<PAGE>

================================================================================

                                  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 JUNE 24, 2006

                                       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)

<TABLE>
<S>                                            <C>
                NEW YORK                                   11-0707740
        (State of Incorporation)               (IRS Employer Identification No.)
</TABLE>

<TABLE>
<S>                                                        <C>
    60 EAST 42ND STREET, 42ND FLOOR,                          10165
           NEW YORK, NEW YORK                              (Zip Code)
(Address of principal executive offices)
</TABLE>

                                 (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 July 28, 2006
was 20,357,481 shares, with a par value $1 per share.

================================================================================

<PAGE>

                                 EDO CORPORATION

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
<S>                                                                         <C>
PART I FINANCIAL INFORMATION
   ITEM 1  Financial Statements .........................................     3
           Consolidated Balance Sheets - June 24, 2006 (unaudited) and
              December 31, 2005 .........................................     3
           Consolidated Statements of Earnings - (unaudited)
              Three months ended June 24, 2006 and June 25, 2005 ........     4
           Consolidated Statements of Earnings - (unaudited)
              Six months ended June 24, 2006 and June 25, 2005 ..........     5
           Consolidated Statements of Cash Flows - (unaudited)
              Six months ended June 24, 2006 and June 25, 2005 ..........     6
           Notes to Consolidated Financial Statements (unaudited) .......     7
   ITEM 2  Management's Discussion and Analysis of Financial Condition
              and Results of Operations .................................    17
   ITEM 3  Quantitative and Qualitative Disclosures about Market Risk ...    25
   ITEM 4  Controls and Procedures ......................................    25

PART II OTHER INFORMATION
   ITEM 1A Risk Factors
   ITEM 4  Submission of Matters to a Vote of Security Holders ..........    25
   ITEM 6  Exhibits and Reports on Form 8-K .............................    26

SIGNATURE PAGE ..........................................................    26
</TABLE>


                                       2
<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                        EDO CORPORATION AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                               JUNE 24,    DECEMBER 31,
                                                                 2006          2005
                                                             -----------   ------------
                                                             (UNAUDITED)
                                                                   (IN THOUSANDS)
<S>                                                          <C>           <C>
                                         ASSETS

Current assets:
   Cash and cash equivalents .............................    $109,092       $108,731
   Accounts receivable, net ..............................     168,015        189,190
   Inventories ...........................................      70,761         56,567
   Deferred income tax asset, net ........................       9,090          8,946
   Notes receivable ......................................       7,000          7,100
   Prepayments and other .................................      13,159          3,809
                                                              --------       --------
      Total current assets ...............................     377,117        374,343
                                                              --------       --------
Property, plant and equipment, net .......................      52,013         49,574
Goodwill .................................................     149,419        152,347
Other intangible assets, net .............................      58,211         55,925
Deferred income tax asset, net ...........................      27,300         29,637
Other assets .............................................      25,217         25,573
                                                              --------       --------
                                                              $689,277       $687,399
                                                              ========       ========

                          LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
   Accounts payable ......................................    $ 23,247       $ 33,111
   Accrued liabilities ...................................      49,598         52,126
   Contract advances and deposits ........................      45,405         42,244
   Note payable ..........................................       2,000          2,000
                                                              --------       --------
      Total current liabilities ..........................     120,250        129,481
                                                              --------       --------
Income taxes payable .....................................       6,513          6,513
Note payable, long-term debt .............................       5,000          5,000
Long-term debt ...........................................     201,250        201,250
Post-retirement benefits obligations .....................     104,268        103,815
Environmental obligation .................................       1,386          1,392
Other long-term liabilities ..............................          48             55
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, 20,470,095 issued in 2006 and
      20,305,815 issued in 2005 ..........................      20,470         20,306
   Additional paid-in capital ............................     168,636        167,219
   Retained earnings .....................................     124,331        120,103
   Accumulated other comprehensive loss, net of income tax
      benefit (32,496 in 2006 and 32,711 in 2005) ........     (46,762)       (47,072)
   Treasury shares at cost (112,614 shares in 2006 and
      111,317 shares in 2005) ............................      (1,950)        (1,868)
   Unearned Employee Stock Ownership Plan shares .........     (14,163)       (14,789)
   Deferred compensation under Long-Term Incentive Plan ..          --         (3,866)
   Management group receivables ..........................          --           (140)
                                                              --------       --------
      Total shareholders' equity .........................     250,562        239,893
                                                              --------       --------
                                                              $689,277       $687,399
                                                              ========       ========
</TABLE>

          See accompanying Notes to Consolidated Financial Statements.


                                       3

<PAGE>

                        EDO CORPORATION AND SUBSIDIARIES

                       CONSOLIDATED STATEMENTS OF EARNINGS

<TABLE>
<CAPTION>
                                                         FOR THE THREE MONTHS ENDED
                                                         --------------------------
                                                            JUNE 24,   JUNE 25,
                                                              2006       2005
                                                            --------   --------
                                                                 (UNAUDITED)
                                                            (IN THOUSANDS, EXCEPT
                                                             PER SHARE AMOUNTS)
<S>                                                      <C>           <C>
NET SALES ............................................      $152,398   $156,112
COSTS AND EXPENSES
   Cost of sales .....................................       119,657    118,360
   Selling, general and administrative ...............        23,903     20,014
   Research and development ..........................         3,006      3,994
   Environmental cost provision, Deer Park facility ..            --      1,250
                                                            --------   --------
                                                             146,566    143,618
                                                            --------   --------
OPERATING EARNINGS ...................................         5,832     12,494
NON-OPERATING INCOME (EXPENSE)
   Interest income ...................................         1,101        294
   Interest expense ..................................        (2,237)    (2,274)
   Other, net ........................................          (111)       (15)
                                                            --------   --------
                                                              (1,247)    (1,995)
                                                            --------   --------
   Earnings before income taxes ......................         4,585     10,499
   Income tax benefit (expense) ......................         1,686     (4,410)
                                                            --------   --------
   NET EARNINGS ......................................      $  6,271   $  6,089
                                                            ========   ========
   NET EARNINGS PER COMMON SHARE:
   Basic: ............................................      $   0.35   $   0.34
                                                            ========   ========
   Diluted: ..........................................      $   0.30   $   0.31
                                                            ========   ========
Weighted-average common shares outstanding:
   Basic .............................................        18,099     18,065
                                                            ========   ========
   Diluted ...........................................        24,467     22,741
                                                            ========   ========
   Dividends declared per common share ...............      $   0.03   $   0.03
                                                            ========   ========
</TABLE>

          See accompanying Notes to Consolidated Financial Statements.


                                       4

<PAGE>

                        EDO CORPORATION AND SUBSIDIARIES

                       CONSOLIDATED STATEMENTS OF EARNINGS

<TABLE>
<CAPTION>
                                                         FOR THE SIX MONTHS ENDED
                                                         ------------------------
                                                           JUNE 24,   JUNE 25,
                                                             2006       2005
                                                           --------   --------
                                                                (UNAUDITED)
                                                           (IN THOUSANDS, EXCEPT
                                                             PER SHARE AMOUNTS)
<S>                                                      <C>          <C>
NET SALES ............................................     $272,107   $272,620
COSTS AND EXPENSES
   Cost of sales .....................................      210,901    203,414
   Selling, general and administrative ...............       49,261     40,302
   Research and development ..........................        6,212      8,412
   Environmental cost provision, Deer Park facility ..           --      1,250
                                                           --------   --------
                                                            266,374    253,378
                                                           --------   --------
OPERATING EARNINGS ...................................        5,733     19,242
NON-OPERATING INCOME (EXPENSE)
   Interest income ...................................        2,122        795
   Interest expense ..................................       (4,661)    (4,465)
   Other, net ........................................         (257)       (60)
                                                           --------   --------
                                                             (2,796)    (3,730)
                                                           --------   --------
Earnings before income taxes .........................        2,937     15,512
Income tax benefit (expense) .........................        2,395     (6,515)
                                                           --------   --------
NET EARNINGS .........................................     $  5,332   $  8,997
                                                           ========   ========
NET EARNINGS PER COMMON SHARE:
   Basic .............................................     $   0.30   $   0.50
                                                           ========   ========
   Diluted ...........................................     $   0.29   $   0.49
                                                           ========   ========
Weighted-average common shares outstanding:
   Basic .............................................       18,055     17,998
                                                           ========   ========
   Diluted ...........................................       18,538     22,690
                                                           ========   ========
   Dividends declared per common share ...............     $   0.06   $   0.06
                                                           ========   ========
</TABLE>

           See accompanying Notes to Consolidated Financial Statements


                                       5
<PAGE>

                        EDO CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                              FOR THE SIX MONTHS ENDED
                                                                              ------------------------
                                                                                JUNE 24,     JUNE 25,
                                                                                  2006         2005
                                                                               -----------   --------
                                                                               (UNAUDITED)
                                                                                   (IN THOUSANDS)
<S>                                                                           <C>            <C>
OPERATING ACTIVITIES:
   Earnings from operations ...............................................     $  5,332     $  8,997
   Adjustments to earnings to arrive at cash provided (used) by operations:
      Depreciation ........................................................        5,736        4,942
      Amortization ........................................................        3,414        2,621
      Bad debt (recovery) expense .........................................          (68)         824
      Deferred tax provision ..............................................           15          113
      Loss on disposal of property, plant and equipment ...................           33           --
      Long-Term Incentive Plan compensation expense .......................        1,599          866
      Stock option compensation expense ...................................          877           --
      Environmental cost provision, Deer Park facility ....................           --        1,250
      Employee Stock Ownership Plan compensation expense ..................        2,335        2,550
      Dividends on unallocated Employee Stock Ownership Plan shares .......          116          128
      Common shares issued for directors' fees ............................          110           98
      Changes in operating assets and liabilities, excluding effects of
         acquisitions:
         Accounts receivable ..............................................       21,243      (13,994)
         Inventories ......................................................      (14,194)     (21,616)
         Prepayments and other assets .....................................       (8,655)       1,929
         Accounts payable, accrued liabilities and other ..................      (11,142)        (638)
         Contract advances and deposits ...................................        3,161        4,043
                                                                                --------     --------
Cash provided (used) by operations ........................................        9,912       (7,887)
                                                                                --------     --------
INVESTING ACTIVITIES:
   Settlement of purchase price on 2005 acquisitions ......................         (800)          --
   Purchase of plant and equipment ........................................       (8,841)     (13,089)
   Payments received on notes receivable ..................................          100          150
   Cash paid for acquisitions, net of cash acquired .......................           --      (35,072)
                                                                                --------     --------
Cash used by investing activities .........................................       (9,541)     (48,011)
                                                                                --------     --------
FINANCING ACTIVITIES:
   Proceeds from exercise of stock options ................................          741          593
   Excess income tax benefit from stock options and Long-Term
      Incentive Plan ......................................................          329          435
   Proceeds from management group receivables .............................          140           --
   Repayments of acquired debt ............................................           --       (4,877)
   Payment of common share cash dividends .................................       (1,220)      (1,209)
                                                                                --------     --------
Cash used by financing activities .........................................          (10)      (5,058)
                                                                                --------     --------
Net increase (decrease) in cash and cash equivalents ......................          361      (60,956)
Cash and cash equivalents at beginning of year ............................      108,731       98,884
                                                                                --------     --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD ................................     $109,092     $ 37,928
                                                                                ========     ========
Supplemental disclosures:
   Cash paid for:
      Interest ............................................................     $  3,891     $  3,617
                                                                                ========     ========
      Income taxes ........................................................     $ 10,838     $  7,393
                                                                                ========     ========
</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, 2005 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)  ACQUISITIONS

     On December 20, 2005, the Company acquired for cash all of the stock of
NexGen Communications LLC (NexGen), a privately-held company specializing in the
design and production of communications systems for a diverse set of U.S.
government organizations. The acquisition strengthened EDO's fast-growing
position in specialized communication products. 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 NexGen is not
deductible for income tax purposes. During the second quarter of 2006, the
purchase price for NexGen was finalized and resulted in an additional cash
payment of $0.4 million.

     On September 19, 2005, the Company acquired for cash all of the stock of
Fiber Innovations, Inc., (Fiber Innovations) a privately-held company that is a
designer and manufacturer of fiber reinforced-composites. This acquisition has
added important complementary design and manufacturing capabilities to EDO's
integrated-composite-structures business. 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 related to Fiber Innovations is not
deductible for income tax purposes. During the first quarter of 2006, the
purchase price for Fiber Innovations was finalized and resulted in an additional
cash payment of $0.4 million.

     On May 2, 2005, the Company acquired for cash all of the units of EVI
Technology, LLC (EVI), a privately-held company. EVI is a designer, manufacturer
and integrator of classified intelligence systems. EVI has strengthened and
expanded EDO's range of products and engineering expertise in a number of
synergistic areas. 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 EVI recorded as goodwill and other intangible
asset is deductible for income tax purposes over 15 years.

(3)  STOCK-BASED COMPENSATION

     The Company has granted non-qualified stock options and restricted shares
under the 2002 Long-Term Incentive Plan (LTIP) and the 2002 Non-Employee
Director Stock Option Plan (NEDSOP). These plans are described in Note 13 to the
consolidated financial statements included in the Company's Annual Report on
Form 10-K for the year ended December 31, 2005.

     Prior to January 1, 2006, the Company accounted for its stock-based
compensation plans in accordance with Accounting Principles Board (APB) Opinion
No. 25, "Accounting for Stock Issued to Employees" and related interpretations,
as permitted by Financial Accounting Standard Board (FASB) Statement No. 123,
"Accounting for Stock-based Compensation." Under APB No. 25, because the
exercise price of the Company's stock options is set equal to the market price
of the underlying stock on the date of grant, no employee compensation expense
was recognized in the Statement of Earnings. Effective January 1, 2006, the
Company adopted the fair value recognition provisions of FASB Statement No.
123(R) (FAS 123(R)), Share-Based Payment, using the modified prospective
transition method. Under this method, compensation cost recognized in the six
months ended June 24, 2006 includes: (a) compensation cost for all options
granted prior to January 1, 2006, but not yet vested, based on the fair value on
the grant date and (b) compensation cost for all options granted to Directors
under the NEDSOP subsequent to January 1, 2006, which are 100% vested on the
date of grant. Results of prior periods are not required to be restated.


                                        7

<PAGE>

     As a result of adopting Statement 123(R) on January 1, 2006, the company's
income before income taxes and net income for the six months ended June 24,
2006, are $0.9 million and $0.5 million lower, respectively, than if it had
continued to account for share-based compensation under Opinion 25. Basic and
diluted earnings per share for the year ended June 24, 2006 are $0.03 and $0.03
lower, respectively, than if the company had continued to account for
share-based compensation under Opinion 25.

     Prior to the adoption of FAS 123(R), the Company presented all excess tax
benefits of deductions resulting from the exercise of stock options as an
operating cash flow in the Statement of Cash Flows. FAS 123(R) requires that
this excess tax benefit now be classified as a financing cash flow. For the six
months ended June 24, 2006 the $0.3 million excess tax benefit classified as a
financing cash flow would have been classified as an operating cash flow if the
Company had not adopted FAS 123(R).

     During the six months ended June 24, 2006, the Company only granted options
to its Board of Directors, which when issued were 100% vested. The Company
estimated the fair value of the 2006 stock option awards as of the grant date by
applying the Black-Scholes pricing valuation model. The application of this
valuation model involves assumptions that are judgmental and sensitive in the
determination of compensation expense. The weighted average for key assumptions
used in determining the fair value of options granted are as follows: expected
dividend yield of 1%, risk free interest rate of 4.3%, expected volatility of
44%, and an expected option life of 7 years.

     A summary of the Company's stock option activity during the six months
ended June 24, 2006 is as follows:

<TABLE>
<CAPTION>
                                                      WEIGHTED-   WEIGHTED-AVERAGE      AGGREGATE
                                                       AVERAGE        REMAINING         INTRINSIC
                                         OPTIONS       EXERCISE   CONTRACTUAL TERM        VALUE
                                     (IN THOUSANDS)     PRICE        (IN YEARS)      (IN THOUSANDS)
                                     --------------   ---------   ----------------   --------------
<S>                                  <C>              <C>         <C>                <C>
Outstanding on January 1, 2006....       1,045          $17.25
Options granted...................          55           27.39
Options exercised.................         (53)          13.93
Options expired/cancelled.........          (4)          13.29
                                         -----          ------
Outstanding on June 24, 2006......       1,043          $17.96          5.33             $9,976
                                         =====          ======          ====             ======
Exercisable on June 24, 2006......       1,038          $17.95          5.57             $9,933
                                         =====          ======          ====             ======
</TABLE>

     As of June 24, 2006, the total future compensation expense related to
non-vested options not yet recognized in the consolidated statement of earnings
is approximately $40 thousand all of which will vest and be recognized in 2006.

     Stock based compensation expense recognized for restricted share awards was
$0.7 million and $0.4 million for the three months ended June 24, 2006 and June
25, 2005, respectively. Stock based compensation expense recognized for
restricted share awards was $1.6 million and $0.9 million for the six months
ended June 24, 2006 and June 25, 2005, respectively. The unrecognized
compensation cost related to the unvested restricted shares at June 24, 2006 is
approximately $5.0 million and will be recognized over a weighted-average period
of 2.1 years.

     A summary of the activity of restricted shares under the Company's 2002
LTIP plan for the six months ended June 24, 2006 is as follows:

<TABLE>
<CAPTION>
                                                       WEIGHTED-
                                                        AVERAGE
                                         SHARES       GRANT DATE
                                     (IN THOUSANDS)   FAIR PRICE
                                     --------------   ----------
<S>                                  <C>              <C>
Outstanding on January 1, 2006....         219          $ 27.78
Granted...........................         111            26.61
Vested............................          --               --
Forfeited/Canceled................          (5)           28.28
                                           ---          -------
Outstanding on June 24, 2006......         325          $ 27.38
                                           ===          =======
</TABLE>

     Prior to adoption of FAS 123(R), the fair value of restricted share awards
was recorded as deferred compensation expense as a separate component of
shareholders equity. In accordance with FAS 123(R), the deferred compensation
balance of $3.9 million at December 31, 2005 was reclassified to additional
paid-in-capital. The restricted share awards cliff vest in 3 years and are
subject to continued employment. If such goal is not met, no compensation cost
is recognized and any previously recognized compensation cost is reversed.


                                       8
<PAGE>

     The following table illustrates the effect on net earnings and earnings per
share if, for the three and six months ended June 25, 2005, the Company had
applied the fair value recognition provisions of SFAS No. 123.

<TABLE>
<CAPTION>
                                                           THREE MONTHS   SIX MONTHS
                                                               ENDED         ENDED
                                                             JUNE 25,      JUNE 25,
                                                               2005          2005
                                                           ------------   ----------
<S>                                                        <C>            <C>
Earnings:
   As reported .........................................      $6,089        $ 8,997
   Deferred compensation expense, net of tax ...........         277            511
   Stock option compensation expense based on fair value
      method, net of tax ...............................        (389)        (1,354)
                                                              ------        -------
   Pro forma ...........................................      $5,977        $ 8,154
                                                              ======        =======
Basic earnings per common share:
   As reported .........................................      $ 0.34        $  0.50
   Pro forma ...........................................      $ 0.33        $  0.45
Diluted earnings per common share:
   As reported .........................................      $ 0.31        $  0.49
   Pro forma ...........................................      $ 0.31        $  0.44
                                                              ======        =======
</TABLE>

(4) BUSINESS COMBINATIONS AND GOODWILL AND OTHER INTANGIBLE ASSETS

     Statement of Financial Accounting Standard (SFAS) No. 141, "Business
Combinations," 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 intangible assets with
indefinite useful lives and requires that these assets be reviewed for
impairment at least annually. Intangible assets with definite lives are
amortized over their estimated useful lives.

     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 for the six
months ended June 24, 2006 are as follows:

<TABLE>
<CAPTION>
                                  ENGINEERED
                                    SYSTEMS      ELECTRONIC
                                      AND        SYSTEMS AND
                                   SERVICES    COMMUNICATIONS     TOTAL
                                  ----------   --------------   --------
                                              (IN THOUSANDS)
<S>                               <C>          <C>              <C>
Balance as of January 1, 2006..     $43,846       $108,501      $152,347
Purchase price adjustments.....         328         (3,256)       (2,928)
                                    -------       --------      --------
Balance as of June 24, 2006....     $44,174       $105,245      $149,419
                                    =======       ========      ========
</TABLE>

     Summarized below are intangible assets:

<TABLE>
<CAPTION>
                                                                    JUNE  24,   DECEMBER 31,
                                                                       2006         2005          LIFE
                                                                    ---------   ------------   ----------
<S>                                                                 <C>         <C>            <C>
                                                                                (IN THOUSANDS)
Intangible assets subject to amortization:
   Capitalized non-compete agreements related to acquisitions.      $  2,888      $  3,118     1-5 years
   Purchased technologies related to acquisitions................     23,002        21,103     8-25 years
   Customer contracts and relationships related to acquisitions..     49,498        45,698     6-20 years
   Tradename related to acquisitions.............................      2,069         2,069     5-10 years
                                                                    --------      --------
                                                                      77,457        71,988
      Less accumulated amortization..............................    (19,646)      (16,463)
                                                                    --------      --------
                                                                    $ 57,811      $ 55,525
                                                                    --------      --------
Intangible assets not subject to amortization:
   Tradename related to acquisitions.............................        400           400
                                                                    --------      --------
                                                                    $ 58,211      $ 55,925
                                                                    ========      ========
</TABLE>


                                       9

<PAGE>

     The amortization expense for the three months ended June 24, 2006 and June
25, 2005 amounted to $1.8 million and $1.3 million, respectively. The
amortization expense for the six months ended June 24, 2006 and June 25, 2005
amounted to $3.4 million and $2.6 million, respectively. Total remaining
amortization expense for 2006, 2007, 2008, 2009, 2010 and thereafter related to
these intangible assets is estimated to be $3.4 million, $6.8 million, $6.1
million, $6.0 million, $5.3 million and $30.2 million, respectively.

(5) INVENTORIES

     Inventories are summarized by major classification as follows:

<TABLE>
<CAPTION>
                                             JUNE 24,   DECEMBER 31,
                                               2006         2005
                                             --------   ------------
                                                  (IN THOUSANDS)
<S>                                          <C>        <C>
Raw material and supplies................    $ 11,715     $11,976
Work-in-process...........................     70,587      49,829
Finished goods............................      1,861       1,690
   Less: Unliquidated progress payments...    (13,402)     (6,928)
                                             --------     -------
                                             $ 70,761     $56,567
                                             ========     =======
</TABLE>

(6) INCOME TAXES

     In the second quarter of 2006, we recorded an income tax benefit of $3.7
million due to the reversal of income tax contingency reserves related to the
resolution of an outstanding tax matter.

(7) EARNINGS PER SHARE

     The following table sets forth the computation of basic and diluted
earnings per share:

<TABLE>
<CAPTION>
                                                   FOR THE THREE MONTHS   FOR THE SIX MONTHS
                                                           ENDED                 ENDED
                                                   --------------------   -------------------
                                                    JUNE 24,   JUNE 25,   JUNE 24,   JUNE 25,
                                                      2006       2005       2006       2005
                                                    --------   --------   --------   --------
                                                                 (IN THOUSANDS)
<S>                                                <C>        <C>         <C>        <C>
Numerator:
   Earnings for basic and diluted calculation...     $ 6,271    $ 6,089    $ 5,332    $ 8,997
   Effect of dilutive securities:
      Convertible notes.........................       1,187      1,067         --      2,134
                                                     -------    -------    -------    -------
   Numerator for diluted calculation............     $ 7,458    $ 7,156    $ 5,332    $11,131
                                                     =======    =======    =======    =======
Denominator:
   Denominator for basic calculation............      18,099     18,065     18,055     17,998
   Effect of dilutive securities:
      Stock options.............................         483        268        483        284
      Convertible notes.........................       5,886      4,408         --      4,408
                                                     -------    -------    -------    -------
   Denominator for diluted calculation..........      24,468     22,741     18,538     22,690
                                                     =======    =======    =======    =======
</TABLE>

     The assumed conversion of the notes was anti-dilutive for the six months
ended June 24, 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.

<TABLE>
<CAPTION>
                                          FOR THE SIX MONTHS
                                                 ENDED
                                          -------------------
                                          JUNE 24,   JUNE 25,
                                            2006       2005
                                          --------   --------
<S>                                       <C>        <C>
4.00% Convertible Subordinated Notes...     5,586        --
Unexercised stock options..............       129        67
                                            -----       ---
                                            5,715        67
                                            =====       ===
</TABLE>

(8) DEFINED BENEFIT PLAN


                                       10

<PAGE>

     The Company maintains a qualified noncontributory defined benefit pension
plan covering less than half 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 months ended June 24, 2006 and June 25, 2005, the Company
recorded pension expense of $1.2 million and $1.1 million, respectively. For the
six months ended June 24, 2006 and June 25, 2005, the Company recorded pension
expense of $2.4 million and $2.1 million, respectively. Summarized below are the
components of the expense for each period presented.

<TABLE>
<CAPTION>
                                           FOR THE THREE MONTHS ENDED   FOR THE SIX MONTHS ENDED
                                           --------------------------   ------------------------
                                               JUNE 24,   JUNE 25,         JUNE 24,   JUNE 25,
                                                 2006       2005             2006       2005
                                               --------   --------         --------   -------
                                                               (IN THOUSANDS)
<S>                                        <C>            <C>           <C>           <C>
Interest cost...........................       $ 3,038    $ 3,088          $ 6,077    $ 6,177
Expected return on plan assets..........        (3,209)    (3,181)          (6,419)    (6,362)
Amortization of unrecognized net loss...         1,365      1,162            2,730      2,324
                                               -------    -------          -------    -------
                                               $ 1,194    $ 1,069          $ 2,388    $ 2,139
                                               =======    =======          =======    =======
</TABLE>

(9) EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST

     The Company sponsors an employee stock ownership plan 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.

(10) COMPREHENSIVE INCOME

     As of June 24, 2006, accumulated other comprehensive income included in the
accompanying consolidated balance sheet primarily represents additional minimum
liabilities on benefit plans. Comprehensive income for the three months ended
June 24, 2006 was $6.5 million compared to comprehensive income for the three
months ended June 25, 2005 of $6.4 million. Comprehensive income for the six
months ended June 24, 2006 was $5.6 million compared to comprehensive income for
the six months ended June 25, 2005 of $9.2 million.

(11) 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 flight line
products. The Company also offers a wide range of professional engineering
services. The Electronic Systems and Communications segment includes products
that serve the Electronic Warfare and the C4 (Command, Control, Communications
and Computers) markets. Primary products include electronic force protection
equipment, interference cancellation technology, airborne electronic warfare
systems, reconnaissance and surveillance systems, other specialized electronic
systems, C4 products and services and antenna products.

<TABLE>
<CAPTION>
                                                   FOR THE THREE MONTHS ENDED   FOR THE SIX MONTHS ENDED
                                                   --------------------------   ------------------------
                                                      JUNE 24,   JUNE 25,         JUNE 24,   JUNE 25,
                                                        2006       2005             2006       2005
                                                      --------   --------         --------   --------
                                                                       (IN THOUSANDS)
<S>                                                <C>           <C>            <C>          <C>
Net Sales:
Engineered Systems & Services ..................       $62,164    $61,638         $121,430   $112,661
Electronic Systems & Communications ............        90,234     94,474          150,677    159,959
                                                       -------    -------         --------   --------
                                                       152,398    156,112          272,107    272,620
                                                       -------    -------         --------   --------
Operating earnings:
Engineered Systems & Services ..................       $ 1,589    $ 2,396         $  3,217   $  6,163
Electronic Systems & Communications ............         4,243     11,348            2,516     14,329
Environmental cost provision, Deer Park facility
                                                            --     (1,250)              --     (1,250)
                                                       -------    -------         --------   --------
                                                         5,832     12,494            5,733     19,242
                                                       -------    -------         --------   --------
Net interest expense ...........................        (1,136)    (1,980)          (2,539)    (3,670)
Other, net .....................................          (111)       (15)            (257)       (60)
                                                       -------    -------         --------   --------
Earnings before income taxes ...................       $ 4,585    $10,499         $  2,937   $ 15,512
                                                       =======    =======         ========   ========
</TABLE>


                                       11
<PAGE>

(12) RECENT ACCOUNTING PRONOUNCEMENTS

     In June 2006, the FASB issued FASB Interpretation No. 48 "Accounting for
Uncertainty in Income Taxes (an interpretation of FASB Statement No. 109)" which
is effective for fiscal years beginning after December 15, 2006. This
interpretation was issued to clarify the accounting for uncertainty in income
taxes recognized in the financial statements by prescribing a recognition
threshold and measurement attribute for the financial statement recognition and
measurement of a tax position taken or expected to be taken in a tax return. We
are currently evaluating the potential impact of this interpretation.

(13) SUBSEQUENT EVENTS

     On July 26, 2006 the Company entered into an agreement to acquire CAS, Inc
(CAS), a privately-held company that provides engineering services, logistic
support and weapons-systems analysis to the Department of Defense (DOD).

     The agreed purchase price consists of (i) a cash component of $170.7
million payable at closing, (ii) the issuance of the Company's common shares
valued at $4.9 million, and (iii) retention payments to certain key employees in
the amount of $10 million to be paid over a three-year period. The source of
funds for the acquisition is a combination of the Company's available cash, as
well as advances under its existing credit facility. The transaction is subject
to certain conditions, including applicable regulatory approval. The acquisition
is expected to close in September 2006.

     On July 26, 2006 the Company entered into an agreement to acquire Impact
Science & Technology Inc (IST), a privately-held company that provides Signals
Intelligence (SIGINT) systems and analysis support to the intelligence
community, and advanced countermeasures and electronic-attack systems to the DOD
and other government agencies.

     The agreed purchase price consists of (i) a cash component of $106 million
payable at closing, (ii) a promissory note in the amount of $18 million to be
paid over three years, and (iii) retention payments to certain senior managers
in the form of restricted common shares valued at approximately $9 million. The
source of funds for the acquisition is a combination of the Company's available
cash, as well as advances under its existing credit facility. The transaction is
subject to certain conditions, including applicable regulatory approval. The
acquisition is expected to close in September 2006.

(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
June 24, 2006 and December 31, 2005 and for the three and six month periods
ended June 24, 2006 and June 25, 2005. 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.

EDO CORPORATION
CONDENSED CONSOLIDATING BALANCE SHEET
JUNE 24, 2006
(IN THOUSANDS)

<TABLE>
<CAPTION>
                                          EDO
                                      Corporation
                                        Parent     Subsidiary
                                     Company Only  Guarantors  Non-Guarantors  Eliminations  Consolidated
                                     ------------  ----------  --------------  ------------  ------------
<S>                                  <C>           <C>         <C>             <C>           <C>
ASSETS
Current assets:
Cash and cash equivalents              $102,193     $    520       $ 6,379             --      $109,092
Accounts receivable, net                 56,187      108,725         3,103             --       168,015
Inventories                              13,389       53,856         3,516             --        70,761
Deferred income tax asset, net            9,090           --            --             --         9,090
Notes receivable                          7,000           --            --             --         7,000
Prepayments and other                    11,125        1,807           227             --        13,159
                                       --------     --------       -------      ---------      --------
Total current assets                    198,984      164,908        13,225             --       377,117
Investment in subsidiaries              330,850           --            --       (330,850)           --
Property, plant and equipment, net       26,577       21,992         3,444             --        52,013
Goodwill                                     --      140,709         8,710             --       149,419
Other intangible assets, net                 --       47,094        11,117             --        58,211
Deferred income tax asset, net           29,637       (2,337)           --             --        27,300
Other assets                             23,440        1,777            --             --        25,217
                                       --------     --------       -------      ---------      --------
                                       $609,488     $374,143       $36,496      $(330,850)     $689,277
</TABLE>


                                       12

<PAGE>

<TABLE>
<S>                                  <C>           <C>         <C>             <C>           <C>
LIABILITIES AND SHAREHOLDERS'
   EQUITY
Current liabilities:
Accounts payable and accrued
   liabilities                         $ 27,791     $ 41,199      $ 3,855              --    $ 72,845
Contract advances and deposits           13,764       31,641           --              --      45,405
Notes payable                             2,000           --           --              --       2,000
                                       --------     --------      -------       ---------    --------
Total current liabilities                43,555       72,840        3.855              --     120,250
Income taxes payable                      6,513           --           --              --       6,513
Deferred income taxes                    (2,870)       2,497          373              --          --
Note payable, long-term                   5,000           --           --              --       5,000
Long-term debt                          201,250           --           --              --     201,250
Post retirement benefits
   obligations                          104,268           --           --              --     104,268
Environmental obligation                  1,386           --           --              --       1,386
Other long-term liabilities                  48           --           --              --          48
Intercompany accounts                        --      188,999       25,344        (214,343)         --
Shareholders' equity:
Preferred shares                             --           --           --              --          --
Common shares                            20,470           98           --             (98)     20,470
Additional paid-in capital              168,636       25,221        6,418         (31,639)    168,636
Retained earnings                       124,331       88,554          268         (88,822)    124,331
Accumulated other comprehensive
   loss, net of income tax benefit      (46,986)         (14)         238              --     (46,762)
Treasury shares                          (1,950)      (4,052)          --           4,052      (1,950)
Unearned ESOP shares                    (14,163)          --           --              --     (14,163)
                                       --------     --------      -------       ---------    --------
Total shareholders' equity              250,338      109,807        6,924        (116,507)    250,562
                                       --------     --------      -------       ---------    --------
                                       $609,488     $374,143      $36,496       $(330,850)   $689,277
                                       ========     ========      =======       =========    ========
</TABLE>

EDO CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF
EARNINGS FOR THE THREE MONTHS ENDED
JUNE 24, 2006
(IN THOUSANDS)

<TABLE>
<CAPTION>
                                          EDO
                                      Corporation
                                        Parent     Subsidiary
                                     Company Only  Guarantors  Non-Guarantors  Eliminations  Consolidated
                                     ------------  ----------  --------------  ------------  ------------
<S>                                  <C>           <C>         <C>             <C>           <C>
Net Sales                               $50,353     $98,885        $6,057        $(2,897)      $152,398
Costs and expenses:
Cost of sales                            42,355      76,317         3,882         (2,897)       119,657
Selling, general and administrative       4,185      17,816         1,902             --         23,903
Research and development                    933       1,982            91             --          3,006
                                        -------     -------        ------        -------       --------
                                         47,473      96,115         5,875         (2,897)       146,566
                                        -------     -------        ------        -------       --------
Operating Earnings                        2,880       2,770           182             --          5,832
Non-operating income (expense)
Interest income                           1,048          --            53             --          1,101
Interest expense                         (2,255)         18            --             --         (2,237)
Other, net                                   (6)        (66)          (39)            --           (111)
                                        -------     -------        ------        -------       --------
                                         (1,213)        (48)           14             --         (1,247)
Earnings before income taxes              1,667       2,722           196             --          4,585
Income tax benefit (expense)              3,439      (1,614)         (139)            --          1,686
                                        -------     -------        ------        -------       --------
Earnings after income taxes               5,106       1,108            57             --          6,271
Equity in undistributed earnings of
   subsidiaries                           1,165          --            --         (1,165)            --
                                        -------     -------        ------        -------       --------
Net earnings                            $ 6,271     $ 1,108        $   57        $(1,165)      $  6,271
                                        =======     =======        ======        =======       ========
</TABLE>

EDO CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF EARNINGS FOR THE
SIX MONTHS ENDED
JUNE 24, 2006
(IN THOUSANDS)

<TABLE>
<CAPTION>
                                         EDO
                                      Corporation
                                        Parent     Subsidiary
                                     Company Only  Guarantors  Non-Guarantors  Eliminations  Consolidated
                                     ------------  ----------  --------------  ------------  ------------
<S>                                  <C>           <C>         <C>             <C>           <C>
Net Sales                              $  97,340    $ 167,971     $ 12,411      $  (5,615)     $ 272,107
Costs and expenses:
Cost of sales                             81,190      127,026        8,300         (5,615)       210,901
Selling, general and administrative        9,693       34,958        4,610             --         49,261
Research and development                   1,815        4,119          278             --          6,212
                                       ---------    ---------     --------      ---------      ---------
                                          92,698      166,103       13,188         (5,615)       266,374
                                       ---------    ---------     --------      ---------      ---------
Operating Earnings (loss)                  4,642        1,868         (777)            --          5,733
</TABLE>


                                       13
<PAGE>

<TABLE>
<S>                                  <C>           <C>         <C>             <C>           <C>
Interest income                           2,015           --           107             --         2,122
Interest expense                         (4,695)          34            --             --        (4,661)
Other, net                                  (22)        (152)          (83)            --          (257)
                                      ---------    ---------      --------      ---------     ---------
                                         (2,702)        (118)           24             --        (2,796)
Earnings (loss) before income taxes       1,940        1,750          (753)            --         2,937
Income tax benefit (expense)              4,544       (2,217)           68             --         2,395
                                      ---------    ---------      --------      ---------     ---------
Earnings (loss) after income taxes        6,484         (467)         (685)            --         5,332
Equity in undistributed earnings of
   subsidiaries                          (1,152)          --            --          1,152            --
                                      ---------    ---------      --------      ---------     ---------
Net earnings (loss)                   $   5,332    $    (467)     $   (685)     $   1,152     $   5,332
                                      =========    =========      ========      =========     =========
</TABLE>

EDO CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED
JUNE 24, 2006
(IN THOUSANDS)

<TABLE>
<CAPTION>
                                         EDO
                                      Corporation
                                        Parent     Subsidiary
                                     Company Only  Guarantors  Non-Guarantors  Eliminations  Consolidated
                                     ------------  ----------  --------------  ------------  ------------
<S>                                  <C>           <C>         <C>             <C>           <C>
OPERATING ACTIVITIES:

Earnings (loss) from continuing
   operations                          $  5,332     $   (467)      $ (685)        $ 1,152      $  5,332
Adjustments to earnings (loss) to
   arrive at cash provided by
   continuing operations:
Depreciation                              2,444        2,839          453              --         5,736
Amortization                                 --        2,914          500              --         3,414
Deferred tax provision                      389         (374)          --              --            15
Bad debt recovery                           (68)          --           --              --           (68)
Loss on sale of property, plant and
   equipment                                 22           11           --              --            33
Long-Term Incentive Plan
   compensation expense                   1,599           --           --              --         1,599
Stock option compensation expense           877           --           --              --           877
Employee Stock Ownership Plan
   compensation expense                   2,335           --           --              --         2,335
Dividends on unallocated Employee
   Stock Ownership Plan shares              116           --           --              --           116
Common shares issued for directors'
   fees                                     110           --           --              --           110
Changes in operating assets and
   liabilities, excluding effects
   of acquisitions:
Equity in earnings of subsidiaries        1,152           --           --          (1,152)           --
Intercompany                            (13,978)      13,405          573              --            --
Accounts receivable                      12,484        8,439          320              --        21,243
Inventories                               3,899      (17,709)        (384)             --       (14,194)
Prepayments and other assets             (7,180)      (1,582)         107              --        (8,655)
Accounts payable, accrued
   liabilities and other                 (9,620)      (2,234)         712              --       (11,142)
Contract advances and deposits            7,644       (4,483)          --              --         3,161
                                       --------     --------       ------         -------      --------
Cash provided by operations               7,557          759        1,596              --         9,912
                                       --------     --------       ------         -------      --------

INVESTING ACTIVITIES:

Settlement of purchase price on
   2005 acquisitions                       (800)          --           --              --          (800)
Purchase of plant and equipment          (3,721)      (4,471)        (649)             --        (8,841)
Payments received on notes
   receivable                               100           --           --              --           100
                                       --------     --------       ------         -------      --------
Cash used by investing activities        (4,421)      (4,471)        (649)             --        (9,541)
                                       --------     --------       ------         -------      --------

FINANCING ACTIVITIES:

Proceeds from exercise of stock
   options                                  741           --           --              --           741
Excess income tax benefit from
   stock options and
   Long-Term Incentive Plan                 329           --           --              --           329
Proceeds from management group
   receivables                              140           --           --              --           140
Payment of common share cash
   dividends                             (1,220)          --           --              --        (1,220)
                                       --------     --------       ------         -------      --------
Cash used by financing activities           (10)          --           --              --           (10)
                                       --------     --------       ------         -------      --------
Net increase (decrease) in cash and
   cash equivalents                       3,126       (3,712)         947              --           361
Cash and cash equivalents at
   beginning of year                     99,067        4,232        5,432              --       108,731
                                       --------     --------       ------         -------      --------
Cash and cash equivalents at end of
   period                              $102,193     $    520       $6,379         $    --      $109,092
                                       ========     ========       ======         =======      ========
</TABLE>


                                       14
<PAGE>

EDO CORPORATION
CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2005
(IN THOUSANDS)

<TABLE>
<CAPTION>
                                         EDO
                                      Corporation
                                        Parent     Subsidiary
                                     Company Only  Guarantors  Non-Guarantors  Eliminations  Consolidated
                                     ------------  ----------  --------------  ------------  ------------
<S>                                  <C>           <C>         <C>             <C>           <C>
ASSETS

Current assets:

Cash and cash equivalents              $ 99,067     $  4,232       $ 5,432             --      $108,731
Accounts receivable, net                 68,603      117,164         3,423             --       189,190
Inventories                              17,288       36,147         3,132             --        56,567
Deferred income tax asset, net            8,946           --            --             --         8,946
Notes receivable                          7,358         (258)           --             --         7,100
Prepayments and other                     2,037        1,438           334             --         3,809
                                       --------     --------       -------      ---------      --------
Total current assets                    203,299      158,723        12,321             --       374,343
                                       --------     --------       -------      ---------      --------

Investment in subsidiaries              317,356           --            --       (317,356)           --
Property, plant and equipment, net       25,946       20,380         3,248             --        49,574
Goodwill                                     --      143,637         8,710             --       152,347
Other intangible assets, net                 --       44,308        11,617             --        55,925
Deferred income tax asset, net           29,637           --            --             --        29,637
Other assets                             24,751          822            --             --        25,573
                                       --------     --------       -------      ---------      --------
                                       $600,989     $367,870       $35,896      $(317,356)     $687,399
                                       --------     --------       -------      ---------      --------

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Accounts payable and accrued
   liabilities                         $ 37,942     $ 43,729       $ 3,566             --      $ 85,237
Contract advances and deposits            6,120       36,124            --             --        42,244
Notes payable                             2,000           --            --             --         2,000
                                       --------     --------       -------      ---------      --------
Total current liabilities                46,062       79,853         3,566             --       129,481
                                       --------     --------       -------      ---------      --------

Long-term debt                          201,250           --            --             --       201,250
Income taxes payable                      6,513           --            --             --         6,513
Deferred income tax liabilities,
   net                                   (3,244)       2,891           353             --            --
Post retirement benefits
   obligations                          103,815           --            --             --       103,815
Notes payable                             5,000           --            --             --         5,000
Environmental obligation                  1,392           --            --             --         1,392
Other long-term liabilities                  55           --            --             --            55
Inter-company accounts                       --      174,844        24,771       (199,615)           --

Shareholders' equity:

Preferred shares                             --           --            --             --            --
Common shares                            20,306           98            --            (98)       20,306
Additional paid-in capital              167,219       25,221         6,418        (31,639)      167,219
Retained earnings                       120,103       89,103           953        (90,056)      120,103
Accumulated other comprehensive
   loss, net of income tax benefit      (46,819)         (88)         (165)            --       (47,072)

Treasury shares                          (1,868)      (4,052)           --          4,052        (1,868)
Unearned ESOP shares                    (14,789)          --            --             --       (14,789)
Management group receivables               (140)          --            --             --          (140)

Deferred compensation under
   Long-Term Incentive Plan              (3,866)          --            --             --        (3,866)
                                       --------     --------       -------      ---------      --------
Total shareholders' equity              240,146      110,282         7,206       (117,741)      239,893
                                       --------     --------       -------      ---------      --------
                                       $600,989     $367,870       $35,896      $(317,356)     $687,399
                                       ========     ========       =======      =========      ========
</TABLE>

EDO CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF EARNINGS FOR THE
THREE MONTHS ENDED
JUNE 25, 2005
(IN THOUSANDS)

<TABLE>
<CAPTION>
                                         EDO
                                      Corporation
                                        Parent     Subsidiary
                                     Company Only  Guarantors  Non-Guarantors  Eliminations  Consolidated
                                     ------------  ----------  --------------  ------------  ------------
<S>                                  <C>           <C>         <C>             <C>           <C>
Continuing Operations:

Net Sales                               $50,690      $92,941       $ 6,801        $ 5,680      $156,112
Costs and expenses:
Cost of sales                            41,914       65,971         4,795          5,680       118,360
Selling, general and administrative       3,806       14,786         1,422             --        20,014
Research and development                  1,639        2,092           263             --         3,994
Environmental cost provision, Deer
   Park                                   1,250           --            --             --         1,250
                                        -------      -------       -------        -------      --------
                                         48,609       82,849         6,480          5,680       143,618
</TABLE>


                                       15
<PAGE>

<TABLE>
<S>                                  <C>           <C>         <C>             <C>           <C>
                                       -------      -------        -----         -------       -------
Operating Earnings                       2,081       10,092          321              --        12,494
                                       -------      -------        -----         -------       -------
Non-operating income (expense)
Interest income                            246           11           37              --           294
Interest expense                        (2,274)          --           --              --        (2,274)
Other, net                                   1           29          (45)             --           (15)
                                       -------      -------        -----         -------       -------
                                        (2,027)          40           (8)             --        (1,995)
Earnings before income taxes                54       10,132          313              --        10,499
Income tax expense                        (248)      (3,981)        (181)             --        (4,410)
                                       -------      -------        -----         -------       -------
(Loss) earnings after income taxes        (194)       6,151          132              --         6,089
Equity in undistributed earnings
   of subsidiaries                       6,283           --           --          (6,283)           --
                                       -------      -------        -----         -------       -------
Net earnings                           $ 6,089      $ 6,151        $ 132         $(6,283)      $ 6,089
                                       =======      =======        =====         =======       =======
</TABLE>

EDO CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF EARNINGS FOR THE
SIX MONTHS ENDED
JUNE 25, 2005
(IN THOUSANDS)

<TABLE>
<CAPTION>
                                        EDO Corporation     Subsidiary
                                      Parent Company Only   Guarantors   Non-Guarantors   Eliminations   Consolidated
                                      -------------------   ----------   --------------   ------------   ------------
<S>                                   <C>                   <C>          <C>              <C>            <C>
Continuing Operations:
Net Sales                                   $86,940          $179,006       $14,205         $(7,531)       $272,620
Costs and expenses:
Cost of sales                                71,604           129,147        10,194          (7,531)        203,414
Selling, general and administrative           7,534            29,754         3,014              --          40,302
Research and development                      3,022             4,861           529              --           8,412
Environmental provision, Deer Park
   facility                                   1,250                --            --              --           1,250
                                            -------          --------       -------         -------        --------
                                             83,410           163,762        13,737          (7,531)        253,378
                                            -------          --------       -------         -------        --------
Operating Earnings                            3,530            15,244           468              --          19,242

Non-operating income (expense)
Interest income                                 709                28            58              --             795
Interest expense                             (4,465)               --            --              --          (4,465)
Other, net                                       11                23           (94)             --             (60)
                                            -------          --------       -------         -------        --------
                                             (3,745)               51           (36)             --          (3,730)
(Loss) earnings from income taxes              (215)           15,295           432              --          15,512
Income tax expense                             (133)           (6,085)         (297)             --          (6,515)
                                            -------          --------       -------         -------        --------
(loss) earnings after income taxes             (348)            9,210           135              --           8,997
Equity in undistributed earnings of
   subsidiaries                               9,345                --            --          (9,345)             --
                                            -------          --------       -------         -------        --------
Net earnings                                $ 8,997          $  9,210       $   135         $(9,345)       $  8,997
                                            =======          ========       =======         =======        ========
</TABLE>

EDO CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED
JUNE 25, 2005
(IN THOUSANDS)

<TABLE>
<CAPTION>
                                            EDO Corporation     Subsidiary
                                          Parent Company Only   Guarantors   Non-Guarantors   Eliminations   Consolidated
                                          -------------------   ----------   --------------   ------------   ------------
<S>                                       <C>                   <C>          <C>              <C>            <C>
OPERATING ACTIVITIES:
Earnings from continuing operations             $  8,997         $  9,210       $   135         $(9,345)       $  8,997
Adjustments to earnings to arrive
   at cash provided (used) by
   continuing operations:
Depreciation                                       2,291            2,386           265              --           4,942
Amortization                                          --            2,112           509              --           2,621
Deferred tax benefit                                 113               --            --              --             113
Bad debt expense                                     184              640            --              --             824
Environmental cost provision, Deer
   Park facility                                   1,250               --            --              --           1,250
Deferred compensation expense                        866               --            --              --             866
Employee Stock Ownership Plan
   compensation expense                            2,550               --            --              --           2,550
Dividends on unallocated Employee
   Stock Ownership Plan shares                       128               --            --              --             128
</TABLE>


                                       16

<PAGE>

<TABLE>
<S>                                       <C>                   <C>          <C>              <C>            <C>
Common shares issued for directors'
   fees                                               98               --            --              --              98
Changes in operating assets and
   liabilities, excluding effects
   of acquisitions:
Equity in earnings of subsidiaries                (9,345)              --            --           9,345              --
Inter-company                                      6,746           (6,629)         (117)             --              --
Accounts receivable                               (4,858)         (10,481)        1,345              --         (13,994)
Inventories                                      (11,414)         (10,483)          281              --         (21,616)
Prepayments and other assets                       1,870               51             8              --           1,929
Accounts payable, accrued
   liabilities and other                          (7,202)           8,711        (2,147)             --            (638)
Contract advances and deposits                    (2,817)           6,860            --              --           4,043
                                                --------         --------       -------         -------        --------
Cash (used) provided by continuing
   operations                                    (10,543)           2,377           279              --          (7,887)
                                                --------         --------       -------         -------        --------

INVESTING ACTIVITIES:
Purchase of plant and equipment                   (8,505)          (4,541)          (43)             --         (13,089)
Payments received on notes receivable                150               --            --              --             150
Cash paid for acquisition settlements,
   net of cash acquired                          (35,072)              --            --              --         (35,072)
                                                --------         --------       -------         -------        --------
Cash used by investing activities                (43,427)          (4,541)          (43)             --         (48,011)
                                                --------         --------       -------         -------        --------

FINANCING ACTIVITIES:
Proceeds from exercise of stock options              593               --            --              --             593
Excess Income tax benefit from stock
   options and Long-Term Incentive Plan              435               --            --              --             435
Repayment of acquired debt                        (4,877)              --            --              --          (4,877)
Payment of common share cash dividends            (1,209)              --            --              --          (1,209)
                                                --------         --------       -------         -------        --------
Cash used by financing activities                 (5,058))             --            --              --          (5,058)
                                                --------         --------       -------         -------        --------
Net (decrease) increase in cash and
   cash equivalents                              (59,028)          (2,164)          236              --         (60,956)
Cash and cash equivalents at beginning
   of year                                        93,129            1,314         4,441              --          98,884
                                                --------         --------       -------         -------        --------
Cash and cash equivalents at end of
   period                                       $ 34,101         $   (850)      $ 4,677         $    --        $ 37,928
                                                ========         ========       =======         =======        ========
</TABLE>

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.

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. 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.


                                       17
<PAGE>

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.

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 title to or 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


                                       18

<PAGE>

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.

     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 June 24, 2006.

THREE MONTHS ENDED JUNE 24, 2006 COMPARED WITH THREE MONTHS ENDED JUNE 25, 2005

     Net sales by segment were as follows:

<TABLE>
<CAPTION>
                                           THREE MONTHS ENDED
                                         ---------------------    INCREASE/(DECREASE)
                                           JUNE 24,   JUNE 25,            FROM
SEGMENT                                      2006       2005          PRIOR PERIOD
-------                                    --------   --------    -------------------
                                         (DOLLARS IN THOUSANDS)
<S>                                      <C>          <C>         <C>
Engineered Systems & Services.........     $ 62,164   $ 61,638            0.9%
Electronic Systems & Communications...       90,234     94,474           (4.5%)
                                           --------   --------           ----
Total.................................     $152,398   $156,112           (2.4%)
                                           ========   ========           ====
</TABLE>

     In the Engineered Systems and Services segment, the increase in sales was
attributable to higher sales of integrated composite structures, due to the
acquisition of Fiber Innovations, which was acquired in the third quarter of
2005 and increased sales in our undersea warfare products. These increases were
partially offset by lower sales in aircraft armament systems.

     In the Electronic Systems and Communications segment, the decrease in sales
was attributable to continued lower sales volume of electronic force protection
systems resulting from a delay in commencing delivery due to expanded testing
requirements in the development phase and lack of systems orders during the
previous periods. This decrease was partially offset by increased sales of C4
products and systems, including the Transition Switch Module "TSM" in addition
to sales contributed by EVI and NexGen, which were acquired in the second and
fourth quarters of 2005, respectively.

     Operating earnings by segment were as follows:

<TABLE>
<CAPTION>
                                                         THREE MONTHS ENDED
                                                       ---------------------
                                                         JUNE 24,   JUNE 25,
SEGMENT                                                     2006      2005
-------                                                  --------   --------
                                                       (DOLLARS IN THOUSANDS)
<S>                                                    <C>          <C>
Engineered Systems & Services.......................      $1,589    $ 2,396
Electronic Systems & Communications ................       4,243     11,348
Environmental cost provision, Deer  Park facility...          --     (1,250)
                                                          ------    -------
Total...............................................      $5,832    $12,494
                                                          ======    =======
</TABLE>

     Operating earnings for the three months ended June 24 2006 were $5.8
million or 3.8% of net sales. This compares to operating earnings for the three
months ended June 25, 2005 of $12.5 million or 8.0% of net sales.

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

<TABLE>
<CAPTION>
                                     THREE MONTHS ENDED
                                   ---------------------
                                     JUNE 24,   JUNE 25,
                                       2006       2005
                                     --------   --------
                                   (DOLLARS IN THOUSANDS)
<S>                                <C>          <C>
Pension.........................      $1,194     $1,069
ESOP Compensation expense.......      $1,149     $1,236
Intangible asset amortization...      $1,802     $1,311
                                      ------     ------
                                      $4,145     $3,616
                                      ======     ======
</TABLE>

     The increase in pension expense in 2006 compared to 2005 is attributable to
changes in actuarial assumptions such as discount rate and return on plan
assets. The lower ESOP compensation expense for the three months ended June 24,
2006 is attributable to our lower average stock price compared to the three
months ended June 25, 2005. Pension and ESOP compensation expense are allocated


                                       19

<PAGE>

between cost of sales and selling, general and administrative expense. The
increase in intangible asset amortization expense is associated with the 2005
acquisitions and the finalizing of the related purchase price allocations.

     The Engineered Systems and Services segment's operating earnings for the
three months ended June 24, 2006 were $1.6 million or 2.6% of this segment's net
sales compared to operating earnings of $2.4 million or 3.9% of this segment's
net sales for the three months ended June 25, 2005. Operating earnings for the
three months ended June 24, 2006, were negatively impacted by a $1.7 million
cost growth on an undersea warfare program and $1.4 million on an aircraft
armament program. We believe that, based on our most current estimates, we have
accounted for all future costs necessary to complete these programs. This was
partially offset by a release of a $0.9 million reserve on an aircraft armament
program which was delivered during the quarter as well as a $0.5 million reserve
release on a completed undersea warfare systems program.

     The Engineered Systems and Services segment's operating earnings for the
three months ended June 25, 2005 were negatively impacted by $2.2 million for
the same undersea warfare systems program noted above. Additionally, earnings
were negatively impacted by a write-off of a $0.2 million receivable from a
customer in our fiber composite business.

     The Electronic Systems and Communications segment's operating earnings for
the three months ended June 24, 2006 were $4.2 million or 4.7% of this segment's
net sales compared to operating earnings of $11.4 million or 12.0% of this
segment's net sales for the three months ended June 25, 2005. Operating Earnings
were negatively impacted by cost growth of $1.1 million on an interference
cancellation program, lower sales volume of electronic force protection systems.
Operating earnings for the three months ended June 25, 2005 were positively
influenced by sales relating to electronic force protection systems.

     Selling, general and administrative expenses for the three months ended
June 24, 2006 of $23.9 million increased as a percent of net sales to 15.7% from
12.8% for the three months ended June 25, 2005. The increase is attributable to
the three acquisitions made in 2005, which resulted in an increase in intangible
amortization expense.

     Research and development expense for the three months ended June 24, 2006
decreased to $3.0 million or 2.0% of net sales from $4.0 million or 2.6% of net
sales for the three months ended June 25, 2005, during which time there was
higher than usual spending on electronic force protection and composite
munitions.

     Interest expense, net of interest income, for the three months ended June
24, 2006 decreased to $1.1 million from $2.0 million for the three months ended
June 25, 2005 due to a higher average cash balance for the three months ended
June 24, 2006 compared to 2005 and a lower interest rate on the convertible
notes. Interest expense for the three months ended June 24, 2006 is associated
primarily with our 4.0% Convertible Subordinated Notes ("Notes") due 2025 and
issued in November 2005. Also, included in interest expense is 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.

     Income tax expense reflects a benefit of 37% for the three month period
ended June 24, 2006 and an expense of 42% for the three month period ended June
25, 2005. For the three months ended June 24, 2006, we recorded an income tax
benefit of $3.7 million due to the reversal of income tax contingency reserves
related to the resolution of an outstanding tax matter.

     For the three months ended June 24, 2006, net earnings were $6.3 million or
$0.30 per diluted common share on 24.5 million diluted shares compared to net
earnings of $6.1 million or $0.31 per diluted common share on 22.7 million
diluted shares for the three months ended June 25, 2005. The convertible notes
had a dilutive effect in the second quarter of 2006 and all of 2005.

SIX MONTHS ENDED JUNE 24, 2006 COMPARED WITH SIX MONTHS ENDED JUNE 25, 2005

     Net sales by segment were as follows:

<TABLE>
<CAPTION>
                                            SIX MONTHS ENDED
                                         ---------------------   INCREASE/(DECREASE)
                                           JUNE 24,   JUNE 25,          FROM
SEGMENT                                      2006       2005        PRIOR PERIOD
-------                                    --------   --------   -------------------
                                         (DOLLARS IN THOUSANDS)
<S>                                      <C>          <C>        <C>
Engineered Systems & Services.........     $121,430   $112,661           7.8%
Electronic Systems & Communications...      150,677    159,959          (5.8%)
                                           --------   --------          ----
Total.................................     $272,107   $272,620          (0.2%)
                                           ========   ========          ====
</TABLE>

     In the Engineered Systems and Services segment, the increase in sales was
attributable to higher sales of aircraft armament systems relating to the F-22
missile launcher program, higher sales in composite structures which include
Fiber Innovations which was acquired in the third quarter of 2005. These
increases in sales were partially offset by lower sales in our Technical
Services Operations division due to delayed funding.


                                       20
<PAGE>

     In the Electronic Systems and Communications segment, the decrease in sales
was attributable to lower sales of electronic force protection systems for the
six months ended June 24, 2006 compared to the six months ended June 25, 2005.
The lower sales of electronic force protection systems relates to a delay in
commencing production due to extended testing requirements in the development
phase. In addition, there were delays in milestone achievements of
reconnaissance and surveillance systems. These lower sales were partially offset
by sales of EVI and NexGen, which were acquired in the second and fourth quarter
of 2005, respectively. In addition sales for the six months ended June 24, 2006
were positively influenced by the delivery of the Joint Enhanced Core
Communication Systems ("JECCS) for the Marine Corps.

     Operating earnings by segment were as follows:

<TABLE>
<CAPTION>
                                                          SIX MONTHS ENDED
                                                       ----------------------
                                                         JUNE 24,   JUNE 25,
SEGMENT                                                    2006       2005
-------                                                  --------   -------
                                                       (DOLLARS IN THOUSANDS)
<S>                                                    <C>         <C>
Engineered Systems & Services ......................      $3,217    $ 6,163
Electronic Systems & Communications ................       2,516     14,329
Environmental cost provision, Deer Park facility ...          --     (1,250)
                                                          ------    -------
Total ..............................................      $5,733    $19,242
                                                          ======    =======
</TABLE>

     Operating earnings for the six months ended June 24, 2006 were $5.7 million
or 2.1% of net sales. This compares to operating earnings for the six months
ended June 25, 2005 of $19.2 million or 7.1% of net sales.

     The Engineered Systems and Services segment's operating earnings for the
six months ended June 24, 2006 were $3.2 million or 2.6% of this segment's net
sales compared to operating earnings of $6.2 million or 5.5% of this segment's
net sales for the six months ended June 25, 2005. For the six months ended June
24, 2006 operating earnings were negatively impacted by a $1.7 million cost
growth on an undersea warfare program, $1.4 million on an aircraft armament
program, as well as an estimated settlement of a lawsuit and related legal
costs. This was partially offset by a release of a $0.9 million reserve on an
aircraft armament program which was delivered during the quarter, as well as a
$0.5 million reserve release on a sonar system program. We believe that, based
on our most current estimates, we have accounted for all future costs necessary
to complete these programs.

     The Engineered Systems and Services segment's operating earnings for the
six months ended June 25, 2005 were negatively impacted by a $1.25 million
reserve for an environmental cleanup effort relating to the Company's former
Deer Park facility as well as cost growth of approximately $1.8 million on the
undersea warfare systems program. This was offset by a positive impact to
operating earnings of approximately $3.4 million resulting from the release of a
reserve which was established for the MK105 related contract, which was
delivered during the second quarter of 2005.

     In the Electronic Systems and Communications segment, operating earnings
for the six months ended June 24, 2006 were $2.5 million or 1.7% of this
segment's net sales compared to operating earnings of $14.3 million or 9.0% of
this segment's net sales for the six months ended June 25, 2005. Operating
Earnings were negatively impacted by cost growth of $2.5 million on an
interference cancellation program, lower sales volume of electronic force
protection systems and delays in milestone achievements of reconnaissance and
surveillance systems. Furthermore, we provided for estimated liabilities and
legal costs incurred in connection with a contract dispute.

     Legal costs and estimated liabilities for the legal matters referred to
above had an adverse effect on the results of operations for the six months
ended June 24, 2006 of approximately $3.3 million.

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

<TABLE>
<CAPTION>
                                                       SIX MONTHS ENDED
                                                    ----------------------
                                                      JUNE 24,   JUNE 25,
                                                        2006       2005
                                                      --------   --------
                                                    (DOLLARS IN THOUSANDS)
<S>                                                 <C>          <C>
Pension .........................................      $2,388     $2,139
ESOP compensation expense .......................      $2,335     $2,550
Intangible asset amortization ...................      $3,414     $2,621
Stock-based compensation expense for options ....      $  877     $   --
                                                       ------     ------
                                                       $9,014     $7,310
                                                       ======     ======
</TABLE>

     The increase in pension expense in 2006 compared to 2005 is attributable to
changes in actuarial assumptions such as discount rate and return on plan
assets. The lower ESOP compensation expense for the first six months of 2006 is
attributable to our lower average stock price compared to the first six months
of 2005. Pension and ESOP compensation expense are allocated between cost of
sales


                                      21

<PAGE>

and selling, general and administrative expense. The increase in intangible
asset amortization expense is attributable to the three acquisitions made in
2005.

     The increase in Stock-Based Compensation Expense relates to the
implementation of Financial Accounting Standards Board Statement No. 123(R),
Accounting for Stock-Based Compensation, (FAS 123 (R)). With respect to FAS 123
(R), the remaining compensation cost in 2006 related to non-vested stock options
is approximately $40 thousand. Prior to adoption of FAS 123 (R) as of January 1,
2006, we accounted for our stock-based compensation plans in accordance with
Accounting Principles Board (APB) Opinion No. 25, "Accounting for Stock Issued
to Employees" and related interpretations. Under APB No. 25, because the
exercise price of the Company's stock options is set equal to the market price
of the underlying stock on the date of grant, no compensation expense was
recognized and pro-forma disclosure information was provided. In 2006, we only
issued options to Directors, which when issued were 100% vested and, therefore,
accounted for most of the $0.9 million of expense recorded in the first quarter.

     Selling, general and administrative expenses for the six months ended June
24, 2006 of $49.3 million increased as a percent of net sales to 18.1% from
14.8% for the six months ended June 25, 2005. The increase is attributable to
the three acquisitions made in 2005, the aforementioned legal matters and the
effect of the implementation of FAS 123 (R). In addition, there were some
continuing start-up costs for our undersea warfare operation in Panama City,
Florida. Intangible asset amortization also increased slightly due to an
increase in intangibles from the acquisitions of EVI, Fiber Innovations, and
NexGen in 2005.

     Research and development expense for the six months ended June 24, 2006
decreased to $6.2 million or 2.3% of net sales from $8.4 million or 3.1% of net
sales for the six months ended June 25, 2005, during which time there was higher
spending on electronic force protection, aircraft armament and composite
munitions.

     Interest expense, net of interest income, for the six months ended June 24,
2006 decreased to $2.5 million from $3.7 million for the six months ended June
25, 2005, primarily due to higher interest income on a higher average cash
balance and a lower interest rate on our Convertible Notes. Interest expense for
the six months ended June 24, 2006 is associated primarily with our 4.0%
Convertible Subordinated Notes ("Notes") due 2025 and issued in November 2005.
Also, included in interest expense is 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.

     Income tax expense reflects a benefit of 82% for the six month period ended
June 24, 2006 and an expense 42% for the six month period ended June 25, 2005.
For the six months ended June 26, 2006, we recorded an income tax benefit of
$3.7 million due to the reversal of income tax contingency reserves related to
the resolution of an outstanding tax matter.

     For the six months ended June 24, 2006, net earnings were $5.3 million or
$0.29 per diluted common share on 18.5 million diluted shares compared to net
earnings of $9.0 million or $0.49 per diluted common share on 22.7 million
diluted shares for the six months ended June 25, 2005. The convertible notes
were anti-dilutive for the six months ended June 24, 2006 and dilutive for the
six months ended June 25, 2005.

LIQUIDITY AND CAPITAL RESOURCES

BALANCE SHEET

     Our cash and cash equivalents at June 24, 2006 were consistent with
year-end with a balance of $109.1 million compared to $108.7 million at December
31, 2005. Year-to-date cash from continuing operations was $9.9 million; $8.8
million was used for the purchase of capital equipment and $1.2 million for the
payment of common share dividends.

     Accounts receivable decreased 11.2% to $168.0 million at June 24, 2006 from
$189.2 million at December 31, 2005 due in part to timing of collections of
billed receivables and increased collection efforts at the Company. At June 24,
2006 approximately 88% of billed receivables were in the under-60 days aging
category compared with 81% at December 31, 2005.

     Inventories increased 25.1% to $70.8 million at June 24, 2006 from $56.6
million at December 31, 2005 due primarily to the work-in-progress on several
programs and the delays in milestone achievements which would have generated
sales and reduced inventories.

     The note receivable of $7.0 million at June 24, 2006 relates to the sale of
our facility in Deer Park in 2003. The Deer Park facility note was due on
October 9, 2005 or the date EDO achieved "Material Closure" defined as the
investigation, assessment and remediation of an Environmental Condition
sufficient to not cause any material interference with the Buyer's ability to
develop, construct, finance or lease the Premises. We believe that this note is
currently due, but it has not yet been collected.

     In the six months ended June 24, 2006, capital expenditures were $8.8
million. This compares to $13.1 million for the six months ended June 25, 2005.
For the six months ended June 25, 2005 the higher expenditures were attributable
to new facility capital for our Antenna Products business unit which was
relocated to a new leased facility, as well as expansion and upgrades at several
other facilities.


                                       22

<PAGE>

FINANCING ACTIVITIES

Credit Facility

     In November 2005, we entered into a $300 million credit facility which
replaced our expiring $200 million credit facility. The new credit facility is a
five-year facility with a consortium of banks, led by Citibank, N.A. as the
administrative agent, Bank of America as the syndication agent and Wachovia
Bank, N.A. as the documentation agent. The facility expires in November 2010.

     The Credit Agreement provides for a revolving credit facility in an
aggregate amount equal to $300 million which includes a swing loan facility with
a sublimit of $20 million and a letter of credit facility with a sub-limit of
$100 million. 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 June 24, 2006, LIBOR was approximately 5.3% and the applicable
adjustment to LIBOR was 1.5%. 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%.

     There were no direct borrowings outstanding under the credit facility at
June 24, 2006 or at December 31, 2005. Letters of credit outstanding at June 24,
2006 pertaining to the credit facility were $38.4 million, resulting in $261.6
million available for borrowings.

     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 June 24, 2006, 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. Accrued interest payable was $0.9 million at June
24, 2006. 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 June 24, 2006, there had been no
such conversions.

Shelf Registration

     At June 24, 2006, 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, have actively sought 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.

COMMITMENTS AND CONTINGENCIES

     In order to aggregate all commitments and contractual obligations as of
June 24, 2006, 2006, we have included the following table. We are obligated
under building and equipment leases expiring between 2006 and 2019. The
aggregate future minimum lease commitments under those obligations with
noncancellable 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 credits 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.

                         PAYMENTS DUE IN (IN MILLIONS):

<TABLE>
<CAPTION>
                                                                                       2011 AND
COMMITMENTS AND CONTRACTUAL OBLIGATIONS:    TOTAL   2006   2007   2008   2009   2010    BEYOND
----------------------------------------   ------   ----   ----   ----   ----   ----   --------
<S>                                        <C>      <C>    <C>    <C>    <C>    <C>    <C>
Note payable ...........................   $  7.0   $2.0   $2.0   $3.0    $--    $--    $   --
4.0% Convertible Subordinated Notes due
   2025(1) .............................   $201.2     --     --     --     --     --    $201.2
</TABLE>


                                       23

<PAGE>

<TABLE>
<S>                                        <C>      <C>     <C>     <C>     <C>     <C>     <C>
Operating leases .......................   $138.3     8.8    17.4    16.7    16.5    15.3     63.6
Letters of credit ......................   $ 38.4     3.7    23.7      --    10.5      --      0.5
Projected pension contributions ........   $ 23.0     6.0     6.0     6.0     5.0      --       --
Advance payment and performance bonds ..   $  1.9     0.2      --      --     1.7      --       --
                                           ------   -----   -----   -----   -----   -----   ------
Total ..................................   $409.8   $20.7   $49.1   $25.7   $33.7   $15.3   $265.3
                                           ======   =====   =====   =====   =====   =====   ======
</TABLE>

(1)  Excludes interest of approximately $8 million annually.

     Actual pension contributions may differ from amounts presented above and
are contingent on cash flow and liquidity.

     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 are unlikely to have a material adverse effect on our consolidated
financial position, results of operations or liquidity. However, certain legal
matters did have a material adverse effect on results of operations as noted
above under Results of Operations for the six months ended June 24, 2006.

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 six months ended June 24, 2006, sales of Warlock force
protection systems represented 0% of net sales compared to 19.3% and 13.1% for
the three and six months ended June 25, 2005, respectively.

BACKLOG

     The funded backlog of unfilled orders at June 24, 2006 increased to $608.0
million from $558.7 million at December 31, 2005. Our backlog consists primarily
of current orders under long-lived, mission-critical programs on 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 satellite programs and equipment sales, follow-on procurement,
contract continuance and future program awards, upgrades and spares support are
subject to: establishment and continuance of various consortiums for satellite
constellation programs; delay in launch dates due to equipment, weather or other
factors beyond our control; and development of sufficient customer base to
support a particular satellite constellation program.

     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.


                                       24
<PAGE>

     Expectations of future income tax rates can be affected by a variety of
factors, including statutory changes in Federal and state tax rates,
nondeductibility of goodwill amortization and IPR&D acquired in a stock purchase
business combination and the nondeductibility of our noncash ESOP compensation
expense.

     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, 2005.

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 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.

CHANGES IN INTERNAL CONTROLS

     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.

                           PART II - OTHER INFORMATION

ITEM 1A. RISK FACTORS

     None.

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

     At the Company's Annual Meeting of Shareholders held on April 25, 2006, the
following actions were taken:

     (a) Election of Directors. The following nominees were elected as
directors. The votes cast for or withheld for each nominee were as follows:

<TABLE>
<CAPTION>
Director               Votes For     Votes Withheld
--------             -------------   --------------
<S>                  <C>             <C>
Robert E. Allen      16,641,038.00      766,223.00
Robert Alvine        16,904,746.00      503,015.00
Dennis C. Blair      17,265,806.00      141,955.00
Robert M. Hanisee    16,451,666.00      956,095.00
Michael J. Hegarty   16,336,647.00    1,071,114.00
Leslie F. Kenne      17,309,094.00       98,667.00
Paul J. Kern         17,309,008.00       98,753.00
Ronald L. Leach      16,860,866.00      546,895.00
James Roth           17,308,100.00       99,661.00
James M. Smith       16,718,732.00      689,029.00
Robert S. Tyrer      16,861,128.00      546,633.00
Robert Walmsley      16,860,851.00      546,910.00
</TABLE>


                                       25

<PAGE>

     (b) The EDO Corporation 2006 Long-Term Incentive Plan was approved by the
shareholders. The votes cast for, against or withheld were as follows:
13,665,041 votes cast in favor, 1,806,520 votes cast against, 93,524 abstentions
and 1,842,676 broker non-votes.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) EXHIBITS

10.1 EDO Corporation 2006 Long-Term Incentive Plan.

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.

(B) REPORTS ON FORM 8-K

     The following report on Form 8-K was filed during the three months ended
June 24, 2006:

<TABLE>
<CAPTION>
DATE OF REPORT                            ITEMS REPORTED
--------------                            --------------
<S>              <C>
April 27, 2006   Earnings Release dated April 27, 2006 announcing financial
                 results for the quarter ended March 25, 2006.

</TABLE>

                                   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: July 31, 2006                   By: /s/ FREDERIC B. BASSETT
                                           ------------------------------------
                                           Frederic B. Bassett
                                           Senior Vice President Finance,
                                           Treasurer and Chief Financial Officer


                                       26