with our credit
facility.

     For the nine months ended  September  29, 2007,  we recorded a discrete net
income  tax  benefit  of  $4.7  million  primarily  related  to  changes  in tax
contingencies and the claim for the federal research and development  credit for
2003 not previously claimed,  compared to a $6.0 million discrete net income tax
benefit recorded for the nine months ended September 30, 2006 related  primarily
to claims for the federal research and development  credit and  extraterritorial
income (ETI)  exclusion tax benefits not  previously  claimed and changes in tax
contingencies.

     For the nine months  ended  September  29, 2007,  net  earnings  were $22.9
million  or $1.05  per  diluted  common  share on 25.2  million  diluted  shares
compared to net  earnings of $7.4  million or $0.40 per diluted  common share on
18.6 million  diluted  shares for the nine months ended  September 30, 2006. The
Convertible Notes were dilutive for the nine months ended September 29, 2007 and
anti-dilutive for the nine months ended September 30.

                                       24
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

Balance sheet

     Cash and cash equivalents  decreased 86.5% to $3.4 million at September 29,
2007 from  $25.3  million  at  December  31,  2006.  For the nine  months  ended
September 29, 2007,  cash provided by operations was $38.9  million,  reflecting
earnings  from  operations  and  collections  of billed  receivables  which were
partially  offset by increases in inventories and  contributions  to the defined
benefit  pension  plan.  During the nine months ended  September  29,  2007,  we
reduced  our  borrowings  under the  credit  facility  by a net  $36.0  million.
Furthermore,  $9.3 million was used to settle the final  purchase  prices of CAS
and IST,  $12.2 million was used for the purchase of plant and  equipment,  $5.8
million for a scheduled  principal  payment on our IST promissory  note and $1.9
million for the payment of common share dividends.

     Accounts receivable decreased 12.1% to $233.1 million at September 29, 2007
from  $265.3  million  at  December  31,  2006  due  to  collections  of  billed
receivables.  At September 29, 2007 approximately 90% of billed receivables were
in the under-60 days aging category compared with 89% at December 31, 2006.

     Inventories  increased to $118.7  million at September  29, 2007 from $56.3
million  at  December  31,  2006  due  primarily  to  the  efforts  expended  on
work-in-process on major programs such as TSM and Crew 2.1.

FINANCING ACTIVITIES

Credit Facility

     We have a five-year  credit  facility  with a consortium  of banks,  led by
Citibank,  N.A.,  as the  administrative  agent,  Bank of  America,  N.A, as the
documentation  agent and Wachovia Bank, N.A. as syndication  agent. The facility
expires in November 2010.

     The  credit  agreement  provides  for a  revolving  credit  facility  in an
aggregate  amount  equal to $300  million  with  sub-limits  of $20  million for
short-term  swing loans and $100  million for letters of credit.  The  potential
cash  borrowing  under the  facility  is reduced  by the  amount of  outstanding
letters of credit.  The Company has the option to select Base Rate or Eurodollar
Rate loans under the terms of the Credit  Agreement.  Any  borrowings  under the
facility  would  be  priced  initially  at  LIBOR  plus a  predetermined  amount
depending on our  consolidated  leverage ratio at the time of the borrowing.  At
September 29, 2007, LIBOR was approximately 5.13% and the applicable  adjustment
to  LIBOR  was  2.00%.  The  facility  requires  us to pay  each  lender  in the
consortium  a  commitment  fee on the  average  daily  unused  portion  of their
respective  commitment  at a rate equal to 0.25%.  In  addition,  the  agreement
provides for potential  incremental  credit extensions in the form of term loans
or revolving credit commitment increases of up to $100 million.

     At  September  29,  2007  there  were  $21.9  million  of letters of credit
outstanding and $144.0 million of direct borrowings outstanding under the credit
facility,  resulting in $134.1 million available for additional  borrowings.  At
December 31, 2006,  there were $180.0 million of direct  borrowings  outstanding
under the  credit  facility.  Accrued  interest  payable  related  to the credit
facility was $0.3  million and $0.8  million at September  29, 2007 and December
31, 2006, respectively.

     In connection with the credit facility, the Company is required to maintain
both  financial  and  non-financial  covenants  and ratios,  including,  but not
limited to,  leverage ratio,  fixed charge  coverage  ratio,  and senior secured
leverage ratio. As of September 29, 2007, the Company was in compliance with its
covenants.  The credit facility is secured by the Company's accounts receivable,
inventory and machinery and equipment.

4.0% Convertible Subordinated Notes due 2025 ("4.0% Notes")

     In November 2005, we completed the offering of $201.2 million  principal of
4.0% Notes and  received  proceeds  of $195.7  million,  net of $5.5  million of
commissions.  Interest  payments  are due May 15 and  November  15 of each  year
commencing on May 15, 2006. The Company made its scheduled  interest  payment of
$4.0  million on the 4.0%  Notes  during  the  second  quarter of 2007.  Accrued
interest  payable,  included in accrued  liabilities,  was $3.1 million and $1.0
million at September 29, 2007 and December 31, 2006, respectively. The Notes are
convertible,  unless previously  redeemed or repurchased by the Company,  at the
option of the holder at any time prior to maturity,  into the  Company's  common
stock at an initial conversion price of $34.19 per share,  subject to adjustment
in certain events. As of September 29, 2007, there had been no such conversions.

                                       25
<PAGE>

Shelf Registration

     At September 29, 2007,  our remaining  capacity  under the universal  shelf
registration  statement that became effective in January 2004 was  approximately
$298.8 million.  We believe that, for the foreseeable  future,  we have adequate
liquidity and sufficient capital to fund our currently anticipated  requirements
for working capital, capital expenditures,  including acquisitions, research and
development  expenditures,  interest  payments  and  funding of our  pension and
post-retirement  benefit  obligations.  We  continue  to  focus  on  positioning
ourselves to be a significant  player in the consolidation of first-tier defense
suppliers and, to that end, actively seek candidates for strategic acquisitions.
Future  acquisitions  may be funded from any of the following  sources:  cash on
hand;  borrowings  under our credit  facility;  issuance of our common  stock or
other equity securities; and/or convertible or other debt offerings.

COMMITMENT AND CONTINGENCIES

     We are obligated under building and equipment  leases expiring between 2007
and 2019. The aggregate future minimum lease commitments under those obligations
with  non-cancellable  terms  in  excess  of  one  year  are  shown  below.  Our
commitments  under letters of credit and advance payment and  performance  bonds
relate  primarily to advances  received on foreign  contracts  should we fail to
perform in accordance  with the contract terms. We do not expect to have to make
payments  under these  letters of credit or bonds since  these  obligations  are
removed as we perform  under the related  contracts.  The amounts for letters of
credit and performance  bonds represent the amount of commitment  expiration per
period.

         In order to aggregate all commitments and contractual obligations as of
September 29, 2007, we have included the following table:
<TABLE>
<CAPTION>
<S>                                               <C>       <C>       <C>       <C>        <C>       <C>       <C>
                                                                      PAYMENTS DUE IN (IN MILLIONS):
                                                  ----------------------------------------------------------------------
COMMITMENTS AND CONTRACTUAL OBLIGATIONS:                                                                       2012 AND
                                                    TOTAL      2007      2008      2009       2010      2011    BEYOND
------------------------------------------------------------------------------------------------------------------------
Borrowings Under Revolver                         $   144.0 $   144.0 $      -- $       -- $      -- $      -- $      --
Notes payable                                          16.5       2.0       8.8        5.7        --        --        --
4.0% Convertible Subordinated Notes due 2025 (1)      201.2        --        --         --        --        --     201.2
Operating leases                                      145.2       5.7      22.4       20.6      19.3      18.1      59.1
Letters of credit                                      21.9       2.5       7.0       11.8        --        --       0.6
Projected pension contributions (2)                    33.6        --      14.7        8.5       8.3       2.1        --
Advance payment and performance bonds                   1.7        --        --        1.7        --        --        --
                                                  ----------------------------------------------------------------------
Total                                             $   564.1 $   154.2 $    52.9 $     48.3 $    27.6 $    20.2 $   260.9
                                                  ======================================================================
</TABLE>

     (1)  Excludes interest of approximately $8 million annually.
     (2)  Actual pension  contributions  may differ from amounts presented above
          and are contingent on cash flow, liquidity, and actuarial assumptions.

     Additionally, we are subject to certain legal actions that arise out of the
normal course of business.  It is our belief that the ultimate  outcome of these
actions  is  unlikely  to have a  material  adverse  effect on our  consolidated
financial position, results of operations or liquidity

CONCENTRATION OF SALES

     We conduct a  significant  amount of our  business  with the United  States
Government.  Although there are currently no indications of a significant change
in the status of government funding of certain programs,  should this occur, our
results of  operations,  financial  position and  liquidity  could be materially
affected. Such a change could have a significant impact on our profitability and
our stock  price.  This could also affect our ability to acquire  funds from our
credit facility due to covenant restrictions or from other sources.

     For the  three and nine  months  ended  September  29,  2007,  sales of TSM
represented 12.7% and 15.1% of net sales,  respectively.  For the three and nine
months ended September 30, 2006, sales of TSM represented  13.9% and 7.3% of net
sales, respectively.

                                       26
<PAGE>


     The funded  backlog of unfilled  orders at September 29, 2007  increased to
$1,362.3  million from $804.4 million at December 31, 2006. Our backlog consists
primarily of current orders under long-lived,  mission-critical  programs of key
defense platforms.

"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995

     The statements in this Quarterly  report and in oral statements that may be
made by representatives of the Company relating to plans,  strategies,  economic
performance  and  trends  and  other  statements  that are not  descriptions  of
historical  facts may be  forward-looking  statements  within the meaning of the
Private  Securities  Litigation  Reform  Act  of  1995,  Section  27(a)  of  the
Securities Act of 1933 and Section 21(e) of the Securities Exchange Act of 1934.
Forward looking  statements are inherently  subject to risks and  uncertainties,
and actual results could differ materially from those currently  anticipated due
to a number of factors,  which include, but are not limited to the following for
each of the types of information noted below.

     U.S. and  international  military  program  sales,  follow-on  procurement,
contract continuance, and future program awards, upgrades and spares support are
subject  to:  U.S.   and   international   military   budget   constraints   and
determinations;   U.S.   congressional   and   international   legislative  body
discretion;  U.S.  and  international  government  administration  policies  and
priorities;   changing   world  military   threats,   strategies  and  missions;
competition from foreign manufacturers of platforms and equipment;  NATO country
determinations  regarding participation in common programs;  changes in U.S. and
international  government  procurement  timing,  strategies and  practices,  the
general state of world  military  readiness and  deployment;  and the ability to
obtain export licenses.

     Commercial  product  sales are subject to:  success of product  development
programs  currently  underway or planned;  competitiveness of current and future
production  costs and prices and market and  consumer  base  development  of new
product programs.

     Achievement of margins on sales, earnings and cash flow can be affected by:
unanticipated  technical  problems;  government  termination  of  contracts  for
convenience; decline in expected levels of sales; underestimation of anticipated
costs on  specific  programs;  the  ability  to effect  acquisitions;  and risks
inherent in integrating recent acquisitions into our overall structure.

     Expectations  of future  income tax rates can be  affected  by a variety of
factors,  including  statutory  changes  in  Federal  and state tax  rates,  tax
treatment  of   acquisitions,   results  of  tax  audits,   the  amount  of  the
non-deductible  portion  of our  non-cash  ESOP  compensation  expense and other
factors  detailed under "Special Note Regarding  Forward-Looking  Statements" in
the  definitive  proxy  statement  filed by the  Company on  November 5, 2007 in
connection with the proposed sale of the company described in Note 2.


         The Company has no obligation to update any forward-looking statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS

     For  quantitative and qualitative  disclosures  about market risk, see Item
7A, "Quantitative and Qualitative  Disclosures About Market Risk," of our annual
report on Form 10-K for the year ended December 31, 2006.

ITEM 4. CONTROLS AND PROCEDURES

     As of the end of the period covered by this Quarterly  Report on Form 10-Q,
the  Company  carried  out an  evaluation,  under the  supervision  and with the
participation of the Company's senior management,  including the Chief Executive
Officer and the Chief Financial  Officer,  as well as the audit committee of the
Board of  Directors,  of the  effectiveness  of the design and  operation of the
Company's disclosure controls and procedures.

     Based on their  evaluation,  the  Chief  Executive  Officer  and the  Chief
Financial  Officer of the Company have concluded  that the Company's  disclosure
controls and procedures (as defined in Rules  13a-15(e) and 15d-15(e)  under the
Securities  Exchange Act of 1934) are  effective to ensure that the  information
required to be  disclosed by the Company in the reports that it files or submits
under the Securities Exchange Act of 1934 is recorded, processed, summarized and
reported within the time periods specified in SEC rules and forms.

     There were no changes in EDO's internal  controls over financial  reporting
during EDO's last fiscal quarter that have materially affected, or are likely to
materially affect internal controls over financial reporting.

                                       27
<PAGE>

                           PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

          On October 15, 2007, one of our shareholders, the City of Bethlehem
          Aggregated Pension Fund, filed in the Supreme Court of the State of
          New York, New York County, a putative shareholder class action against
          the Company and the individual members of the Board of Directors. The
          complaint alleges, among other things, that the proposed acquisition
          of the Company by ITT substantially undervalues our common shares and
          unfairly benefits the Company's insiders. The plaintiff seeks
          injunctive relief with regard to the proposed acquisition. On November
          1, 2007 plaintiff filed an amended complaint. We believe that the
          allegations in the complaint are without merit, and we intend to
          defend against them vigorously.


          On October 26, 2007, one of our shareholders, Mr. Samuel Pill, filed
          in the Supreme Court of the State of New York, New York County, a
          putative shareholder class action against the individual members of
          our Board of Directors, the Company, ITT and Merger Sub. The complaint
          alleges, among other things, that the $56.00 per share merger
          consideration is inadequate and unfair to the public shareholders of
          the Company and that the preliminary proxy statement filed by the
          Company on October 23, 2007 failed to disclose material non-public
          information concerning the financial position and prospects of the
          Company. The plaintiff seeks injunctive relief with regard to the
          proposed transaction. We believe that the allegations in the complaint
          are without merit, and we intend to defend against them vigorously.



ITEM 1A. RISK FACTORS

          There have been no material changes in our risk factors from the risk
          factors disclosed in our annual report on Form10-K for the year ended
          December 31, 2006, except for risks related to the proposed sale of
          the company, as described in Note 2 above. There are no assurances
          that the proposed merger will be consummated. If the proposed merger
          is not consummated, under certain circumstances we may be required to
          pay a termination fee plus reimbursement of out-of-pocket expenses to
          the proposed acquirer, which amounts could be significant. In
          addition, the proposed merger may disrupt our current plans and
          operations and create potential difficulties in customer and employee
          retention. The effect of the announcement of the proposed merger or
          any subsequent announcements related to the merger may affect our
          business relationships. We have incurred and may continue to incur
          significant amounts of costs and fees associated with the proposed
          merger.



ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         None.

ITEM 6.  EXHIBITS AND REPORTS FILED ON FORM 8-K

        2(d)  Agreement and Plan of Merger, dated as of September 16, 2007, by
              and among ITT Corporation, Donatello Acquisition Corporation and
              EDO Corporation (File No. 001-03985, Form 8-K dated September 18,
              2007, Exhibit 2.1)

        2(e)  Form of Shareholder Voting Agreement, dated as of September 16,
              2007, by and between ITT Corporation and Shareholder
              ("Shareholder") party thereto. (File No. 001-03985, Form 8-K dated
              September 18 , 2007, Exhibit 2.2)

      10(a)*  Extension  Agreement to James M. Smith Employment  Agreement,
              dated August 30, 2007

      10(b)*  Amended and Restated Change in Control Agreement dated June 12,
              2007 between the Company and Jon A. Anderson

      10(c)*  Amended and Restated Change in Control Agreement dated June 12,
              2007 between the Company and Frederic B. Bassett

      10(d)*  Amended and Restated Change in Control Agreement dated June 12,
              2007 between the Company and Patricia D. Comiskey

      10(e)*  Amended and Restated Change in Control Agreement dated June 12,
              2007 between the Company and Milo Hyde

      10(f)*  Amended and Restated Change in Control Agreement dated June 12,
              2007 between the Company and Frank W. Otto

      10(g)*  Amended and Restated Change in Control Agreement dated June 12,
              2007 between the Company and Lisa M. Palumbo

       31.1*  Certification of Chief Executive Officer pursuant to Rule
              13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as
              adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

       31.2*  Certification of Chief Financial Officer pursuant to Rule
              13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as
              adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

         32*  Certification of Chief Executive Officer and Chief Financial
              Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section
              906 of the Sarbanes-Oxley Act of 2002.

*    Filed herewith.

                                   SIGNATURES

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
Registrant  has duly  caused  this  Report  to be  signed  on its  behalf by the
undersigned, its principal financial officer, thereunto duly authorized.


                                       EDO CORPORATION (Registrant)

Dated: November 5, 2007                By: /s/ FREDERIC B. BASSETT
                                           -------------------------------------
                                           Frederic B. Bassett
                                           Senior Vice President Finance,
                                           Treasurer and Chief Financial Officer



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