**UNITEDSTATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.  20549**

**FORM10-K/A**

**(AmendmentNo. 1)**
| **(Mark One)**                              | ** ** | ** **                                                                                    |
|---------------------------------------------|------------|-----------------------------------------------------------------------------------------------|
| **x**                                       | ** ** | **ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF  THE SECURITIES EXCHANGE ACT OF 1934**     |
| ** **                                  | ** ** | ** **                                                                                    |
| **For the fiscal year ended June 30, 2006** |
| ** **                                  | ** ** | ** **                                                                                    |
| **OR**                                      |
| ** **                                  | ** ** | ** **                                                                                    |
| **o**                                       | ** ** | **TRANSITION REPORT PURSUANT TO SECTION 13 OR  15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |

**For thetransition periodfrom              to**

**Commission File No. 000-02324**

**AeroflexIncorporated**(Exact name ofregistrant as specified in its charter)

| **Delaware**                                   |   | **11-1974412**      |
|------------------------------------------------|--------|---------------------|
| (State or Other Jurisdiction of                |   | (I.R.S. Employer    |
| Incorporation or Organization)                 |   | Identification No.) |
|                                           |   |                |
| **35 South Service Road, Plainview, New York** |   | **11803**           |
| (Address of Principal Executive Offices)       |   | (Zip Code)          |

Registrant’stelephone number, including area code:   **(516) 694-6700**

Securities registered pursuant to Section 12(b) of the Act:

| **Title of Class**              |   | **Name of Each Exchange on Which Registered** |
|---------------------------------|--------|-----------------------------------------------|
| Common Stock, $.10 par value    |   | The NASDAQ Stock Market LLC                   |
| Preferred Share Purchase Rights |   | The NASDAQ Stock Market LLC                   |

 

Securities registered pursuant to Section12(g) of the Act:   None

Indicateby check mark if the registrant is a well-known seasoned issuer, as defined inRule 405 of the Securities Act.   Yes  x   No  o

Indicateby check mark if the registrant is not required to file reports pursuant toRule 13 or Section 15(d) of the Exchange Act.   Yes  o   No  x

Indicateby check mark whether the registrant (1) has filed all reports required to befiled by Section 13 or 15(d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the registrant wasrequired to file such reports), and (2) has been subject to such filingrequirements for the past 90 days.   Yes  x   No  o

Indicateby check mark if disclosure of delinquent filers pursuant to Item 405 ofRegulation S-K is not contained herein, and will not be contained, to the bestof registrant’s knowledge, in definitive proxy or information statementsincorporated by reference in Part III of this Form 10-K or any amendment tothis Form 10-K  x.

Indicateby check mark whether the registrant is a large accelerated filer, anaccelerated filer, or a non-accelerated filer. See definition of  “acceleratedfiler and large accelerated filer” in Rule 12b-2 of the Exchange Act.  (Check one):

Large accelerated filer    o              Acceleratedfiler    x              Non-acceleratedfiler    o

Indicate by check markwhether the registrant is a shell company (as defined in Rule 12b-2 of theExchange Act).   Yes  o   No  x

Statethe aggregate market value of the voting and non-voting common equity held bynon-affiliates computed by reference to the price at which the common equitywas last sold, or the average bid and asked prices of such common equity, as ofthe last business day of the registrant’s most recently completed second fiscalquarter.  As of December 31, 2005 —approximately $794,564,000.

Indicatethe number of shares outstanding of each of the registrant’s classes of commonstock, as of the latest practicable date (applicable only to corporateregistrants).  Common Stock, par value$.10 per share; outstanding as of September 11, 2006 - 73,727,790.

Documentsincorporated by reference:  Part III(Items 10, 11, 12, 13 and 14) — registrant’s definitive proxy statement to befiled pursuant to Regulation 14A of the Securities Act of 1934.

 

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**EXPLANATORYNOTE**

This Annual Reporton Form 10-K/A is being filed to include previously omitted conformed versionsof the signed Reports of Independent Registered Public Accounting Firm, datedSeptember 12, 2006 and the signed consent of the Company’s independentregistered public accounting firm.   TheCompany’s code of ethics was previously filed as Exhibit 4.2 and it is nowfiled under Exhibit 14.

Except asdescribed above, no other changes have been made to the original Form 10-K, andthis Form 10-K/A does not amend, update or change the financial statements orany other Items or disclosures in the original Form 10-K. This Form 10-K/A doesnot reflect events occurring after the filing of the Form 10-K or modify orupdate those disclosures, including any exhibits to the Form 10-K affected bysubsequent events.

**PARTIV**

**ITEM 15—EXHIBITS AND FINANCIAL STATEMENT SCHEDULES**

**(a)          **See index to Financial Statements atbeginning of attached financial statements.

**(b)           Exhibits**

| 3.1    |   | Certificate of Incorporation, as amended.  (Incorporated by reference to Exhibit 3.1 to Form 10-Q for the quarter ended  September 30, 2001).                                                                                                                                                                                                    |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                             |
| 3.2    |   | By-Laws, as amended. (Incorporated by reference to  Exhibit 3.1 to Quarterly Report on Form 8-K filed on August 17, 2005).                                                                                                                                                                                                                       |
|   |   |                                                                                                                                                                                                                                                                                                                                             |
| 4.1    |   | Rights agreement, dated as of August 13, 1998,  between Aeroflex Incorporated and American Stock Transfer Company  (Incorporated by reference to Exhibit 4 to report on Form 8-K filed August  14, 1998).                                                                                                                                        |
|   |   |                                                                                                                                                                                                                                                                                                                                             |
| 10.1   |   | Fifth Amended and Restated Loan and Security  Agreement dated as of February 14, 2003 among the Registrant, certain of its  subsidiaries, JPMorgan Chase Bank and Fleet National Bank. (Incorporated by  reference to Exhibit 10.1 to Form 10-Q for the quarter ended December 31,  2002).                                                       |
|   |   |                                                                                                                                                                                                                                                                                                                                             |
| 10.2   |   | Eighth Amendment Agreement dated March 21, 2006,  between and among Aeroflex Incorporated, and certain of its domestic  subsidiaries, Bank of America, N.A. as the Fronting Bank and Administrative  Agent and JPMorgan Chase Bank, N.A., as Syndication Agent (incorporated by  reference to Exhibit 10.3 of Form 8-K filed on March 27, 2006). |
|   |   |                                                                                                                                                                                                                                                                                                                                             |
| 10.3   |   | Credit Agreement, dated March 21, 2006, between and  among Aeroflex Incorporated, Aeroflex Test Solutions Limited, the Lenders  party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent  Incorporated by reference to Exhibit 10.1 of the Report on Form 8-K filed on  March 27, 2006).                                             |
|   |   |                                                                                                                                                                                                                                                                                                                                             |
| 10.4   |   | Guarantee Agreement, dated March 21, 2006, between  Aeroflex Incorporated and certain of its domestic subsidiaries, and JPMorgan  Chase Bank, N.A., as Administrative Agent Incorporated by reference to  Exhibit 10.2 of Form 8-K filed on March 27, 2006).                                                                                     |
|   |   |                                                                                                                                                                                                                                                                                                                                             |
| 10.5   |   | First Amendment Agreement, dated August 28, 2006, to  the Credit Agreement, by and among Aeroflex Incorporated, Aeroflex Test  Solutions, the Lenders party thereto and JPMorgan Chase Bank, N.A., as  Administrative Agent (Incorporated by reference to Exhibit 10.1 of Report on  Form 8-K filed on September 1, 2006).                       |
|   |   |                                                                                                                                                                                                                                                                                                                                             |
| 10.6   |   | 1994 Non-Qualified Stock Option Plan. (Incorporated  by reference to Exhibit 10.2 to Annual Report on Form 10-K for the year ended  June 30, 1994).                                                                                                                                                                                              |

 

2

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|        |   |                                                                                                                                                                                                                           |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.7   |   | 1994 Outside Directors Stock Option Plan.  (Incorporated by reference to Exhibit 10.3 of Annual Report on Form 10-K for  the year ended June 30, 1994).                                                                        |
|   |   |                                                                                                                                                                                                                           |
| 10.8   |   | Employment Agreement between Aeroflex Incorporated  and Harvey R. Blau. (Incorporated by reference to Exhibit 10.1 to Report on  Form 10-Q for the quarter ended March 31, 1999).                                              |
|   |   |                                                                                                                                                                                                                           |
| 10.9   |   | Employment Agreement between Aeroflex Incorporated  and Michael Gorin. (Incorporated by reference to Exhibit 10.2 to Report on  Form 10-Q for the quarter ended March 31, 1999).                                               |
|   |   |                                                                                                                                                                                                                           |
| 10.10  |   | Employment Agreement between Aeroflex Incorporated  and Leonard Borow. (Incorporated by reference to Exhibit 10.3 to Report on  Form 10-Q for the quarter ended March 31, 1999).                                               |
|   |   |                                                                                                                                                                                                                           |
| 10.11  |   | 1996 Stock Option Plan. (Incorporated by reference  to Exhibit A to Definitive schedule 14A filed September 30, 1996).                                                                                                         |
|   |   |                                                                                                                                                                                                                           |
| 10.12  |   | 1998 Stock Option Plan. (Incorporated by reference  to Exhibit 10 to Quarterly Report on Form 10-Q for the quarter ended March  31, 1998).                                                                                     |
|   |   |                                                                                                                                                                                                                           |
| 10.13  |   | 1999 Stock Option Plan. (Incorporated by reference  to Exhibit 4.1 to Registration Statement on Form S-8, Registration Statement  #333-31654).                                                                                 |
|   |   |                                                                                                                                                                                                                           |
| 10.14  |   | Key Employee Stock Option Plan. (Incorporated by  reference to Exhibit 4.1 to Registration Statement on Form S-8, Registration  Statement #333-53622).                                                                         |
|   |   |                                                                                                                                                                                                                           |
| 10.15  |   | 2000 Stock Option Plan, as amended. (Incorporated by  reference to Exhibit 4 to Registration Statement on Form S-8, #333-97027).                                                                                               |
|   |   |                                                                                                                                                                                                                           |
| 10.16  |   | 2002 Stock Option Plan. (Incorporated by reference  to Exhibit 4 to Registration Statement on Form S-8, #333-97029).                                                                                                           |
|   |   |                                                                                                                                                                                                                           |
| 10.17  |   | Amendment No. 1 to Employment Agreement between  Aeroflex Incorporated and Harvey R. Blau, effective September 1, 1999.  (Incorporated by reference to Exhibit 10.17 to Form 10-K for the fiscal year  ended June 30, 2000).   |
|   |   |                                                                                                                                                                                                                           |
| 10.18  |   | Amendment No. 1 to Employment Agreement between Aeroflex  Incorporated and Michael Gorin, effective September 1, 1999. (Incorporated by  reference to Exhibit 10.18 to Form 10-K for the fiscal year ended June 30,  2000).    |
|   |   |                                                                                                                                                                                                                           |
| 10.19  |   | Amendment No. 1 to Employment Agreement between  Aeroflex Incorporated and Leonard Borow, effective September 1, 1999.  (Incorporated by reference to Exhibit 10.19 to Form 10-K for the fiscal year  ended June 30, 2000).    |
|   |   |                                                                                                                                                                                                                           |
| 10.20  |   | Amendment No. 2 to Employment Agreement between  Aeroflex Incorporated and Harvey R. Blau, effective August 13, 2001.  (Incorporated by reference to Exhibit 10.16 to Form 10-K for the fiscal year  ended June 30, 2001).     |
|   |   |                                                                                                                                                                                                                           |
| 10.21  |   | Amendment No. 2 to Employment Agreement between  Aeroflex Incorporated and Michael Gorin, effective August 13, 2001.  (Incorporated by reference to Exhibit 10.17 to Form 10-K for the fiscal year  ended June 30, 2001). |
|   |   |                                                                                                                                                                                                                           |
| 10.22  |   | Amendment No. 2 to Employment Agreement between  Aeroflex Incorporated and Leonard Borow, effective August 13, 2001.  (Incorporated by reference to Exhibit 10.18 to Form 10-K for the fiscal year  ended June 30, 2001).      |
|   |   |                                                                                                                                                                                                                           |
| 10.23  |   | Aeroflex Incorporated Key Employee Deferred  Compensation Plan. (Incorporated by reference to Exhibit 10.19 to Form 10-K  for the fiscal year ended June 20, 2001).                                                            |

 

3

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|        |   |                                                                                                                                                                                                                                                                              |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.24  |   | Trust Under Deferred Compensation Plan.  (Incorporated by reference to Exhibit 10.20 to Form 10-K for the fiscal year  ended June 30, 2001).                                                                                                                                      |
|   |   |                                                                                                                                                                                                                                                                              |
| 10.25  |   | Amendment No. 3 to Employment Agreement between  Aeroflex Incorporated and Harvey R. Blau, effective November 8, 2001.  (Incorporated by reference to Exhibit 10.1 to Form 10-Q for the quarter ended  September 30, 2001).                                                       |
|   |   |                                                                                                                                                                                                                                                                              |
| 10.26  |   | Amendment No. 3 to Employment Agreement between  Aeroflex Incorporated and Michael Gorin, effective November 8, 2001.  (Incorporated by reference to Exhibit 10.2 to Form 10-Q for the quarter ended  September 30, 2001).                                                        |
|   |   |                                                                                                                                                                                                                                                                              |
| 10.27  |   | Amendment No. 3 to Employment Agreement between  Aeroflex Incorporated and Leonard Borow, effective November 8, 2001. (Incorporated  by reference to Exhibit 10.3 to Form 10-Q for the quarter ended September 30,  2001).                                                        |
|   |   |                                                                                                                                                                                                                                                                              |
| 10.28  |   | Agreement and Plan of Merger, dated as of June 27,  2003, among Aeroflex Incorporated, Acquisition, MCE and Michael J. Endres.  (Incorporated by reference to Exhibit 99.1 of Report on Form 8-K filed  July 2, 2003).                                                       |
|   |   |                                                                                                                                                                                                                                                                              |
| 10.29  |   | Form of Warrant Exchange Agreement. (Incorporated by  reference to Exhibit 99.2 of Report on Form 8-K filed July 2, 2003).                                                                                                                                                        |
|   |   |                                                                                                                                                                                                                                                                              |
| 10.30  |   | Form of MCE Shareholders’ Agreement. (Incorporated  by reference to Exhibit 99.3 of Report on Form 8-K filed July 2, 2003).                                                                                                                                                  |
|   |   |                                                                                                                                                                                                                                                                              |
| 10.31  |   | Employment Agreement between Aeroflex Incorporated  and John Adamovich, Jr., dated November 9, 2005. (Incorporated by reference to Exhibit 10.1  of Report on Form 8-K filed on November 15, 2005).                                                                               |
|   |   |                                                                                                                                                                                                                                                                              |
| 10.32  |   | Stock Purchase Agreement dated as of July 31, 2003,  by and among Racal Instruments Group Limited, Aeroflex and IFR Systems  Limited, a wholly-owned subsidiary of Aeroflex Incorporated. (Incorporated by  reference to Exhibit 99.1 to Report on Form 8-K dated July 31, 2003). |
|   |   |                                                                                                                                                                                                                                                                              |
| 10.33  |   | Asset Purchase Agreement dated as of July 31, 2003,  by and between Racal Instruments Inc. and Aeroflex Incorporated.  (Incorporated by reference to Exhibit 99.2 to Report on Form 8-K dated July  31, 2003).                                                                    |
|   |   |                                                                                                                                                                                                                                                                              |
| 10.34  |   | Asset Purchase Agreement dated as of July 31, 2003,  by and among Racal Instruments Group Limited and Aeroflex Incorporated.  (Incorporated by reference to Exhibit 99.3 to Report on Form 8-K dated July  31, 2003).                                                             |
|   |   |                                                                                                                                                                                                                                                                              |
| 10.35  |   | Employment Agreement between Aeroflex Incorporated  and Carl Caruso dated November 6, 2003. (Incorporated by reference to Exhibit  10.2 to Report on Form 10-Q for the quarter ended December 31, 2003).                                                                          |
|   |   |                                                                                                                                                                                                                                                                              |
| 10.36  |   | Employment Agreement between Aeroflex Incorporated and  Charles Badlato dated November 6, 2003. (Incorporated by reference to Exhibit  10.1 to Report on Form 10-Q for the quarter ended December 31, 2003).                                                                      |
|   |   |                                                                                                                                                                                                                                                                              |
| 10.37  |   | Amendment No. 4 to Employment Agreement between  Aeroflex Incorporated and Harvey R. Blau dated as of May 13, 2004.  (Incorporated by reference to Exhibit 10.1 to Form 10-Q for the quarter ended  March 31, 2004).                                                         |
|   |   |                                                                                                                                                                                                                                                                              |
| 10.38  |   | Amended No. 4 to Employment Agreement between  Aeroflex Incorporated and Michael Gorin dated as of May 13, 2004.  (Incorporated by reference to Exhibit 10.2 to Form 10-Q for the quarter ended  March 31, 2004).                                                                 |
|   |   |                                                                                                                                                                                                                                                                              |
| 10.39  |   | Amendment No. 4 to Employment Agreement between  Aeroflex Incorporated and Leonard Borow dated May 13, 2004. (Incorporated by  reference to Exhibit 10.3 to Form 10-Q for the quarter ended March 31, 2004).                                                                      |

 

4

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|        |   |                                                                                                                                                                                                                    |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.40  |   | Amendment No. 1 to Employment Agreement between  Aeroflex Incorporated and Carl Caruso dated March 11, 2005. (Incorporated by  reference to Exhibit 10.1 of Report on Form 8-K filed March 31, 2005).                   |
|   |   |                                                                                                                                                                                                                    |
| 10.41  |   | Sale and Purchase Agreement, dated as of May 23,  2005, between UbiNetics Holdings Limited and Aeroflex Test Solutions Limited.  (Incorporated by reference to Exhibit 10.1 to Report on Form 8-K filed May  27, 2005). |
|   |   |                                                                                                                                                                                                                    |
| 10.42  |   | Deed of Guarantee, dated as of May 23, 2005, made  between Aeroflex Incorporated and UbiNetics Holdings Limited. (Incorporated  by reference to Exhibit 10.2 to Report on Form 8-K filed May 27, 2005).                 |
|   |   |                                                                                                                                                                                                                    |
| 10.43  |   | Amendment No. 5 to Employment Agreement between  Aeroflex Incorporated and Harvey R. Blau dated August 17, 2005. (Incorporated  by reference to Exhibit 10.1 to Report on Form 8-K filed August 17, 2005).              |
|   |   |                                                                                                                                                                                                                    |
| 10.44  |   | Amendment No. 5 to Employment Agreement between  Aeroflex Incorporated and Michael Gorin dated August 17, 2005. (Incorporated  by reference to Exhibit 10.2 to Report on Form 8-K filed August 17, 2005).               |
|   |   |                                                                                                                                                                                                                    |
| 10.45  |   | Amendment No. 5 to Employment Agreement between  Aeroflex Incorporated and Leonard Borow dated August 17, 2005. (Incorporated  by reference to Exhibit 10.3 to Report on Form 8-K filed August 17, 2005).               |
|   |   |                                                                                                                                                                                                                    |
| 10.46  |   | Consulting and Retirement Agreement between Aeroflex  Incorporated and Michael Gorin dated August 17, 2005. (Incorporated by  reference to Exhibit 10.4 to Report on Form 8-K filed August 17, 2005).                   |
|   |   |                                                                                                                                                                                                                    |
| 14     |   | Code of ethics for Chairman, Chief Executive Officer  and Senior Financial Officers of Aeroflex Incorporated.                                                                                                           |
|   |   |                                                                                                                                                                                                                    |
| 21     |   | The following is a list of the Registrant’s  subsidiaries as of June 30, 2006:                                                                                                                                     |

 

|                                               | ** ** | **Jurisdiction of** | ** ** |
|-----------------------------------------------|------------|--------------------------|------------|
| **Name**                                      | ** ** | ** **               | ** ** | **Incorporation** | ** ** |
| Aeroflex  Cambridge, Ltd.                     |       | England                  |       |
| Aeroflex  Colorado Springs, Inc.              |       | Delaware                 |       |
| Aeroflex /  Inmet, Inc.                       |       | Michigan                 |       |
| Aeroflex  International Ltd.                  |       | England                  |       |
| Aeroflex / KDI,  Inc.                         |       | Michigan                 |       |
| Aeroflex /  Metelics, Inc.                    |       | California               |       |
| Aeroflex  Microelectronics Solutions, Inc.    |       | Michigan                 |       |
| Aeroflex  Plainview, Inc.                     |       | Delaware                 |       |
| Aeroflex Powell,  Inc.                        |       | Ohio                     |       |
| Aeroflex Systems  Corp.                       |       | Delaware                 |       |
| Aeroflex /  Weinschel, Inc.                   |       | Michigan                 |       |
| Aeroflex  Wichita, Inc.                       |       | Delaware                 |       |
| Europtest, S.A.                               |       | France                   |       |
| MCE Technologies  (Nanjing) Co., Ltd.         |       | China                    |       |
| Racal Instruments  Wireless Solutions Limited |       | England                  |       |
|                                               |            |                          |            |  |  |

 

| 23     |   | Consent of Independent Registered Public Accounting  Firm                                             |
|--------|--------|-------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                  |
| 31.1   |   | Certification of Chairman of the Board pursuant to  Section 302 of Sarbanes-Oxley Act of 2002.        |
|   |   |                                                                                                  |
| 31.2   |   | Certification of Chief Financial Officer pursuant to  Section 302 of Sarbanes-Oxley Act of 2002.      |
|   |   |                                                                                                  |
| 31.3   |   | Certification of Chief Operating Officer pursuant to  Section 302 of Sarbanes-Oxley Act of 2002.      |
|   |   |                                                                                                  |
| 31.4   |   | Certification of Principal Accounting Officer  pursuant to Section 302 of Sarbanes-Oxley Act of 2002. |
|   |   |                                                                                                  |
| 32.1   |   | Certification of Chief Executive Officer pursuant to  Section 906 of Sarbanes-Oxley Act of 2002.      |

 

5

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|      |                                                                                             |
|------|--------------------------------------------------------------------------------------------------|
| 32.2 | Certification of Chief Financial Officer pursuant to  Section 906 of Sarbanes-Oxley Act of 2002. |

 

Pursuant to the requirements of Section 13 or 15(d) of the SecuritiesExchange Act of 1934, the Registrant has duly caused this report to be signedon its behalf by the undersigned, thereunto duly authorized.
|                           |   | Aeroflex Incorporated |
|---------------------------|--------|-----------------------|
| Date: September  19, 2006 |   |                  |   |
|                      |   | By:                   | /s/ John Adamovich, Jr. |
|                      |   |                  | John Adamovich, Jr., Senior Vice President and Chief |
|                      |   |                  | Financial Officer |

 

 

** **

6

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**Reportof Independent Registered Public Accounting Firm**

The Board of Directorsand StockholdersAeroflex Incorporated:

We have auditedmanagement’s assessment, included in the accompanying Item 9A(b),  *Management’sReport on Internal Control Over Financial Reporting,*that AeroflexIncorporated (the Company) maintained effective internal control over financialreporting as of June 30, 2006, based on criteriaestablished in Internal Control—Integrated Framework issued by the Committee ofSponsoring Organizations of the Treadway Commission (COSO)*.*Aeroflex Incorporated’smanagement is responsible for maintaining effective internal control overfinancial reporting and for its assessment of the effectiveness of internalcontrol over financial reporting. Our responsibility is to express an opinionon management’s assessment and an opinion on the effectiveness of the Company’sinternal control over financial reporting based on our audit.

We conducted ouraudit in accordance with the standards of the Public Company AccountingOversight Board (United States). Those standards require that we plan andperform the audit to obtain reasonable assurance about whether effectiveinternal control over financial reporting was maintained in all materialrespects. Our audit included obtaining an understanding of internal controlover financial reporting, evaluating management’s assessment, testing andevaluating the design and operating effectiveness of internal control, andperforming such other procedures as we considered necessary in thecircumstances. We believe that our audit provides a reasonable basis for ouropinion.

A company’sinternal control over financial reporting is a process designed to providereasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A company’s internal control over financial reporting includes thosepolicies and procedures that (1) pertain to the maintenance of records that, inreasonable detail, accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurancethat transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles, andthat receipts and expenditures of the company are being made only in accordancewith authorizations of management and directors of the company; and (3) providereasonable assurance regarding prevention or timely detection of unauthorizedacquisition, use, or disposition of the company’s assets that could have amaterial effect on the financial statements.

Because of itsinherent limitations, internal control over financial reporting may not preventor detect misstatements.  Also,projections of any evaluation of effectiveness to future periods are subject tothe risk that controls may become inadequate because of changes in conditions,or that the degree of compliance with the policies or procedures maydeteriorate.

In our opinion,management’s assessment that Aeroflex Incorporated maintained effectiveinternal control over financial reporting as of June 30, 2006, is fairlystated, in all material respects, based on criteria established in Internal Control—Integrated Framework issued bythe Committee of Sponsoring Organizations of the Treadway Commission (COSO)*.* Also, in our opinion, AeroflexIncorporated maintained, in all material respects, effective internal controlover financial reporting as of June 30, 2006, based on criteria established in InternalControl—Integrated Framework issued by the *Committee of Sponsoring Organizations of the Treadway Commission(COSO).*

We also haveaudited, in accordance with the standards of the Public Company AccountingOversight Board (United States), the consolidatedbalance sheets of Aeroflex Incorporated andsubsidiaries as of June 30, 2006 and 2005, and the related consolidated statements of earnings,stockholders’ equity and comprehensive income, and cash flows for each of theyears in the three-year period ended June 30, 2006, and our report dated September 12, 2006, expressed an unqualified opinion on those consolidatedfinancial statements*.* Our report,dated September 12, 2006, refers to the Company’s adoption of FASBInterpretation No. 47, *Accounting for ConditionalAsset Retirement Obligations,*effective June 30, 2006, and theadoption of Statement of Financial Accounting Standards No. 123(R), *Share-Based Payment*, effective July 1, 2005.
| /s/ KPMG LLP        |   |
|---------------------|--------|
|                |
| Melville, New  York |
| September 12,  2006 |

7

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**Report ofIndependent Registered Public Accounting Firm**

The Board of Directorsand StockholdersAeroflex Incorporated:

We have auditedthe accompanying consolidatedbalance sheets of Aeroflex Incorporated andsubsidiaries as of June 30, 2006 and 2005, and the related consolidated statements of earnings,stockholders’ equity and comprehensive income, and cash flows for each of theyears in the three-year period ended June 30, 2006. In connection with ouraudits of the consolidated financial statements, we also have audited thefinancial statement schedule listed in Item 15(a)2.  These consolidatedfinancial statements and the financial statement schedule are theresponsibility of the Company’s management. Our responsibility is to express anopinion on these consolidatedfinancial statements and the financial statement schedule based on our audits.

We conducted ouraudits in accordance with the standards of the Public Company AccountingOversight Board (United States).  Thosestandards require that we plan and perform the audit to obtain reasonableassurance about whether the financial statements are free of materialmisstatement.  An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures inthe financial statements. An audit also includes assessing the accountingprinciples used and significant estimates made by management, as well asevaluating the overall financial statement presentation.  We believe that our audits provide areasonable basis for our opinion.

In our opinion,the consolidated financialstatements referred to above present fairly, in all material respects, thefinancial position of Aeroflex Incorporated and subsidiaries as of June 30,2006, and 2005, and the results of their operations and their cash flows foreach of the years in the three-year period ended June 30, 2006, in conformitywith U.S. generally accepted accounting principles.  Also in our opinion, the related financialstatement schedule, when considered in relation to the basic consolidatedfinancial statements taken as a whole, presents fairly, in all materialrespects, the information set forth therein.

As discussed innote 1 to the consolidated financial statements, the Company adopted theprovisions of FASB Interpretation No. 47, *Accounting for ConditionalAsset Retirement Obligations*, effective June 30, 2006.  Also, as discussed in notes 1 and 9 to theconsolidated financial statements, the Company adopted the provisions ofStatement of Financial Accounting Standards No. 123(R), *Share-BasedPayment*, effective July 1, 2005.

We also haveaudited, in accordance with the standards of the Public Company AccountingOversight Board (United States), the effectiveness of Aeroflex Incorporated’sinternal control over financial reporting as of June 30, 2006, based on criteria established in InternalControl—Integrated Framework issued by the Committee of SponsoringOrganizations of the Treadway Commission (COSO), and our report datedSeptember 12, 2006, expressed anunqualified opinion on management’s assessment of, and the effective operationof, internal control over financial reporting.
| /s/ KPMG LLP        |   |
|---------------------|--------|
|                |
| Melville, New  York |
| September 12,  2006 |

8

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**AEROFLEXINCORPORATEDINDEX TO EXHIBITS**
| Exhibit  Number | ** ** | **Description**                                                                                                                                                                                                                                                                                                                                  |
|-----------------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 3.1             |       | Certificate of Incorporation, as amended.  (Incorporated by reference to Exhibit 3.1 to Form 10-Q for the quarter ended  September 30, 2001).                                                                                                                                                                                                    |
|            |       |                                                                                                                                                                                                                                                                                                                                             |
| 3.2             |       | By-Laws, as amended. (Incorporated by reference to  Exhibit 3.1 to Quarterly Report on Form 8-K filed on August 17, 2005).                                                                                                                                                                                                                       |
|            |       |                                                                                                                                                                                                                                                                                                                                             |
| 4.1             |       | Rights agreement, dated as of August 13, 1998,  between Aeroflex Incorporated and American Stock Transfer Company  (Incorporated by reference to Exhibit 4 to report on Form 8-K filed August  14, 1998).                                                                                                                                        |
|            |       |                                                                                                                                                                                                                                                                                                                                             |
| 10.1            |       | Fifth Amended and Restated Loan and Security  Agreement dated as of February 14, 2003 among the Registrant, certain of its  subsidiaries, JPMorgan Chase Bank and Fleet National Bank. (Incorporated by  reference to Exhibit 10.1 to Form 10-Q for the quarter ended December 31,  2002).                                                       |
|            |       |                                                                                                                                                                                                                                                                                                                                             |
| 10.2            |       | Eighth Amendment Agreement dated March 21, 2006,  between and among Aeroflex Incorporated, and certain of its domestic  subsidiaries, Bank of America, N.A. as the Fronting Bank and Administrative  Agent and JPMorgan Chase Bank, N.A., as Syndication Agent (incorporated by  reference to Exhibit 10.3 of Form 8-K filed on March 27, 2006). |
|            |       |                                                                                                                                                                                                                                                                                                                                             |
| 10.3            |       | Credit Agreement, dated March 21, 2006, between and  among Aeroflex Incorporated, Aeroflex Test Solutions Limited, the Lenders  party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent  Incorporated by reference to Exhibit 10.1 of the Report on Form 8-K filed on  March 27, 2006).                                             |
|            |       |                                                                                                                                                                                                                                                                                                                                             |
| 10.4            |       | Guarantee Agreement, dated March 21, 2006, between  Aeroflex Incorporated and certain of its domestic subsidiaries, and JPMorgan  Chase Bank, N.A., as Administrative Agent Incorporated by reference to  Exhibit 10.2 of Form 8-K filed on March 27, 2006).                                                                                     |
|            |       |                                                                                                                                                                                                                                                                                                                                             |
| 10.5            |       | First Amendment Agreement, dated August 28, 2006, to  the Credit Agreement, by and among Aeroflex Incorporated, Aeroflex Test  Solutions, the Lenders party thereto and JPMorgan Chase Bank, N.A., as  Administrative Agent (Incorporated by reference to Exhibit 10.1 of Report on  Form 8-K filed on September 1, 2006).                       |
|            |       |                                                                                                                                                                                                                                                                                                                                             |
| 10.6            |       | 1994 Non-Qualified Stock Option Plan. (Incorporated  by reference to Exhibit 10.2 to Annual Report on Form 10-K for the year ended  June 30, 1994).                                                                                                                                                                                              |
|            |       |                                                                                                                                                                                                                                                                                                                                             |
| 10.7            |       | 1994 Outside Directors Stock Option Plan.  (Incorporated by reference to Exhibit 10.3 of Annual Report on Form 10-K for  the year ended June 30, 1994).                                                                                                                                                                                          |
|            |       |                                                                                                                                                                                                                                                                                                                                             |
| 10.8            |       | Employment Agreement between Aeroflex Incorporated  and Harvey R. Blau. (Incorporated by reference to Exhibit 10.1 to Report on  Form 10-Q for the quarter ended March 31, 1999).                                                                                                                                                                |
|            |       |                                                                                                                                                                                                                                                                                                                                             |
| 10.9            |       | Employment Agreement between Aeroflex Incorporated  and Michael Gorin. (Incorporated by reference to Exhibit 10.2 to Report on  Form 10-Q for the quarter ended March 31, 1999).                                                                                                                                                                 |
|            |       |                                                                                                                                                                                                                                                                                                                                             |
| 10.10           |       | Employment Agreement between Aeroflex Incorporated  and Leonard Borow. (Incorporated by reference to Exhibit 10.3 to Report on  Form 10-Q for the quarter ended March 31, 1999).                                                                                                                                                                 |
|            |       |                                                                                                                                                                                                                                                                                                                                             |
| 10.11           |       | 1996 Stock Option Plan. (Incorporated by reference  to Exhibit A to Definitive schedule 14A filed September 30, 1996).                                                                                                                                                                                                                           |

 

9

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| 10.12  |   | 1998 Stock Option Plan. (Incorporated by reference  to Exhibit 10 to Quarterly Report on Form 10-Q for the quarter ended March  31, 1998).                                                                                     |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                           |
| 10.13  |   | 1999 Stock Option Plan. (Incorporated by reference  to Exhibit 4.1 to Registration Statement on Form S-8, Registration Statement  #333-31654).                                                                                 |
|   |   |                                                                                                                                                                                                                           |
| 10.14  |   | Key Employee Stock Option Plan. (Incorporated by  reference to Exhibit 4.1 to Registration Statement on Form S-8, Registration  Statement #333-53622).                                                                         |
|   |   |                                                                                                                                                                                                                           |
| 10.15  |   | 2000 Stock Option Plan, as amended. (Incorporated by  reference to Exhibit 4 to Registration Statement on Form S-8, #333-97027).                                                                                               |
|   |   |                                                                                                                                                                                                                           |
| 10.16  |   | 2002 Stock Option Plan. (Incorporated by reference  to Exhibit 4 to Registration Statement on Form S-8, #333-97029).                                                                                                           |
|   |   |                                                                                                                                                                                                                           |
| 10.17  |   | Amendment No. 1 to Employment Agreement between  Aeroflex Incorporated and Harvey R. Blau, effective September 1, 1999.  (Incorporated by reference to Exhibit 10.17 to Form 10-K for the fiscal year  ended June 30, 2000).   |
|   |   |                                                                                                                                                                                                                           |
| 10.18  |   | Amendment No. 1 to Employment Agreement between  Aeroflex Incorporated and Michael Gorin, effective September 1, 1999.  (Incorporated by reference to Exhibit 10.18 to Form 10-K for the fiscal year  ended June 30, 2000).    |
|   |   |                                                                                                                                                                                                                           |
| 10.19  |   | Amendment No. 1 to Employment Agreement between  Aeroflex Incorporated and Leonard Borow, effective September 1, 1999.  (Incorporated by reference to Exhibit 10.19 to Form 10-K for the fiscal year  ended June 30, 2000).    |
|   |   |                                                                                                                                                                                                                           |
| 10.20  |   | Amendment No. 2 to Employment Agreement between  Aeroflex Incorporated and Harvey R. Blau, effective August 13, 2001.  (Incorporated by reference to Exhibit 10.16 to Form 10-K for the fiscal year  ended June 30, 2001).     |
|   |   |                                                                                                                                                                                                                           |
| 10.21  |   | Amendment No. 2 to Employment Agreement between  Aeroflex Incorporated and Michael Gorin, effective August 13, 2001.  (Incorporated by reference to Exhibit 10.17 to Form 10-K for the fiscal year  ended June 30, 2001). |
|   |   |                                                                                                                                                                                                                           |
| 10.22  |   | Amendment No. 2 to Employment Agreement between  Aeroflex Incorporated and Leonard Borow, effective August 13, 2001.  (Incorporated by reference to Exhibit 10.18 to Form 10-K for the fiscal year  ended June 30, 2001).      |
|   |   |                                                                                                                                                                                                                           |
| 10.23  |   | Aeroflex Incorporated Key Employee Deferred  Compensation Plan. (Incorporated by reference to Exhibit 10.19 to Form 10-K  for the fiscal year ended June 20, 2001).                                                            |
|   |   |                                                                                                                                                                                                                           |
| 10.24  |   | Trust Under Deferred Compensation Plan.  (Incorporated by reference to Exhibit 10.20 to Form 10-K for the fiscal year  ended June 30, 2001).                                                                                   |
|   |   |                                                                                                                                                                                                                           |
| 10.25  |   | Amendment No. 3 to Employment Agreement between  Aeroflex Incorporated and Harvey R. Blau, effective November 8, 2001.  (Incorporated by reference to Exhibit 10.1 to Form 10-Q for the quarter ended  September 30, 2001).    |
|   |   |                                                                                                                                                                                                                           |
| 10.26  |   | Amendment No. 3 to Employment Agreement between  Aeroflex Incorporated and Michael Gorin, effective November 8, 2001.  (Incorporated by reference to Exhibit 10.2 to Form 10-Q for the quarter ended  September 30, 2001).     |
|   |   |                                                                                                                                                                                                                           |
| 10.27  |   | Amendment No. 3 to Employment Agreement between  Aeroflex Incorporated and Leonard Borow, effective November 8, 2001.  (Incorporated by reference to Exhibit 10.3 to Form 10-Q for the quarter ended  September 30, 2001).     |
|   |   |                                                                                                                                                                                                                           |

 

10

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| 10.28  |   | Agreement and Plan of Merger, dated as of June 27,  2003, among Aeroflex Incorporated, Acquisition, MCE and Michael J. Endres.  (Incorporated by reference to Exhibit 99.1 of Report on Form 8-K filed  July 2, 2003).                                                       |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                              |
| 10.29  |   | Form of Warrant Exchange Agreement. (Incorporated by  reference to Exhibit 99.2 of Report on Form 8-K filed July 2, 2003).                                                                                                                                                        |
|   |   |                                                                                                                                                                                                                                                                              |
| 10.30  |   | Form of MCE Shareholders’ Agreement. (Incorporated  by reference to Exhibit 99.3 of Report on Form 8-K filed July 2, 2003).                                                                                                                                                  |
|   |   |                                                                                                                                                                                                                                                                              |
| 10.31  |   | Employment Agreement between Aeroflex Incorporated  and John Adamovich, Jr., dated November 9, 2005. (Incorporated by reference to Exhibit 10.1  of Report on Form 8-K filed on November 15, 2005).                                                                               |
|   |   |                                                                                                                                                                                                                                                                              |
| 10.32  |   | Stock Purchase Agreement dated as of July 31, 2003,  by and among Racal Instruments Group Limited, Aeroflex and IFR Systems  Limited, a wholly-owned subsidiary of Aeroflex Incorporated. (Incorporated by  reference to Exhibit 99.1 to Report on Form 8-K dated July 31, 2003). |
|   |   |                                                                                                                                                                                                                                                                              |
| 10.33  |   | Asset Purchase Agreement dated as of July 31, 2003,  by and between Racal Instruments Inc. and Aeroflex Incorporated.  (Incorporated by reference to Exhibit 99.2 to Report on Form 8-K dated July  31, 2003).                                                                    |
|   |   |                                                                                                                                                                                                                                                                              |
| 10.34  |   | Asset Purchase Agreement dated as of July 31, 2003,  by and among Racal Instruments Group Limited and Aeroflex Incorporated.  (Incorporated by reference to Exhibit 99.3 to Report on Form 8-K dated July  31, 2003).                                                             |
|   |   |                                                                                                                                                                                                                                                                              |
| 10.35  |   | Employment Agreement between Aeroflex Incorporated  and Carl Caruso dated November 6, 2003. (Incorporated by reference to Exhibit  10.2 to Report on Form 10-Q for the quarter ended December 31, 2003).                                                                          |
|   |   |                                                                                                                                                                                                                                                                              |
| 10.36  |   | Employment Agreement between Aeroflex Incorporated  and Charles Badlato dated November 6, 2003. (Incorporated by reference to  Exhibit 10.1 to Report on Form 10-Q for the quarter ended December 31, 2003).                                                                      |
|   |   |                                                                                                                                                                                                                                                                              |
| 10.37  |   | Amendment No. 4 to Employment Agreement between  Aeroflex Incorporated and Harvey R. Blau dated as of May 13, 2004.  (Incorporated by reference to Exhibit 10.1 to Form 10-Q for the quarter ended  March 31, 2004).                                                         |
|   |   |                                                                                                                                                                                                                                                                              |
| 10.38  |   | Amended No. 4 to Employment Agreement between  Aeroflex Incorporated and Michael Gorin dated as of May 13, 2004. (Incorporated  by reference to Exhibit 10.2 to Form 10-Q for the quarter ended March 31,  2004).                                                                 |
|   |   |                                                                                                                                                                                                                                                                              |
| 10.39  |   | Amendment No. 4 to Employment Agreement between  Aeroflex Incorporated and Leonard Borow dated May 13, 2004. (Incorporated by  reference to Exhibit 10.3 to Form 10-Q for the quarter ended March 31, 2004).                                                                      |
|   |   |                                                                                                                                                                                                                                                                              |
| 10.40  |   | Amendment No. 1 to Employment Agreement between  Aeroflex Incorporated and Carl Caruso dated March 11, 2005. (Incorporated by  reference to Exhibit 10.1 of Report on Form 8-K filed March 31, 2005).                                                                             |
|   |   |                                                                                                                                                                                                                                                                              |
| 10.41  |   | Sale and Purchase Agreement, dated as of May 23,  2005, between UbiNetics Holdings Limited and Aeroflex Test Solutions Limited.  (Incorporated by reference to Exhibit 10.1 to Report on Form 8-K filed May  27, 2005).                                                           |
|   |   |                                                                                                                                                                                                                                                                              |
| 10.42  |   | Deed of Guarantee, dated as of May 23, 2005, made  between Aeroflex Incorporated and UbiNetics Holdings Limited. (Incorporated  by reference to Exhibit 10.2 to Report on Form 8-K filed May 27, 2005).                                                                           |
|   |   |                                                                                                                                                                                                                                                                              |
| 10.43  |   | Amendment No. 5 to Employment Agreement between  Aeroflex Incorporated and Harvey R. Blau dated August 17, 2005. (Incorporated  by reference to Exhibit 10.1 to Report on Form 8-K filed August 17, 2005).                                                                        |
|   |   |                                                                                                                                                                                                                                                                              |
| 10.44  |   | Amendment No. 5 to Employment Agreement between  Aeroflex Incorporated and Michael Gorin dated August 17, 2005. (Incorporated  by reference to Exhibit 10.2 to Report on Form 8-K filed August 17, 2005).                                                                         |
|   |   |                                                                                                                                                                                                                                                                              |

 

11

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| 10.45  |   | Amendment No. 5 to Employment Agreement between  Aeroflex Incorporated and Leonard Borow dated August 17, 2005. (Incorporated  by reference to Exhibit 10.3 to Report on Form 8-K filed August 17, 2005). |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                      |
| 10.46  |   | Consulting and Retirement Agreement between Aeroflex  Incorporated and Michael Gorin dated August 17, 2005. (Incorporated by  reference to Exhibit 10.4 to Report on Form 8-K filed August 17, 2005).     |
|   |   |                                                                                                                                                                                                      |
| 14     |   | Code of ethics for Chairman, Chief Executive Officer  and Senior Financial Officers of Aeroflex Incorporated.                                                                                             |
|   |   |                                                                                                                                                                                                      |
| 21     |   | The following is a list of the Registrant’s  subsidiaries as of June 30, 2006:                                                                                                                       |

 

|                                               | ** ** | **Jurisdiction of** | ** ** |
|-----------------------------------------------|------------|--------------------------|------------|
| **Name**                                      | ** ** | ** **               | ** ** | **Incorporation** | ** ** |
| Aeroflex  Cambridge, Ltd.                     |       | England                  |       |
| Aeroflex  Colorado Springs, Inc.              |       | Delaware                 |       |
| Aeroflex /  Inmet, Inc.                       |       | Michigan                 |       |
| Aeroflex  International Ltd.                  |       | England                  |       |
| Aeroflex / KDI,  Inc.                         |       | Michigan                 |       |
| Aeroflex /  Metelics, Inc.                    |       | California               |       |
| Aeroflex  Microelectronics Solutions, Inc.    |       | Michigan                 |       |
| Aeroflex  Plainview, Inc.                     |       | Delaware                 |       |
| Aeroflex Powell,  Inc.                        |       | Ohio                     |       |
| Aeroflex Systems  Corp.                       |       | Delaware                 |       |
| Aeroflex /  Weinschel, Inc.                   |       | Michigan                 |       |
| Aeroflex  Wichita, Inc.                       |       | Delaware                 |       |
| Europtest, S.A.                               |       | France                   |       |
| MCE Technologies  (Nanjing) Co., Ltd.         |       | China                    |       |
| Racal Instruments  Wireless Solutions Limited |       | England                  |       |
|                                               |            |                          |            |  |  |

 
| 23     |   | Consent of Independent Registered Public Accounting  Firm                                             |
|--------|--------|-------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                  |
| 31.1   |   | Certification of Chairman of the Board pursuant to  Section 302 of Sarbanes-Oxley Act of 2002.        |
|   |   |                                                                                                  |
| 31.2   |   | Certification of Chief Financial Officer pursuant to  Section 302 of Sarbanes-Oxley Act of 2002.      |
|   |   |                                                                                                  |
| 31.3   |   | Certification of Chief Operating Officer pursuant to  Section 302 of Sarbanes-Oxley Act of 2002.      |
|   |   |                                                                                                  |
| 31.4   |   | Certification of Principal Accounting Officer  pursuant to Section 302 of Sarbanes-Oxley Act of 2002. |
|   |   |                                                                                                  |
| 32.1   |   | Certification of Chief Executive Officer pursuant to  Section 906 of Sarbanes-Oxley Act of 2002.      |
|   |   |                                                                                                  |
| 32.2   |   | Certification of Chief Financial Officer pursuant to  Section 906 of Sarbanes-Oxley Act of 2002.      |

 

 

12

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