Sales for the fiscal year ended March 31, 2003 were $49,378,000. Net income for the year was $133,000 or diluted earnings per share of $.08. Sales for the fourth quarter of the fiscal year were $14,070,000. Net income for the fourth quarter was $1,120,000 or diluted earnings per share of $.67. Two significant transactions affected the fourth quarter. The Company had reserved capacity in previous quarters for a large electrical power condenser that was placed on hold. During the fourth quarter this order was formally cancelled, which resulted in a before income tax gain of $1,801,000. Also, the Company recorded a provision for employee severance expense of $658,000.

By comparison, sales for the previous fiscal year were $47,396,000 producing a net income of $2,305,000, or diluted earnings per share of $1.38. Sales for the fourth quarter of the previous fiscal year were $11,923,000 producing net income of $2,211,000 or diluted earnings per share of $1.32. Four electric power condenser orders were cancelled in the fourth quarter. The effect on income before tax of these terminated orders was $3,989,000.

New orders for the fiscal year ended March 31, 2003 were $40,596,000 compared to $54,464,000 for the previous full fiscal year. New orders for the fourth quarter of the fiscal year ended March 31, 2003 were $12,372,000, the highest level of quarterly bookings for the year. This compares to $16,764,000 for the fourth quarter of the previous fiscal year and to $8,790,000 for the third quarter of the fiscal year ended March 31, 2003.

Consolidated backlog on March 31, 2003 was $25,069,000 compared to $33,871,000 on March 31, 2002.

Al Cadena, President and Chief Executive Officer of Graham, commented, "Graham's markets continue to be extremely competitive. However, we see new opportunities coming from overseas markets such as China. We have re-sized the Company to bring its cost structure into line with anticipated conditions. The Company remains in a very strong financial position, enabling it to take advantage of such opportunities as we may identify for expanding the product base. We will continue executing our strategies for developing new products to increase the breadth of our vacuum product line. This is one of our important investments in the Company's future."

Graham designs and builds vacuum and heat transfer equipment for process industries throughout the world. It is a worldwide leader in vacuum technology. The principal markets for Graham's equipment are the chemical, petrochemical, petroleum refining and electric power generating industries, including cogeneration and geothermal plants. Other markets served include metal refining, pulp and paper, shipbuilding, water heating, refrigeration, desalination, food processing, drugs, heating, ventilating and air conditioning. Graham's ejectors, liquid ring and dry vacuum pumps, condensers, heat exchangers and other products, sold either as components or as complete systems, are used by its customers to produce synthetic fibers, chemicals, petroleum products (including gasoline), electric power, processed food (including canned, frozen and dairy products), pharmaceutical products, paper, steel, fertilizers and numerous other products used everyday by people throughout the world.