----

**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      DC 20549**

**FORM      10-K**

**    x        **
**ANNUAL      REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE**

**SECURITIES      EXCHANGE ACT OF 1934**

**For      the fiscal year ended September 30, 2006 or**

**    o               **
**TRANSITION      REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE**

**SECURITIES      EXCHANGE ACT OF 1934**

**TECH/OPS      SEVCON, INC.**

*(Exact      name of registrant as specified in its charter)*

| **Delaware**                                                                                   | **04-2985631**                                        |
|------------------------------------------------------------------------------------------------|-------------------------------------------------------|
| *(State                or other jurisdiction of incorporation or                organization)* | *(I.R.S.                Employer Identification No.)* |

**155      Northboro Road, Southborough, Massachusetts 01772**

*(Address      of Principal Executive Offices)*
*(Zip      Code)*

| (Title                of Each Class)                      | (Name                of Exchange on Which Registered) |
|-----------------------------------------------------------|-------------------------------------------------------|
| **COMMON                STOCK, PAR VALUE $.10 PER SHARE** | **AMERICAN                STOCK EXCHANGE**            |

**o**
**x**

**o**
**x**

**x**
**o**

**o**

**o**
**o**
** **
** **
**x**

**o**
** **
**x**

----

**INDEX**

**ITEM**

| **PART                  I**                                                                                                                                                                           | **PAGE** |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------|
| 1. BUSINESS                                                                                                                                                                                      |     |
| General                  description                                                                                                                                                                  | 3        |
| Marketing                  and sales                                                                                                                                                                  | 3        |
| Patents                                                                                                                                                                                               | 3        |
| Backlog                                                                                                                                                                                               | 3        |
| Raw                  materials                                                                                                                                                                        | 3        |
| Competition                                                                                                                                                                                           | 3        |
| Research                  and development                                                                                                                                                             | 4        |
| Environmental                  regulations                                                                                                                                                            | 4        |
| Employees                  and labor relations                                                                                                                                                        | 4        |
| 1A. RISK                  FACTORS                                                                                                                                                                | 4        |
| 1B. UNRESOLVED                  STAFF COMMENTS                                                                                                                                                   | 4        |
| 2. PROPERTIES                                                                                                                                                                                    | 5        |
| 3. LEGAL                  PROCEEDINGS                                                                                                                                                            | 5        |
| 4. SUBMISSION                  OF MATTERS TO A VOTE OF SECURITY HOLDERS                                                                                                                          | 5        |
|     EXECUTIVE                  OFFICERS OF THE REGISTRANT                                                                                                                         | 5        |
| **PART                  II**                                                                                                                                                                          |     |
| 5. MARKET                  FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND                      ISSUER                  PURCHASES OF EQUITY SECURITIES | 5        |
| 6. SELECTED                  FINANCIAL DATA                                                                                                                                                      | 6        |
| 7. MANAGEMENT’S                  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF                  OPERATIONS                                                                 | 6        |
| 7A. QUANTITATIVE                  AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                                                                                                                  | 12       |
| 8. FINANCIAL                  STATEMENTS AND SUPPLEMENTARY DATA                                                                                                                                  |     |
| Consolidated                  Balance Sheets September 30, 2006 and 2005                                                                                                                              | 13       |
| Consolidated                  Statements of Income for the Years ended September 30, 2006, 2005                  and                  2004                                                            | 14       |
| Consolidated                  Statements of Comprehensive Income for the Years ended September                  30, 2006,                  2005 and 2004                                              | 14       |
| Consolidated                  Statements of Stockholders’ Equity for the Years ended September 30, 2006,                  2005 and 2004                                                         | 15       |
| Consolidated                  Statements of Cash Flows for the Years ended September 30, 2006,                  2005 and                  2004                                                        | 16       |
| Notes                  to Consolidated Financial Statements                                                                                                                                           | 17       |
| Reports                  of Independent Registered Public Accounting Firms                                                                                                                            | 29       |
| 9. CHANGES                  IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL                  DISCLOSURE                                                                        | 30       |
| 9A. CONTROLS                  AND PROCEDURES                                                                                                                                                     | 30       |
| 9B. OTHER                  INFORMATION                                                                                                                                                           | 30       |
| **PART                  III**                                                                                                                                                                         |     |
| 10. DIRECTORS                  AND EXECUTIVE OFFICERS OF THE REGISTRANT                                                                                                                          | 30       |
| 11. EXECUTIVE                  COMPENSATION                                                                                                                                                      | 31       |
| 12. SECURITY                  OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                                                                                                              | 31       |
| 13. CERTAIN                  RELATIONSHIPS AND RELATED TRANSACTIONS                                                                                                                              | 31       |
| 14. PRINCIPAL                  ACCOUNTING FEES AND SERVICES                                                                                                                                      | 31       |
| **PART                  IV**                                                                                                                                                                          |     |
| 15. EXHIBITS,                  FINANCIAL STATEMENT SCHEDULES                                                                                                                                     |     |
| Exhibits                                                                                                                                                                                              | 32       |
| Financial                  statements and schedules                                                                                                                                                   | 32       |
| Signatures                  of registrant and directors                                                                                                                                               | 33       |
| SCHEDULES                                                                                                                                                                                             |     |
| II RESERVES                                                                                                                                                                                      | 34       |

----

**PART      I**

**ITEM      1 BUSINESS**

----

**ITEM      1A RISK FACTORS**

**Capital      goods markets are cyclical**

**Single      source materials and sub-contractors may not meet the Company’s      needs**

**Damage      to the Company’s or sub-contractor’s buildings would hurt      results**

**Product      liability claims may have a material adverse effect**

**ITEM      1B UNRESOLVED STAFF COMMENTS**

----

**Item      2 Properties**

**ITEM      3 LEGAL PROCEEDINGS **

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

**EXECUTIVE      OFFICERS OF THE REGISTRANT**

| Name                  of Officer   | Age | Position                                                                                  |
|------------------------------------|-----|-------------------------------------------------------------------------------------------|
| Matthew                  Boyle     | 44  | President                  & Chief Executive Officer                                  |
| Paul                  A. McPartlin | 61  | Vice                  President, Treasurer & Chief Financial                  Officer |

**PART      II**

**ITEM      5 MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND      ISSUER PURCHASES OF EQUITY SECURITIES**

|                                                                                             |   |        | Quarter                      1  |   |        | Quarter                      2 |   |        | Quarter                      3 |   |        | Quarter                      4 |   |        | Year             |   |
|--------------------------------------------------------------------------------------------------|--------|-------------|--------------------------------------|--------|-------------|--------------------------------|--------|-------------|--------------------------------|--------|-------------|--------------------------------|--------|-------------|------------------|--------|
| **2006                      Quarters**                                                           |   |        |                                 |   |        |                           |   |        |                           |   |        |                           |   |        |             |   |
| **Cash                      dividends per share**                                                |   | **$**       | **.03**                              |   | **$**       | **.03**                        |   | **$**       | **.03**                        |   | **$**       | **.03**                        |   | **$**       | **.12**          |   |
| **Common                      stock price per share** **-** **High****-** **Low** |   | **$**  | **6.10****4.95**                     |   | **$**  | **6.55****5.36**               |   | **$**  | **7.36****5.95**               |   | **$**  | **7.09****6.20**               |   | **$**  | **7.36****4.95** |   |
|                                                                                             |   |        |                                 |   |        |                           |   |        |                           |   |        |                           |   |        |             |   |
| 2005                      Quarters                                                               |   |        |                                 |   |        |                           |   |        |                           |   |        |                           |   |        |             |   |
| Cash                      dividends per share                                                    |   | $           | .03                                  |   | $           | .03                            |   | $           | .03                            |   | $           | .03                            |   | $           | .12              |   |
| Common                      stock price per share - High- Low                     |   | $      | 6.605.65                             |   | $      | 7.156.20                       |   | $      | 6.305.10                       |   | $      | 6.105.70                       |   | $      | 7.155.10         |   |

----

**Item      6 Selected Financial Data**

|                                      |   |   | **2006**   |   |   | 2005   |   |   | 2004   |   |   | 2003   |   |   | 2002   |   |
|-------------------------------------------|--------|--------|------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Net                sales                  |   | **$**  | **34,630** |   | $      | 31,675 |   | $      | 29,150 |   | $      | 23,113 |   | $      | 21,872 |   |
| Operating                income           |   |   | **1,844**  |   |   | 999    |   |   | 972    |   |   | 151    |   |   | 45     |   |
| Net                income                 |   |   | **1,114**  |   |   | 641    |   |   | 611    |   |   | 83     |   |   | 57     |   |
| Basic                income per share     |   | **$**  | **.35**    |   | $      | .21    |   | $      | .20    |   | $      | .03    |   | $      | .02    |   |
| Cash                dividends per share   |   | **$**  | **.12**    |   | $      | .12    |   | $      | .12    |   | $      | .12    |   | $      | .30    |   |
| Average                shares outstanding |   |   | **3,139**  |   |   | 3,125  |   |   | 3,125  |   |   | 3,125  |   |   | 3,117  |   |
| Stockholders’                equity |   |   | **10,037** |   |   | 10,589 |   |   | 10,464 |   |   | 9,648  |   |   | 9,453  |   |
| Total                assets               |   | **$**  | **18,652** |   | $      | 16,446 |   | $      | 16,608 |   | $      | 13,784 |   | $      | 13,521 |   |

**ITEM      7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF      OPERATIONS**

**Bad      Debts**

----

** **

**Inventories      **

**Warranty      Costs **

**Goodwill      Impairment **

**Pension      Plan Assumptions**

----

**·**
**      A) Results of Operations**

**2006      compared to 2005**

|                                                             |   |   |       |   |   |   |   |   | %                change due to:  |   |
|-------------------------------------------------------------|--------|--------|------------|--------|--------|--------|--------|--------|---------------------------------------|--------|
|                                                        |   |   | **2006**   |   |   | 2005   |   |   | Total                                 |   |   | Currency |   |   | Volume                / other |   |
| Sales                                                       |   |   |       |   |   |   |   |   |                                  |   |   |   |   |   |   |   |
| Controls                - to external customers             |   | **$**  | **32,808** |   | $      | 30,009 |   |   | 9%                                    |   |   | -2% |   |   | 11% |   |
| Capacitors-                to external customers            |   |   | **1,822**  |   |   | 1,666  |   |   | 9%                                    |   |   | -3% |   |   | 12% |   |
| Capacitors                - inter-segment                   |   |   | **64**     |   |   | 199    |   |   | -68%                                  |   |   | -2% |   |   | -66% |   |
| Capacitors                - total                           |   |   | **1,886**  |   |   | 1,865  |   |   | 1%                                    |   |   | -3% |   |   | 4% |   |
| Total                sales to external customers            |   |   | **34,630** |   |   | 31,675 |   |   | 9%                                    |   |   | -2% |   |   | 11% |   |
| Gross                Profit                                 |   |   |       |   |   |   |   |   |                                  |   |   |   |   |   |   |   |
| Controls                                                    |   |   | **12,268** |   |   | 11,259 |   |   | 9%                                    |   |   | 0% |   |   | 9% |   |
| Capacitors                                                  |   |   | **838**    |   |   | 777    |   |   | 8%                                    |   |   | -2% |   |   | 10% |   |
| Total                                                       |   |   | **13,106** |   |   | 12,036 |   |   | 9%                                    |   |   | 0% |   |   | 9% |   |
| Selling                research and administrative expenses |   |   |       |   |   |   |   |   |                                  |   |   |   |   |   |   |   |
| Controls                                                    |   |   | **10,094** |   |   | 9,916  |   |   | 2%                                    |   |   | -2% |   |   | 4% |   |
| Capacitors                                                  |   |   | **770**    |   |   | 745    |   |   | 3%                                    |   |   | -2% |   |   | 5% |   |
| Unallocated                corporate expense                |   |   | **398**    |   |   | 376    |   |   | 6%                                    |   |   | 0% |   |   | 6% |   |
| Total                                                       |   |   | **11,262** |   |   | 11,037 |   |   | 2%                                    |   |   | -2% |   |   | 4% |   |
| Operating                income                             |   |   |       |   |   |   |   |   |                                  |   |   |   |   |   |   |   |
| Controls                                                    |   |   | **2,174**  |   |   | 1,343  |   |   | 62%                                   |   |   | 11% |   |   | 51% |   |
| Capacitors                                                  |   |   | **68**     |   |   | 32     |   |   | 113%                                  |   |   | -3% |   |   | 116% |   |
| Unallocated                corporate expense                |   |   | **(398**   | **)**  |   | (376   | )      |   | 6%                                    |   |   | 0% |   |   | 6% |   |
| Total                                                       |   |   | **1,844**  |   |   | 999    |   |   | 85%                                   |   |   | 15% |   |   | 70% |   |
| Other                income and expense                     |   |   | **(110**   | **)**  |   | (48    | )      |   | 129%                                  |   |   | 117% |   |   | 12% |   |
| Income                before income taxes                   |   |   | **1,734**  |   |   | 951    |   |   | 82%                                   |   |   | 10% |   |   | 72% |   |
| Income                taxes                                 |   |   | **(620**   | **)**  |   | (310   | )      |   | 100%                                  |   |   | 12% |   |   | 88% |   |
| Net                Income                                   |   | **$**  | **1,114**  |   | $      | 641    |   |   | 74%                                   |   |   | 9% |   |   | 65% |   |

----

| **Selling,                research and administrative expenses**                                            |  (in              thousands of dollars) |   |
|-------------------------------------------------------------------------------------------------------------|----------------------------------------------|--------|
| Reported                expense in fiscal 2006                                                         |                                         | $      | 11,262 |   |
| Reported                expense in fiscal 2005                                                              |                                         |   | 11,037 |   |
| Increase                in expense                                                                          |                                         |   | 225 |   |
| Increase                (decrease) due to:                                                                  |                                         |   |   |   |
| Effect                of exchange rate changes                                                              |                                         |   | (200 | ) |
| Additional                engineering expense, net of currency effect                                       |                                         |   | 156 |   |
| Additional                sales and marketing expense, net of currency effect                               |                                         |   | 264 |   |
| Increased                cost of equity compensation in 2006                                                |                                         |   | 88 |   |
| Net                other operating expense decreases                                                        |                                         |   | (108 | ) |
| Total                increase in selling research and administrative expenses in fiscal                2006 |                                         |   | 225 |   |

----

**2005      compared to 2004**

|                                                        |   |   |   |   |   |   |   |   | %                change due to:  |
|-------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|---------------------------------------|
|                                                        |   |   | 2005   |   |   | 2004   |   |   | Total                                 |   |   | Currency |   |   | Volume                / other |   |
| Sales                                                       |   |   |   |   |   |   |   |   |                                  |   |   |   |   |   |   |   |
| Controls                - to external customers             |   | $      | 30,009 |   | $      | 27,101 |   |   | 11%                                   |   |   | 2% |   |   | 9% |   |
| Capacitors-                to external customers            |   |   | 1,666  |   |   | 2,049  |   |   | -19%                                  |   |   | 2% |   |   | -21% |   |
| Capacitors                - inter-segment                   |   |   | 199    |   |   | 218    |   |   | -9%                                   |   |   | 2% |   |   | -11% |   |
| Capacitors                - total                           |   |   | 1,865  |   |   | 2,267  |   |   | -18%                                  |   |   | 2% |   |   | -20% |   |
| Total                sales to external customers            |   |   | 31,675 |   |   | 29,150 |   |   | 9%                                    |   |   | 2% |   |   | 7% |   |
| Gross                Profit                                 |   |   |   |   |   |   |   |   |                                  |   |   |   |   |   |   |   |
| Controls                                                    |   |   | 11,259 |   |   | 10,546 |   |   | 7%                                    |   |   | -1% |   |   | 8% |   |
| Capacitors                                                  |   |   | 777    |   |   | 999    |   |   | -22%                                  |   |   | 2% |   |   | -24% |   |
| Total                                                       |   |   | 12,036 |   |   | 11,545 |   |   | 4%                                    |   |   | -1% |   |   | 5% |   |
| Selling                research and administrative expenses |   |   |   |   |   |   |   |   |                                  |   |   |   |   |   |   |   |
| Controls                                                    |   |   | 9,916  |   |   | 9,572  |   |   | 4%                                    |   |   | 1% |   |   | 3% |   |
| Capacitors                                                  |   |   | 745    |   |   | 704    |   |   | 6%                                    |   |   | 2% |   |   | 4% |   |
| Unallocated                corporate expense                |   |   | 376    |   |   | 297    |   |   | 27%                                   |   |   | 0% |   |   | 27% |   |
| Total                                                       |   |   | 11,037 |   |   | 10,573 |   |   | 4%                                    |   |   | 2% |   |   | 2% |   |
| Operating                income                             |   |   |   |   |   |   |   |   |                                  |   |   |   |   |   |   |   |
| Controls                                                    |   |   | 1,343  |   |   | 974    |   |   | 38%                                   |   |   | -25% |   |   | 63% |   |
| Capacitors                                                  |   |   | 32     |   |   | 295    |   |   | -89%                                  |   |   | 1% |   |   | -90% |   |
| Unallocated                corporate expense                |   |   | (376   | )      |   | (297   | )      |   | 27%                                   |   |   | 0% |   |   | 27% |   |
| Total                                                       |   |   | 999    |   |   | 972    |   |   | 3%                                    |   |   | -24% |   |   | 27% |   |
| Other                income and expense                     |   |   | (48    | )      |   | (54    | )      |   | -11%                                  |   |   | -56% |   |   | 45% |   |
| Income                before income taxes                   |   |   | 951    |   |   | 918    |   |   | 4%                                    |   |   | -23% |   |   | 27% |   |
| Income                taxes                                 |   |   | (310   | )      |   | (307   | )      |   | 1%                                    |   |   | -22% |   |   | 23% |   |
| Net                Income                                   |   | $      | 641    |   | $      | 611    |   |   | 5%                                    |   |   | -23% |   |   | 28% |   |

----

| **Selling,                research and administrative expenses**                                            |  (in                thousands of dollars) |
|-------------------------------------------------------------------------------------------------------------|------------------------------------------------|
| Reported                expense in fiscal 2005                                                              |                                           | $ | 11,037 |   |
| Reported                expense in fiscal 2004                                                              |                                           |   | 10,573 |   |
| Increase                in expense                                                                          |                                           |   | 464 |   |
| Increase                (decrease) due to:                                                                  |                                           |   |   |   |
| Effect                of exchange rate changes                                                              |                                           |   | 210 |   |
| Lower                engineering consultancy costs in fiscal 2005, net of currency                effect    |                                           |   | (915 | ) |
| Additional                internal engineering expense, net of currency effect                              |                                           |   | 379 |   |
| Additional                sales and marketing expense, net of currency effect                               |                                           |   | 450 |   |
| Charge                for restricted stock grants in fiscal 2005                                            |                                           |   | 87 |   |
| Other                increases in operating expense - net,                                                  |                                           |   | 253 |   |
| Total                increase in selling research and administrative expenses in fiscal                2005 |                                           |   | 464 |   |

----

|                                            |   |   | (in                thousands of dollars)  |
|--------------------------------------------|--------|--------|------------------------------------------------|
|                                       |   |   | Total                                     |   |   | Less                than 1 year |   |   | 1                - 3 years |   |   | 3                - 5 years |   |   | More                than 5 years |   |
| Long-term                debt obligations  |   | $      | -                                              |   | $ | - |   | $ | - |   | $ | - |   | $ | - |   |
| Capital                lease obligations   |   |   | -                                              |   |   | - |   |   | - |   |   | - |   |   | - |   |
| Operating                lease obligations |   |   | 2,583                                          |   |   | 224 |   |   | 412 |   |   | 412 |   |   | 1,535 |   |
| Purchase                Obligations        |   |   | 2,633                                          |   |   | 2,633 |   |   | - |   |   | - |   |   | - |   |
| Other                long term liabilities |   |   | 56                                             |   |   | - |   |   | - |   |   | 56 |   |   | - |   |
| Total                                      |   | $      | 5,272                                          |   | $ | 2,857 |   | $ | 412 |   | $ | 468 |   | $ | 1,535 |   |

**ITEM      7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET      RISK**

**Foreign      currency risk**

**Interest      Rate Risk**

----

**ITEM      8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA**

**CONSOLIDATED      BALANCE SHEETS**

| **ASSETS**                                                                                                                               |   |   | **2006**   |   |   | 2005   |   |
|------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|--------|
| **Current                  assets:**                                                                                                     |   |   |       |   |   |   |   |
| Cash                  and cash equivalents                                                                                               |   | **$**  | **1,290**  |   | $      | 1,130  |   |
| Receivables,                  net of allowances for doubtful accounts of $141 in 2006 and $144                  in                  2005 |   |   | **6,187**  |   |   | 6,193  |   |
| Inventories                                                                                                                              |   |   | **4,717**  |   |   | 3,737  |   |
| Prepaid                  expenses and other current assets                                                                               |   |   | **847**    |   |   | 915    |   |
| Total                  current assets                                                                                                    |   |   | **13,041** |   |   | 11,975 |   |
| **Property,                  plant and equipment, at cost:**                                                                             |   |   |       |   |   |   |   |
| Land                  and improvements                                                                                                   |   |   | **26**     |   |   | 25     |   |
| Buildings                  and improvements                                                                                              |   |   | **2,256**  |   |   | 2,139  |   |
| Equipment                                                                                                                                |   |   | **8,215**  |   |   | 7,429  |   |
|                                                                                                                                     |   |   | **10,497** |   |   | 9,593  |   |
| Less:                  accumulated depreciation and amortization                                                                         |   |   | **7,202**  |   |   | 6,557  |   |
| Net                  property, plant and equipment                                                                                       |   |   | **3,295**  |   |   | 3,036  |   |
| Long-term                  deferred tax asset                                                                                            |   |   | **881**    |   |   | -      |   |
| Goodwill                                                                                                                                 |   |   | **1,435**  |   |   | 1,435  |   |
| **Total                  assets**                                                                                                        |   | **$**  | **18,652** |   | $      | 16,446 |   |
|  **LIABILITIES                  AND STOCKHOLDERS’ EQUITY**                                                                    |   |   |       |   |   |   |   |
| **Current                  liabilities:**                                                                                                |   |   |       |   |   |   |   |
| Accounts                  payable                                                                                                        |   | **$**  | **2,397**  |   | $      | 2,599  |   |
| Dividend                  payable                                                                                                        |   |   | **96**     |   |   | 95     |   |
| Accrued                  expenses                                                                                                        |   |   | **2,701**  |   |   | 2,685  |   |
| Accrued                  taxes on income                                                                                                 |   |   | **479**    |   |   | 445    |   |
| Total                  current liabilities                                                                                               |   |   | **5,673**  |   |   | 5,824  |   |
| Deferred                  taxes on income                                                                                                |   |   | **-**      |   |   | 33     |   |
| Liability                  for pension benefits                                                                                          |   |   | **2,886**  |   |   | -      |   |
| Other                  long term liabilities                                                                                             |   |   | **56**     |   |   | -      |   |
| Total                  liabilities                                                                                                       |   |   | **8,615**  |   |   | 5,857  |   |
| Commitments                  and contingencies (note 5)                                                                                  |   |   |       |   |   |   |   |
| **S****tockholders’                  equity**                                                                                      |   |   |       |   |   |   |   |
| Preferred                  stock, par value $.10 per share - authorized - 1,000,000 shares;                  outstanding - none          |   |   | **-**      |   |   | -      |   |
| Common                  stock, par value $.10 per share - authorized - 8,000,000 shares;                  outstanding                    |   |   |       |   |   |   |   |
| 3,211,051                  shares in 2006 and 3,172,051 shares in 2005                                                                   |   |   | **321**    |   |   | 317    |   |
| Premium                  paid in on common stock                                                                                         |   |   | **4,309**  |   |   | 4,310  |   |
| Retained                  earnings                                                                                                       |   |   | **7,123**  |   |   | 6,394  |   |
| Unearned                  compensation on restricted stock                                                                               |   |   | **-**      |   |   | (180   | )      |
| Cumulative                  other comprehensive loss                                                                                     |   |   | **(1,716** | **)**  |   | (252   | )      |
| Total                  stockholders’ equity                                                                                        |   |   | **10,037** |   |   | 10,589 |   |
| **Total                  liabilities and stockholders’ equity**                                                                    |   | **$**  | **18,652** |   | $      | 16,446 |   |

----

**CONSOLIDATED      STATEMENTS OF INCOME**

|                                                         |   |   | **2006**   |   |   | 2005   |   |   | 2004   |   |
|--------------------------------------------------------------|--------|--------|------------|--------|--------|--------|--------|--------|--------|--------|
| Net                sales                                     |   | **$**  | **34,630** |   | $      | 31,675 |   | $      | 29,150 |   |
| Cost                of sales                                 |   |   | **21,524** |   |   | 19,639 |   |   | 17,605 |   |
| Gross                profit                                  |   |   | **13,106** |   |   | 12,036 |   |   | 11,545 |   |
| Selling,                research and administrative expenses |   |   | **11,262** |   |   | 11,037 |   |   | 10,573 |   |
| Operating                income                              |   |   | **1,844**  |   |   | 999    |   |   | 972    |   |
| Interest                expense                              |   |   | **(64**    | **)**  |   | (56    | )      |   | (29    | )      |
| Interest                income                               |   |   | **6**      |   |   | 4      |   |   | 1      |   |
| Foreign                currency gain or (loss)               |   |   | **(52**    | **)**  |   | 4      |   |   | (26    | )      |
| Income                before income taxes                    |   |   | **1,734**  |   |   | 951    |   |   | 918    |   |
| Income                taxes                                  |   |   | **(620**   | **)**  |   | (310   | )      |   | (307   | )      |
| Net                income                                    |   | **$**  | **1,114**  |   | $      | 641    |   | $      | 611    |   |
| Basic                income per share                        |   | **$**  | **.35**    |   | $      | .21    |   | $      | .20    |   |
| Diluted                income per share                      |   | **$**  | **.35**    |   | $      | .20    |   | $      | .19    |   |

**CONSOLIDATED      STATEMENTS OF COMPREHENSIVE INCOME**

|                                                            |   |   | **2006**  |   |   | 2005 |   |   | 2004  |   |
|-----------------------------------------------------------------|--------|--------|-----------|--------|--------|------|--------|--------|-------|--------|
| Net                income                                       |   | **$**  | **1,114** |   | $      | 641  |   | $      | 611   |   |
| Foreign                currency translation adjustment          |   |   | **459**   |   |   | (208 | )      |   | 574   |   |
| Changes                in fair market value of cash flow hedges |   |   | **-**     |   |   | (15  | )      |   | 6     |   |
| Comprehensive                income                             |   | **$**  | **1,573** |   | $      | 418  |   | $      | 1,191 |   |

----

**CONSOLIDATED      STATEMENTS OF STOCKHOLDERS’ EQUITY**

|                                                                                                                                   |   |   | Common                stock  |   |   | Premium                paid in on common stock |   |   | Retained                earnings |   |   | Unearned                compensation on restricted stock |   |   | Cumulative                other comprehensive income (loss | )      |   | Total                stockholders’ equity |   |
|----------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-----------------------------------|--------|--------|------------------------------------------------|--------|--------|----------------------------------|--------|--------|----------------------------------------------------------|--------|--------|------------------------------------------------------------|--------|--------|-------------------------------------------------|--------|
| Balance                September 30, 2003                                                                                              |   | $      | 313                               |   | $      | 4,047                                          |   | $      | 5,897                            |   | $      | -                                                        |   | $      | (609                                                       | )      | $      | 9,648                                           |   |
| Net                income                                                                                                              |   |   | -                                 |   |   | -                                              |   |   | 611                              |   |   | -                                                        |   |   | -                                                          |   |   | 611                                             |   |
| Dividends                ($.12 per share)                                                                                              |   |   | -                                 |   |   | -                                              |   |   | (375                             | )      |   | -                                                        |   |   | -                                                          |   |   | (375                                            | )      |
| Currency                translation adjustment                                                                                         |   |   | -                                 |   |   | -                                              |   |   | -                                |   |   | -                                                        |   |   | 574                                                        |   |   | 574                                             |   |
| Change                in fair market value of cash flow hedge                                                                          |   |   | -                                 |   |   | -                                              |   |   | -                                |   |   | -                                                        |   |   | 6                                                          |   |   | 6                                               |   |
| Balance                September 30, 2004                                                                                              |   |   | 313                               |   |   | 4,047                                          |   |   | 6,133                            |   |   | -                                                        |   |   | (29                                                        | )      |   | 10,464                                          |   |
| Net                income                                                                                                              |   |   | -                                 |   |   | -                                              |   |   | 641                              |   |   | -                                                        |   |   | -                                                          |   |   | 641                                             |   |
| Dividends                ($.12 per share)                                                                                              |   |   | -                                 |   |   | -                                              |   |   | (380                             | )      |   | -                                                        |   |   | -                                                          |   |   | (380                                            | )      |
| Currency                translation adjustment                                                                                         |   |   | -                                 |   |   | -                                              |   |   | -                                |   |   | -                                                        |   |   | (208                                                       | )      |   | (208                                            | )      |
| Change                in fair market value of cash flow hedge                                                                          |   |   | -                                 |   |   | -                                              |   |   | -                                |   |   | -                                                        |   |   | (15                                                        | )      |   | (15                                             | )      |
| Issuance                of restricted stock                                                                                            |   |   | 4                                 |   |   | 263                                            |   |   | -                                |   |   | (267                                                     | )      |   | -                                                          |   |   | -                                               |   |
| Restricted                stock expense                                                                                                |   |   | -                                 |   |   | -                                              |   |   | -                                |   |   | 87                                                       |   |   | -                                                          |   |   | 87                                              |   |
| Balance                September 30, 2005                                                                                              |   |   | 317                               |   |   | 4,310                                          |   |   | 6,394                            |   |   | (180                                                     | )      |   | (252                                                       | )      |   | 10,589                                          |   |
| **Net                income**                                                                                                          |   |   | **-**                             |   |   | **-**                                          |   |   | **1,114**                        |   |   | **-**                                                    |   |   | **-**                                                      |   |   | **1,114**                                       |   |
| **Dividends                ($.12 per share)**                                                                                          |   |   | **-**                             |   |   | **-**                                          |   |   | **(385**                         | **)**  |   | **-**                                                    |   |   | **-**                                                      |   |   | **(385**                                        | **)**  |
| **Currency                translation adjustment**                                                                                     |   |   | **-**                             |   |   | **-**                                          |   |   | **-**                            |   |   | **-**                                                    |   |   | **459**                                                    |   |   | **459**                                         |   |
| **Reclassification                of unearned compensation on adoption of****SFAS                #123R**                               |   |   | **-**                             |   |   | **(180**                                       | **)**  |   | **-**                            |   |   | **180**                                                  |   |   | **-**                                                      |   |   | **-**                                           |   |
| **Issuance                of restricted stock**                                                                                        |   |   | **4**                             |   |   | **(4**                                         | **)**  |   | **-**                            |   |   | **-**                                                    |   |   | **-**                                                      |   |   | **-**                                           |   |
| **Exercise                of stock options**                                                                                           |   |   | **-**                             |   |   | **8**                                          |   |   | **-**                            |   |   | **-**                                                    |   |   | **-**                                                      |   |   | **8**                                           |   |
| **Equity                compensation expense**                                                                                         |   |   | **-**                             |   |   | **175**                                        |   |   | **-**                            |   |   |                                                     |   |   | **-**                                                      |   |   | **175**                                         |   |
| **Pension                liability adjustment to initially apply SFAS #158, net of tax benefit                of                $849** |   |   | **-**                             |   |   | **-**                                          |   |   | **-**                            |   |   | **-**                                                    |   |   | **(1,923**                                                 | **)**  |   | **(1,923**                                      | **)**  |
| **Balance                September 30, 2006**                                                                                          |   | **$**  | **321**                           |   | **$**  | **4,309**                                      |   | **$**  | **7,123**                        |   | **$**  | **-**                                                    |   | **$**  | **(1,716**                                                 | **)**  | **$**  | **10,037**                                      |   |

----

**CONSOLIDATED      STATEMENTS OF CASH FLOWS**

|                                                                                                                                                    |   |   | **2006**  |   |   | 2005   |   |   | 2004   |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|--------|--------|--------|--------|
| Cash                flow from operating activities:                                                                                                     |   |   |      |   |   |   |   |   |   |   |
| Net                income                                                                                                                               |   | **$**  | **1,114** |   | $      | 641    |   | $      | 611    |   |
| Adjustments                to reconcile net income to net cash from operating                activities:                                                |   |   |      |   |   |   |   |   |   |   |
|                    Depreciation and amortization                                                                                         |   |   | **657**   |   |   | 661    |   |   | 630    |   |
|                    Stock-based compensation                                                                                              |   |   | **175**   |   |   | 87     |   |   | -      |   |
|                    Deferred tax provision (benefit)                                                                                      |   |   | **64**    |   |   | (6     | )      |   | (41    | )      |
|                    Increase (decrease) in cash resulting from changes in operating assets                and                liabilities: |   |   |      |   |   |   |   |   |   |   |
|                        Receivables                                                                                   |   |   | **6**     |   |   | (84    | )      |   | (1,971 | )      |
|                        Inventories                                                                                   |   |   | **(980**  | **)**  |   | 306    |   |   | (44    | )      |
|                        Prepaid expenses and other current assets                                                     |   |   | **10**    |   |   | (21    | )      |   | (138   | )      |
|                        Accounts payable                                                                              |   |   | **(202**  | **)**  |   | (401   | )      |   | 1,511  |   |
|                        Accrued expenses                                                                              |   |   | **16**    |   |   | 144    |   |   | 218    |   |
|                        Accrued taxes on income                                                                       |   |   | **34**    |   |   | (2     | )      |   | 295    |   |
|                        Proceeds of rental deposit                                                                    |   |   | **56**    |   |   | -      |   |   | -      |   |
| Net                cash generated from operating activities                                                                                             |   |   | **950**   |   |   | 1,324  |   |   | 1,071  |   |
| Cash                flow used by investing activities:                                                                                                  |   |   |      |   |   |   |   |   |   |   |
|                    Acquisition of property, plant and equipment                                                                          |   |   | **(706**  | **)**  |   | (571   | )      |   | (628   | )      |
| Net                cash used by investing activities                                                                                                    |   |   | **(706**  | **)**  |   | (571   | )      |   | (628   | )      |
| Cash                flow used by financing activities:                                                                                                  |   |   |      |   |   |   |   |   |   |   |
|                    Dividends paid                                                                                                        |   |   | **(384**  | **)**  |   | (379   | )      |   | (375   | )      |
|                    Exercise of stock options                                                                                             |   |   | **8**     |   |   | -      |   |   | -      |   |
|                    Net cash used by financing activities                                                                                 |   |   | **(376**  | **)**  |   | (379   | )      |   | (375   | )      |
| Effect                of exchange rate changes on cash                                                                                                  |   |   | **292**   |   |   | (149   | )      |   | 313    |   |
| Net                increase in cash                                                                                                                     |   |   | **160**   |   |   | 225    |   |   | 381    |   |
| Beginning                balance - cash and cash equivalents                                                                                            |   |   | **1,130** |   |   | 905    |   |   | 524    |   |
| Ending                balance - cash and cash equivalents                                                                                               |   | **$**  | **1,290** |   | $      | 1,130  |   | $      | 905    |   |
| Supplemental                disclosure of cash flow information:                                                                                        |   |   |      |   |   |   |   |   |   |   |
|                    Cash paid for income taxes                                                                                            |   | **$**  | **650**   |   | $      | 354    |   | $      | 44     |   |
|                    Cash paid for interest                                                                                                |   | **$**  | **64**    |   | $      | 56     |   | $      | 29     |   |
| Supplemental                disclosure of non-cash financing activity:                                                                                  |   |   |      |   |   |   |   |   |   |   |
|                    Dividend declared                                                                                                     |   | **$**  | **96**    |   | $      | 95     |   | $      | 94     |   |

----

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS**

**(1)      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

**A.      Basis of presentation**

**B.      Revenue recognition**

|                                                                                                         |   |   | **2006** |   |   | 2005 |   |
|--------------------------------------------------------------------------------------------------------------|--------|--------|----------|--------|--------|------|--------|
| Warranty                reserves at beginning of year                                                        |   | **$**  | **364**  |   | $      | 386  |   |
| Decrease                in beginning balance for warranty obligations settled during the                year |   |   | **(329** | **)**  |   | (338 | )      |
| Other                changes to pre-existing warranties                                                      |   |   | **4**    |   |   | 5    |   |
| Net                increase in warranty reserves for products sold during the                year            |   |   | **325**  |   |   | 311  |   |
| Warranty                reserves at end of year                                                              |   | **$**  | **364**  |   | $      | 364  |   |

**C.      Research and development**

**D.      Depreciation and maintenance**

**E.      Stock based compensation plans**

|                                                                    |   |   | 2005 |   |   | 2004 |   |
|-------------------------------------------------------------------------|--------|--------|------|--------|--------|------|--------|
| Net                income - As reported                                 |   | $      | 641  |   | $      | 611  |   |
| Pro-forma                effect of expensing stock options (net of tax) |   | $      | (52  | )      | $      | (66  | )      |
| Net                income - Pro forma                                   |   | $      | 589  |   | $      | 545  |   |
| Basic                net income per share - As reported                 |   | $      | .21  |   | $      | .20  |   |
| Basic                net income per share - Pro forma                   |   | $      | .19  |   | $      | .17  |   |
| Diluted                net income per share - As reported               |   | $      | .20  |   | $      | .19  |   |
| Diluted                net income per share - Pro forma                 |   | $      | .19  |   | $      | .17  |   |

----

|                              |   |   | Options#                of shares  |   |   | Weighted                average Exercise Price |   |   | Weighted                average remaining contractual life (years | )      |   | Aggregate                Intrinsic Value |   |
|--------------------------------------------------|--------|--------|-----------------------------------------|--------|--------|------------------------------------------------|--------|--------|-------------------------------------------------------------------|--------|--------|------------------------------------------|--------|
| Outstanding                at September 30, 2005 |   |   | 182,000                                 |   | $      | 9.26                                           |   |   |                                                              |   |   |                                     |   |
| Granted                                          |   |   | -                                       |   |   |                                           |   |   |                                                              |   |   |                                     |   |
| Exercised                                        |   |   | (2,000                                  | )      | $      | 4.37                                           |   |   |                                                              |   |   |                                     |   |
| Cancelled                                        |   |   | (8,000                                  | )      | $      | 8.46                                           |   |   |                                                              |   |   |                                     |   |
| Outstanding                at September 30, 2006 |   |   | 172,000                                 |   | $      | 9.35                                           |   |   | 3                years                                            |   | $      | 175,000                                  |   |
| Exercisable                at September 30, 2006 |   |   | 118,900                                 |   | $      | 10.39                                          |   |   | 3                years                                            |   | $      | 88,000                                   |   |

|                                                  |   |   | Number                of shares of Restricted Stock   |   |   | Weighted                Average Grant-Date Fair Value |   |
|------------------------------------------------------------|--------|--------|-----------------------------------------------------------------|--------|--------|-------------------------------------------------------|--------|
| Non-vested                balance as of September 30, 2005 |   |   | 47,000                                                          |   | $      | 6.18                                                  |   |
| Granted                                                    |   |   | 37,000                                                          |   | $      | 5.58                                                  |   |
| Vested                                                     |   |   | (19,000                                                         | )      | $      | 6.64                                                  |   |
| Forfeited                                                  |   |   | -                                                               |   |   | N/A                                                   |   |
| Non-vested                balance as of September 30, 2006 |   |   | 65,000                                                          |   | $      | 5.70                                                  |   |

----

|                                                                                                   |   |   | **2006** |   |   | 2005   |   |   | 2004   |   |
|--------------------------------------------------------------------------------------------------------|--------|--------|----------|--------|--------|--------|--------|--------|--------|--------|
| Stock                  option expense under SFAS # 123R *                                              |   | **$**  | **46**   |   | $      | -      |   | $      | -      |   |
| Restricted                  stock grants:                                                              |   |   |     |   |   |   |   |   |   |   |
| Employees                                                                                              |   | **$**  | **55**   |   | $      | 30     |   | $      | -      |   |
| Non-employee                  directors                                                                |   | **$**  | **74**   |   | $      | 57     |   | $      | -      |   |
| Total                  stock based compensation expense                                                |   | **$**  | **175**  |   | $      | 87     |   | $      | -      |   |
| *                  Pro-forma expense disclosed for options accounted for under                  APB#25 |   | **$**  | **N/A**  |   | $      | 52     |   | $      | 66     |   |

**F.      Income taxes**

**G.      Inventories**

|                          |   |   | **2006**  |   |   | 2005  |   |
|-------------------------------|--------|--------|-----------|--------|--------|-------|--------|
| Raw                materials  |   | **$**  | **2,195** |   | $      | 1,596 |   |
| Work-in-process               |   |   | **119**   |   |   | 174   |   |
| Finished                goods |   |   | **2,403** |   |   | 1,967 |   |
|                          |   | **$**  | **4,717** |   | $      | 3,737 |   |

**H.      Accounts receivable**

**I.      Translation of foreign currencies**

**J.      Derivative instruments and hedging**

----

**Foreign      currency spot/forward contracts:**

|                                                                                          |   |       |  **2006**               |   |   |  2005                                  |   |
|-----------------------------------------------------------------------------------------------|--------|------------|------------------------------|--------|--------|---------------------------------------------|--------|
|                                                                                          |   |       | **Notional****Amount**  |   |   | **Average****Contract                Rate** |   |   | NotionalAmount |   |   | AverageContract                Rate |   |
| Sell                Euros for British PoundsSell                US Dollars for British Pounds |   | **$****$** | **-****250**                 |   |   | **-****$1.73                = £1**     |   | $$ | -1,050 |   |   | -$1.80                = £1 |   |
| Total                                                                                         |   | **$**      | **250**                      |   |   |                                        |   | $ | 1,050 |   |   |   |   |
| Estimated                fair value *                                                         |   | **$**      | **19**                       |   |   |                                        |   | $ | (21 | ) |   |   |   |
| Amount                recorded as other comprehensive income                                  |   | **$**      | **-**                        |   |   |                                        |   | $ | - |   |   |   |   |

**K.      Cash equivalents and short-term investments**

----

**L.      Earnings per share**

|                                                                   |   |   | **2006**  |   |   | 2005  |   |   | 2004  |   |
|------------------------------------------------------------------------|--------|--------|-----------|--------|--------|-------|--------|--------|-------|--------|
| Net                income                                              |   | **$**  | **1,114** |   | $      | 641   |   | $      | 611   |   |
| Weighted                average shares outstanding                     |   |   | **3,139** |   |   | 3,125 |   |   | 3,125 |   |
| Basic                income per share                                  |   | **$**  | **.35**   |   | $      | .21   |   | $      | .20   |   |
| Common                stock equivalents                                |   |   | **27**    |   |   | 27    |   |   | 22    |   |
| Average                common and common equivalent shares outstanding |   |   | **3,166** |   |   | 3,152 |   |   | 3,147 |   |
| Diluted                income per share                                |   | **$**  | **.35**   |   | $      | .20   |   | $      | .19   |   |

**M.      Use of estimates in the preparation of financial      statements**

**N.      Fair value of financial instruments**

**O.      Goodwill**

**P.      New Accounting Pronouncements **

----

**(2)      CAPITAL STOCK**

**(3)      STOCK-BASED COMPENSATION PLANS**

|                                             |   |   | Shares                under option  |   |   | Weighted                average exercise                price |   |
|--------------------------------------------------|--------|--------|------------------------------------------|--------|--------|---------------------------------------------------------------|--------|
| Outstanding                at September 30, 2003 |   |   | 193,000                                  |   | $      | 9.29                                                          |   |
| Cancelled                in 2004                 |   |   | (5,000                                   | )      | $      | 4.37                                                          |   |
| Outstanding                at September 30, 2004 |   |   | 188,000                                  |   | $      | 9.42                                                          |   |
| Cancelled                in 2005                 |   |   | (6,000                                   | )      | $      | 14.48                                                         |   |
| Outstanding                at September 30, 2005 |   |   | 182,000                                  |   | $      | 9.26                                                          |   |
| Exercised                in 2006                 |   |   | (2,000                                   | )      | $      | 4.37                                                          |   |
| Cancelled                in 2006                 |   |   | (8,000                                   | )      | $      | 8.46                                                          |   |
| Outstanding                at September 30, 2006 |   |   | 172,000                                  |   | $      | 9.35                                                          |   |
| Exercisable                at September 30, 2006 |   |   | 118,900                                  |   | $      | 10.39                                                         |   |

| Price                range      |   |   | Shares                under option |   |   | Weighted                average remaining contractual life |   |
|---------------------------------|--------|--------|------------------------------------|--------|--------|------------------------------------------------------------|--------|
| $                4.37 - $ 6.56  |   |   | 72,000                             |   |   | 6                years                                     |   |
| $                6.57 - $ 9.85  |   |   | 10,000                             |   |   | 5                years                                     |   |
| $                9.86 - $14.79  |   |   | 70,000                             |   |   | 2                years                                     |   |
| $                14.80 - $22.20 |   |   | 20,000                             |   |   | 1                years                                     |   |
|                            |   |   | 172,000                            |   |   | 3                years                                     |   |

----

|                                                                          |   |   | **2006** |   |   | 2005 |   |   | 2004 |   |
|-------------------------------------------------------------------------------|--------|--------|----------|--------|--------|------|--------|--------|------|--------|
| Beginning                Balance - Non-vested                                 |   |   | **47**   |   |   | -    |   |   | -    |   |
| Granted                to employees - 5 year vesting                          |   |   | **25**   |   |   | 35   |   |   | -    |   |
| Granted                to non-employee directors - 1 year vesting             |   |   | **12**   |   |   | 12   |   |   | -    |   |
| Vested                                                                        |   |   | **(19**  | **)**  |   | -    |   |   | -    |   |
| Forfeited                                                                     |   |   | **-**    |   |   | -    |   |   | -    |   |
| Ending                Balance - Non-vested                                    |   |   | **65**   |   |   | 47   |   |   | -    |   |
| Weighted-average                fair value for shares granted during the year |   | **$**  | **5.58** |   | $      | 6.18 |   | $      | -    |   |

**(4)      INCOME TAXES**

|     |   |   | **2006**  |   |   | 2005 |   |   | 2004 |   |
|----------|--------|--------|-----------|--------|--------|------|--------|--------|------|--------|
| Domestic |   | **$**  | **(87**   | **)**  | $      | 1    |   | $      | 5    |   |
| Foreign  |   |   | **1,821** |   |   | 950  |   |   | 913  |   |
|     |   | **$**  | **1,734** |   | $      | 951  |   | $      | 918  |   |

|        |   |   |              |   |   | **2006**     |   |   |      |   |
|-------------|--------|--------|-------------------|--------|--------|--------------|--------|--------|-----------|--------|
|             |   |   | **Current**  |   |   | **Deferred** |   |   | **Total** |   |
| **Federal** |   | **$**  | **77**            |   | **$**  | **(45**      | **)**  | **$**  | **32**    |   |
| **State**   |   |   | **21**            |   |   | **(1**       | **)**  |   | **20**    |   |
| **Foreign** |   |   | **504**           |   |   | **65**       |   |   | **569**   |   |
|        |   | **$**  | **601**           |   | **$**  | **19**       |   | **$**  | **620**   |   |
|        |   |   |              |   |   | 2005         |   |   |      |   |
|        |   |   | Current      |   |   | Deferred     |   |   | Total     |   |
| Federal     |   | $      | 24                |   | $      | (32          | )      | $      | (8        | )      |
| State       |   |   | 7                 |   |   | 8            |   |   | 15        |   |
| Foreign     |   |   | 338               |   |   | (35          | )      |   | 303       |   |
|        |   | $      | 369               |   | $      | (59          | )      | $      | 310       |   |
|        |   |   | Current      |   |   | 2004         |   |   |      |   |
|        |   |   |              |   |   | Deferred     |   |   | Total     |   |
| Federal     |   | $      | 26                |   | $      | (25          | )      | $      | 1         |   |
| State       |   |   | 21                |   |   | (5           | )      |   | 16        |   |
| Foreign     |   |   | 299               |   |   | (9           | )      |   | 290       |   |
|        |   | $      | 346               |   | $      | (39          | )      | $      | 307       |   |

----

|                                                           |   |   | **2006** |   |   | 2005   |   |   | 2004   |   |
|----------------------------------------------------------------|--------|--------|----------|--------|--------|--------|--------|--------|--------|--------|
| Statutory                Federal income tax rate               |   |   | **34%**  |   |   | 34%    |   |   | 34%    |   |
| Computed                tax provision at statutory rate        |   | **$**  | **590**  |   | $      | 323    |   | $      | 312    |   |
| Increases                (decreases) resulting from:           |   |   |     |   |   |   |   |   |   |   |
| Foreign                tax rate differentials                  |   |   | **(53**  | **)**  |   | (20    | )      |   | (28    | )      |
| State                taxes net of federal tax benefit          |   |   | **13**   |   |   | (7     | )      |   | 1      |   |
| Change                in deferred tax valuation allowance      |   |   | **58**   |   |   | 7      |   |   | (15    | )      |
| Foreign                tax credits and other                   |   |   | **12**   |   |   | 7      |   |   | 37     |   |
| Income                tax provision in the Statement of Income |   | **$**  | **620**  |   | $      | 310    |   | $      | 307    |   |

|                                                |   |   |                                        |   | **2006** |                                |   |   |
|-----------------------------------------------------|--------|--------|---------------------------------------------|--------|----------|-------------------------------------|--------|--------|
|                                                |   |   | **Domestic                  current**  |   |     | **Domestic****long-term**           |   |   | **Foreign****current** |   |   | **Foreign****long-term** |   |
| Assets:                                             |   |   |                                        |   |     |                                |   |   |   |   |   |   |   |
| Pension                  accruals (prepaid)         |   | **$**  | **83**                                      |   | **$**    | **233**                             |   | **$**  | **28** |   | **$** | **687** |   |
| Inventory                  basis differences        |   |   | **58**                                      |   |     | **-**                               |   |   | **58** |   |   | **-** |   |
| Warranty                  reserves                  |   |   | **45**                                      |   |     | **-**                               |   |   | **-** |   |   | **-** |   |
| Foreign                  tax credit carry forwards  |   |   | **189**                                     |   |     | **-**                               |   |   | **-** |   |   | **-** |   |
| Accrued                  compensation expense       |   |   | **196**                                     |   |     | **-**                               |   |   | **-** |   |   | **-** |   |
| Other                  (net)                        |   |   | **34**                                      |   |     | **-**                               |   |   | **2** |   |   | **-** |   |
|                                                |   |   | **605**                                     |   |     | **233**                             |   |   | **88** |   |   | **687** |   |
| Liabilities:                                        |   |   |                                        |   |     |                                |   |   |   |   |   |   |   |
| Property                  basis differences         |   |   | **-**                                       |   |     | **(22**                             | **)**  |   | **-** |   |   | **(17** | **)** |
| Net                  asset (liability)              |   |   | **605**                                     |   |     | **211**                             |   |   | **88** |   |   |   |   |
| Valuation                  allowance                |   |   | **(189**                                    | **)**  |     | **-**                               |   |   | **-** |   |   | **-** |   |
| Net                  deferred tax asset (liability) |   | **$**  | **416**                                     |   | **$**    | **211**                             |   | **$**  | **88** |   | **$** | **670** |   |
|                                                |   |   |                                        |   | 2005     |                                |   |   |
|                                                |   |   | Domestic                  current      |   |     | Domestic                  long-term |   |   | Foreign                  current |   |   | Foreign                  long-term |   |
| Assets:                                             |   |   |                                        |   |     |                                |   |   |   |   |   |   |   |
| Pension                  accruals (prepaid)         |   | $      | 274                                         |   | **$**    | **-**                               |   | $      | 22 |   | $ | - |   |
| Inventory                  basis differences        |   |   | 49                                          |   |     | **-**                               |   |   | 30 |   |   | - |   |
| Warranty                  reserves                  |   |   | 42                                          |   |     | **-**                               |   |   | - |   |   | - |   |
| Foreign                  tax credit carry forwards  |   |   | 150                                         |   |     | **-**                               |   |   | - |   |   | - |   |
| Accrued                  compensation expense       |   |   | 69                                          |   |     | **-**                               |   |   | **-** |   |   | **-** |   |
| Other                  (net)                        |   |   | 57                                          |   |     | **-**                               |   |   | 1 |   |   | - |   |
|                                                |   |   | 641                                         |   |     | **-**                               |   |   | 53 |   |   | - |   |
| Liabilities:                                        |   |   |                                        |   |     |                                |   |   |   |   |   |   |   |
| Property                  basis differences         |   |   | -                                           |   |     | **-**                               |   |   | - |   |   | (33 | ) |
| Net                  asset (liability)              |   |   | 641                                         |   |     | **-**                               |   |   | 53 |   |   | (33 | ) |
| Valuation                  allowance                |   |   | (131                                        | )      |     | **-**                               |   |   | - |   |   | - |   |
| Net                  deferred tax asset (liability) |   | $      | 510                                         |   | **$**    | **-**                               |   | $      | 53 |   | $ | (33 | ) |

----

**(5)      ACCRUED EXPENSES**

|                                                    |   |   | **2006**  |   |   | 2005  |   |
|---------------------------------------------------------|--------|--------|-----------|--------|--------|-------|--------|
| Accrued                  compensation and related costs |   | **$**  | **1,047** |   | $      | 1,101 |   |
| Warranty                  reserves                      |   |   | **364**   |   |   | 364   |   |
| Other                  accrued expenses                 |   |   | **1,290** |   |   | 1,220 |   |
|                                                    |   | **$**  | **2,701** |   | $      | 2,685 |   |

**(6)      COMMITMENTS AND CONTINGENCIES**

**(7)      EMPLOYEE BENEFIT PLANS**

----

|                                                                        |   |   | **2006**   |   |   | 2005   |   |
|-----------------------------------------------------------------------------|--------|--------|------------|--------|--------|--------|--------|
| **Change                in benefit obligation:**                            |   |   |       |   |   |   |   |
| Benefit                obligation at beginning of year                      |   | **$**  | **15,910** |   | $      | 14,418 |   |
| Service                cost                                                 |   |   | **393**    |   |   | 419    |   |
| Interest                cost                                                |   |   | **972**    |   |   | 867    |   |
| Plan                participants contributions                              |   |   | **269**    |   |   | 234    |   |
| Actuarial                (gain) loss                                        |   |   | **2,209**  |   |   | 514    |   |
| Benefits                paid                                                |   |   | **(58**    | **)**  |   | (252   | )      |
| Foreign                currency exchange rate changes                       |   |   | **781**    |   |   | (290   | )      |
| Benefit                obligation at end of year                            |   |   | **20,476** |   |   | 15,910 |   |
| **Change                in plan assets:**                                   |   |   |       |   |   |   |   |
| Fair                value of plan assets at beginning of year               |   |   | **14,210** |   |   | 12,899 |   |
| Return                on plan assets                                        |   |   | **1,575**  |   |   | 1,148  |   |
| Employer                contributions                                       |   |   | **871**    |   |   | 444    |   |
| Plan                participants contributions                              |   |   | **269**    |   |   | 234    |   |
| Benefits                paid                                                |   |   | **(58**    | **)**  |   | (252   | )      |
| Foreign                currency exchange rate changes                       |   |   | **723**    |   |   | (263   | )      |
| Fair                value of plan assets at end of year                     |   |   | **17,590** |   |   | 14,210 |   |
| Funded                status                                                |   |   | **(2,886** | **)**  |   | (1,700 | )      |
| Unrecognized                transition obligation (asset)                   |   |   | **n/a**    |   |   | (3     | )      |
| Unrecognized                prior service cost                              |   |   | **n/a**    |   |   | 593    |   |
| Unrecognized                net actuarial (gain) loss                       |   |   | **n/a**    |   |   | 629    |   |
| Accrued                benefit cost                                         |   |   | **n/a**    |   |   | (481   | )      |
| Liability                for pension benefits recorded in the balance sheet |   | **$**  | **(2,886** | **)**  | $      | N/A    |   |

|                                                            |   |   | Before                implementation of SFAS #158  |   |   | Change                due to SFAS #158 |   |   | After                implementation of SFAS #158 |   |
|-----------------------------------------------------------------|--------|--------|---------------------------------------------------------|--------|--------|----------------------------------------|--------|--------|--------------------------------------------------|--------|
| **ASSETS**                                                      |   |   |                                                    |   |   |                                   |   |   |                                             |   |
| Prepaid                expense and other current assets         |   | $      | 1,290                                                   |   | $      | (443                                   | )      | $      | 847                                              |   |
| Total                current assets                             |   |   | 13,484                                                  |   |   | (443                                   | )      |   | 13,041                                           |   |
| Long-term                deferred tax asset                     |   |   | -                                                       |   |   | 881                                    |   |   | 881                                              |   |
| Total                assets                                     |   |   | 18,214                                                  |   |   | 438                                    |   |   | 18,652                                           |   |
| **LIABILITIES                AND STOCKHOLDERS’ EQUITY**   |   |   |                                                    |   |   |                                   |   |   |                                             |   |
| Accrued                expenses                                 |   |   | 3,102                                                   |   |   | (401                                   | )      |   | 2,701                                            |   |
| Total                Current liabilities                        |   |   | 6,074                                                   |   |   | (401                                   | )      |   | 5,673                                            |   |
| Deferred                taxes on income                         |   |   | 124                                                     |   |   | (124                                   | )      |   | -                                                |   |
| Liability                for pension benefits                   |   |   | -                                                       |   |   | 2,886                                  |   |   | 2,886                                            |   |
| Cumulative                other comprehensive income            |   |   | 207                                                     |   |   | (1,923                                 | )      |   | (1,716                                           | )      |
| Total                Stockholders’ equity                 |   |   | 11,960                                                  |   |   | (1,923                                 | )      |   | 10,037                                           |   |
| Total                liabilities and stockholders’ equity |   |   | 18,214                                                  |   |   | 438                                    |   |   | 18,652                                           |   |

|                                                    |   |   | **2006** |   |   | 2005   |   |   | 2004   |   |
|---------------------------------------------------------|--------|--------|----------|--------|--------|--------|--------|--------|--------|--------|
| Components                of net periodic benefit cost: |   |   |     |   |   |   |   |   |   |   |
| Service                cost                             |   | **$**  | **382**  |   | $      | 434    |   | $      | 443    |   |
| Interest                cost                            |   |   | **942**  |   |   | 901    |   |   | 840    |   |
| Expected                return on plan assets           |   |   | **(886** | **)**  |   | (845   | )      |   | (844   | )      |
| Amortization                of transition obligation    |   |   | **(2**   | **)**  |   | (2     | )      |   | (2     | )      |
| Amortization                of prior service cost       |   |   | **54**   |   |   | 55     |   |   | 54     |   |
| Recognized                net actuarial gain (loss)     |   |   | **-**    |   |   | -      |   |   | -      |   |
| Net                periodic benefit cost                |   | **$**  | **490**  |   | $      | 543    |   | $      | 491    |   |
| Net                cost of defined contribution plans   |   | **$**  | **35**   |   | $      | 29     |   | $      | 28     |   |

----

|                                                    |   |   | **2006**  |   |   | 2005   |   |
|---------------------------------------------------------|--------|--------|-----------|--------|--------|--------|--------|
| Plan                obligations:                        |   |   |      |   |   |   |   |
| Discount                rate                            |   |   | **5.27%** |   |   | 5.80%  |   |
| Rate                of compensation increase            |   |   | **3.98%** |   |   | 3.93%  |   |
| Net                periodic benefit cost:               |   |   |      |   |   |   |   |
| Discount                rate                            |   |   | **5.27%** |   |   | 6.02%  |   |
| Expected                long term return on plan assets |   |   | **6.04%** |   |   | 6.05%  |   |
| Rate                of compensation increase            |   |   | **3.98%** |   |   | 4.23%  |   |

|                             |                       | **2006**                   |      |                   | 2005                   |   |
|----------------------------------|----------------------------|----------------------------|-----------|------------------------|------------------------|--------|
|                             | **US                Plan** | **UK                Plan** | **Total** | US                Plan | UK                Plan | Total  |
| Equity                securities | **39%**                    | **43%**                    | **42%**   | 40%                    | 30%                    | 31%    |
| Debt                securities   | **56%**                    | **36%**                    | **38%**   | 56%                    | 49%                    | 50%    |
| Real                estate       | **-**                      | **17%**                    | **16%**   | -                      | 18%                    | 16%    |
| Other                            | **5%**                     | **4%**                     | **4%**    | 4%                     | 3%                     | 3%     |
| Total                            | **100%**                   | **100%**                   | **100%**  | 100%                   | 100%                   | 100%   |

| 2007                       |   | $      | 82    |   |
|----------------------------|--------|--------|-------|--------|
| 2008                       |   |   | 108   |   |
| 2009                       |   |   | 146   |   |
| 2010                       |   |   | 187   |   |
| 2011                       |   |   | 285   |   |
| 2012                - 2016 |   |   | 3,025 |   |

**(8)      SEGMENT INFORMATION**

----

|                                             |   |   |               |   |   |           |   |   | **2006**      |   |   |       |   |
|--------------------------------------------------|--------|--------|--------------------|--------|--------|----------------|--------|--------|---------------|--------|--------|------------|--------|
|                                             |   |   | **Controls**  |   |   | **Capacitors** |   |   | **Corporate** |   |   | **Total**  |   |
| **Sales                to external customers**   |   | **$**  | **32,808**         |   | **$**  | **1,822**      |   | **$**  | **-**         |   | **$**  | **34,630** |   |
| **Inter-segment                revenues**        |   |   | **-**              |   |   | **64**         |   |   | **-**         |   |   | **64**     |   |
| **Operating                income**              |   |   | **2,174**          |   |   | **68**         |   |   | **(398**      | **)**  |   | **1,844**  |   |
| **Depreciation                and amortization** |   |   | **586**            |   |   | **71**         |   |   | **-**         |   |   | **657**    |   |
| **Identifiable                assets**           |   |   | **17,121**         |   |   | **1,097**      |   |   | **434**       |   |   | **18,652** |   |
| **Capital                expenditures**          |   |   | **664**            |   |   | **42**         |   |   | **-**         |   |   | **706**    |   |
|                                             |   |   |               |   |   |           |   |   | 2005          |   |   |       |   |
|                                                  |   |   | Controls      |   |   | Capacitors     |   |   | Corporate     |   |   | Total      |   |
| Sales                to external customers       |   | $      | 30,009             |   | $      | 1,666          |   | $      | -             |   | $      | 31,675     |   |
| Inter-segment                revenues            |   |   | -                  |   |   | 199            |   |   | -             |   |   | 199        |   |
| Operating                income                  |   |   | 1,343              |   |   | 32             |   |   | (376          | )      |   | 999        |   |
| Depreciation                and amortization     |   |   | 611                |   |   | 50             |   |   | -             |   |   | 661        |   |
| Identifiable                assets               |   |   | 14,948             |   |   | 951            |   |   | 547           |   |   | 16,446     |   |
| Capital                expenditures              |   |   | 536                |   |   | 35             |   |   | -             |   |   | 571        |   |
|                                             |   |   |               |   |   |           |   |   | 2004          |   |   |       |   |
|                                                  |   |   | Controls      |   |   | Capacitors     |   |   | Corporate     |   |   | Total      |   |
| Sales                to external customers       |   | $      | 27,101             |   | $      | 2,049          |   | $      | -             |   | $      | 29,150     |   |
| Inter-segment                revenues            |   |   | -                  |   |   | 218            |   |   | -             |   |   | 218        |   |
| Operating                income                  |   |   | 974                |   |   | 295            |   |   | (297          | )      |   | 972        |   |
| Depreciation                and amortization     |   |   | 580                |   |   | 50             |   |   | -             |   |   | 630        |   |
| Identifiable                assets               |   |   | 14,938             |   |   | 1,026          |   |   | 644           |   |   | 16,608     |   |
| Capital                expenditures              |   |   | 612                |   |   | 16             |   |   | -             |   |   | 628        |   |

|                              |   |   | **2006**   |   |   | 2005   |   |   | 2004   |   |
|-----------------------------------|--------|--------|------------|--------|--------|--------|--------|--------|--------|--------|
| Sales:-                           |   |   |       |   |   |   |   |   |   |   |
| US                sales           |   | **$**  | **14,643** |   | $      | 12,893 |   | $      | 10,577 |   |
| Foreign                sales:     |   |   |       |   |   |   |   |   |   |   |
| United                Kingdom     |   |   | **10,702** |   |   | 9,477  |   |   | 13,529 |   |
| France                            |   |   | **9,285**  |   |   | 9,305  |   |   | 5,044  |   |
| Korea                and Japan    |   |   | **-**      |   |   | -      |   |   | -      |   |
| Total                Foreign      |   |   | **19,987** |   |   | 18,782 |   |   | 18,573 |   |
| Total                sales        |   | **$**  | **34,630** |   | $      | 31,675 |   | $      | 29,150 |   |
| Long-lived                assets: |   |   |       |   |   |   |   |   |   |   |
| USA                               |   | **$**  | **1,732**  |   | $      | 1,543  |   | $      | 1,571  |   |
| United                Kingdom     |   |   | **3,768**  |   |   | 2,866  |   |   | 2,970  |   |
| France                            |   |   | **90**     |   |   | 51     |   |   | 71     |   |
| Korea                and Japan    |   |   | **21**     |   |   | 11     |   |   | 8      |   |
| Total                             |   | **$**  | **5,611**  |   | $      | 4,471  |   | $      | 4,620  |   |

----

**Report      of Independent Registered Public Accounting Firm**

**Report      of Independent Registered Public Accounting Firm**

----

**SELECTED      QUARTERLY FINANCIAL DATA **

|                                        |   |   | FirstQuarter  |   |   | SecondQuarter |   |   | ThirdQuarter |   |   | FourthQuarter |   |   | TotalYear  |   |
|---------------------------------------------|--------|--------|--------------------|--------|--------|---------------|--------|--------|--------------|--------|--------|---------------|--------|--------|------------|--------|
| **2006                Quarters**            |   |   |               |   |   |          |   |   |         |   |   |          |   |   |       |   |
| **Net                sales**                |   | **$**  | **7,821**          |   | **$**  | **8,562**     |   | **$**  | **9,313**    |   | **$**  | **8,934**     |   | **$**  | **34,630** |   |
| **Gross                profit**             |   |   | **3,047**          |   |   | **3,317**     |   |   | **3,552**    |   |   | **3,190**     |   |   | **13,106** |   |
| **Operating                income**         |   |   | **244**            |   |   | **562**       |   |   | **584**      |   |   | **454**       |   |   | **1,844**  |   |
| **Net                income**               |   |   | **160**            |   |   | **342**       |   |   | **369**      |   |   | **243**       |   |   | **1,114**  |   |
| **Basic                income per share *** |   | **$**  | **.05**            |   | **$**  | **.11**       |   | **$**  | **.12**      |   | **$**  | **.08**       |   | **$**  | **.35**    |   |
| **Diluted                income per share** |   | **$**  | **.05**            |   | **$**  | **.11**       |   | **$**  | **.12**      |   | **$**  | **.08**       |   | **$**  | **.35**    |   |
| 2005                Quarters                |   |   |               |   |   |          |   |   |         |   |   |          |   |   |       |   |
| Net                sales                    |   | $      | 7,542              |   | $      | 8,094         |   | $      | 8,453        |   | $      | 7,586         |   | $      | 31,675     |   |
| Gross                profit                 |   |   | 2,842              |   |   | 3,126         |   |   | 3,160        |   |   | 2,908         |   |   | 12,036     |   |
| Operating                income             |   |   | 20                 |   |   | 285           |   |   | 381          |   |   | 313           |   |   | 999        |   |
| Net                income                   |   |   | 20                 |   |   | 172           |   |   | 216          |   |   | 233           |   |   | 641        |   |
| Basic                income per share *     |   | $      | .01                |   | $      | .05           |   | $      | .07          |   | $      | .07           |   | $      | .21        |   |
| Diluted                income per share     |   | $      | .01                |   | $      | .05           |   | $      | .07          |   | $      | .07           |   | $      | .20        |   |

**ITEM      9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL      DISCLOSURE**

**ITEM      9 A CONTROLS AND PROCEDURES**

**ITEM      9B OTHER INFORMATION**

**PART      III**

**ITEM      10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT**

----

**Item      11 Executive Compensation**

**ITEM      12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND      MANAGEMENT**

| Plan                    Category                                                                                                                                          | Number                    of securities to be issued upon exercise of outstanding options                    warrants                    and rights | Weighted-average                    exercise price of outstanding options, warrants and rights | Number                    of securities remaining available for future issuance under equity                    compensation plans(excluding securities reflected in column (a))                    at                    beginning of year | Number                    of securities remaining available for future issuance under equity                    compensation plans(excluding securities reflected in column (a))                    at end of                    year |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                      | (a)                                                                                                                                                 | (b)                                                                                            | (c)                                                                                                                                                                                                                                         | (d)                                                                                                                                                                                                                                   |
| Equity                    compensation plans approved by security holders:1996                    Equity Incentive Plan1998                    Director Stock Option Plan |  147,00025,000                                                                                                                                 |  $8.69$13.23                                                                              |  100,000-                                                                                                                                                                                                                              |  71,000-                                                                                                                                                                                                                         |
| Sub                    Total                                                                                                                                              | 172,000                                                                                                                                             | $9.35                                                                                          | 100,000                                                                                                                                                                                                                                     | 71,000                                                                                                                                                                                                                                |
| Equity                    compensation plans not approved by security holders                                                                                             | -                                                                                                                                                   | -                                                                                              | -                                                                                                                                                                                                                                           | -                                                                                                                                                                                                                                     |
| Total                                                                                                                                                                     | 172,000                                                                                                                                             | $9.35                                                                                          | 100,000                                                                                                                                                                                                                                     | 71,000                                                                                                                                                                                                                                |

**ITEM      13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS**

**ITEM      14 PRINCIPAL ACCOUNTING FEES AND SERVICES**

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**P**
**art      IV**

**ITEM      15 EXHIBITS, FINANCIAL STATEMENT SCHEDULES**

| (a)    | Financial                statements and schedule                                                                                                                                                                                            |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |  The                financial statements and financial statement schedule listed under                Item 8                in the index following the cover page are filed as part of this Annual                Report on Form 10-K. |
| (b)    | Exhibits                                                                                                                                                                                                                                    |
|   |  The                exhibits filed as part of this Annual Report on Form 10-K are listed                on                the Exhibit Index below.                                                                                     |

**INDEX      TO EXHIBITS**

| *(3)(a)  | Certificate                of Incorporation of the registrant (incorporated by reference to                Exhibit                (3)(a) to Quarterly Report on Form 10-Q for the quarter ended July                3,                2004).                                                      |
|----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| *(3)(b)  | By-laws                of the registrant (incorporated by reference to Exhibit (3)(b) to                Quarterly Report on Form 10-Q for the quarter ended June 30,                2000).                                                                                                        |
| *(4)(a)  | Specimen                common stock of registrant (incorporated by reference to Exhibit                (4)(a) to                Annual Report for the fiscal year ended September 30,                1994).                                                                                      |
| *(10)(a) | Tech/Ops                Sevcon, Inc. 1996 Equity Incentive Plan (incorporated by reference                to the                Registrant's 2004 Proxy Statement filed on December 29,                2003).                                                                                     |
| *(10)(b) | Form                of Option for 1996 Equity Incentive Plan (incorporated by reference                to                Exhibit (10)(b) to Annual Report for the fiscal year ended September                30,                2002).                                                            |
| *(10)(c) | Form                of Restricted Stock Agreement for employees for 1996 Equity Incentive                Plan                (incorporated by reference to Exhibit (10)(c) to Annual Report for                the                fiscal year ended September 30, 2004).                          |
| *(10)(d) | Form                of Restricted Stock Agreement for non-employee directors for 1996                Equity                Incentive Plan (incorporated by reference to Exhibit (10)(d) to Annual                Report for the fiscal year ended September 30, 2004).                            |
| *(10)(e) | Form                of Indemnification Agreement dated January 4, 1988 between the registrant                and each of its directors (incorporated by reference to Exhibit (10)(e)                to                Annual Report for the fiscal year ended September 30,                1994). |
| *(10)(f) | Directors’                Retirement Plan (incorporated by reference to Exhibit (10)(b) to                Annual                Report for the fiscal year ended September 30, 1990).                                                                                                       |
| *(10)(g) | Board                resolution terminating Directors’ Retirement Plan (incorporated by                reference to Exhibit (10)(e) to Annual Report for the fiscal year                ended                September 30, 1997).                                                           |
| *(10)(h) | Tech/Ops                Sevcon, Inc. 1998 Director Stock Option Plan (incorporated by reference                to                Exhibit 10 to Quarterly Report on Form 10-Q for the quarter ended                March                31, 1998).                                                 |
| (10)(i)  | Summary                of Director and Executive Officer Non-Plan Compensation (filed                herewith).                                                                                                                                                                                   |
| *(21)    | Subsidiaries                of the registrant (incorporated by reference to exhibit (21) to Annual                Report for the fiscal year ended September 30, 2001).                                                                                                                           |
| (23)     | Consent                of Vitale Caturano & Company, Ltd. (filed                herewith).                                                                                                                                                                                                    |
|     | Consent                of Grant Thornton LLP (filed herewith).                                                                                                                                                                                                                                    |
| (31.1)   | Certification                of Principal Executive Officer pursuant to section 302 of the                Sarbanes-Oxley Act of 2002. (Filed herewith)                                                                                                                                            |
| (31.2)   | Certification                of Principal Financial Officer pursuant to section 302 of the                Sarbanes-Oxley Act of 2002. (Filed herewith)                                                                                                                                            |
| (32.1)   | Certification                of Principal Executive Officer and Principal                Financial                Officer pursuant to section 906 of the Sarbanes-Oxley Act of 2002.                (Furnished herewith)                                                                          |

**A      copy of these exhibits may be obtained on the SEC’s EDGAR database (at**
**www.sec.gov**
**)      or will be furnished without charge to any stockholder upon written request      to      Tech/Ops Sevcon, Inc. attention Paul A. McPartlin, Chief Financial Officer,      155      Northboro Road, Southborough MA 01772, Telephone: (581) 281      5510.**

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**SIGNATURES**

|   | **TECH/OPS                  SEVCON, INC.**                 |                               |
|--------|------------------------------------------------------------|------------------------------------|
|   |                                                       |                               |
|   | By                  */s/                  Matthew Boyle*   | December                  14, 2006 |
|   | Matthew                  Boyle                             |                               |
|   | **President                  and Chief Executive Officer** |                               |

| **SIGNATURE**                                     | **TITLE**                                      | **DATE**                           |
|---------------------------------------------------|------------------------------------------------|------------------------------------|
| */s/                  Matthew Boyle*              | President,                  Chief Executive    | December                  14, 2006 |
| Matthew                  Boyle                    | Officer                  and Director          |                               |
|                                              | (Principal                  Executive Officer) |                               |
|                                              |                                           |                               |
| */s/                  Paul A. McPartlin*          | Vice                  President, Treasurer     | December                  14, 2006 |
| Paul                  A. McPartlin                | and                  Chief Financial Officer   |                               |
|                                              | (Principal                  Financial and      |                               |
|                                              | Accounting                  Officer)           |                               |
|                                              |                                           |                               |
| */s/                  Maarten D. Hemsley*         | Director                                       | December                  14, 2006 |
| Maarten                  D. Hemsley               |                                           |                               |
|                                              |                                           |                               |
| */s/                  Paul B. Rosenberg*          | Director                                       | December                  14, 2006 |
| Paul                  B. Rosenberg                |                                           |                               |
|                                              |                                           |                               |
| */s/                  Marvin G. Schorr*      | Director                                       | December                  14, 2006 |
| Marvin                  G. Schorr                 |                                           |                               |
|                                              |                                           |                               |
| */s/                  Bernard F. Start*      | Director                                       | December                  14, 2006 |
| Bernard                  F. Start                 |                                           |                               |
|                                              |                                           |                               |
| */s/                  David R. A. Steadman*  | Director                                       | December                  14, 2006 |
| David                  R. A. Steadman             |                                           |                               |
|                                              |                                           |                               |
| */s/                  Paul O. Stump*              | Director                                       | December                  14, 2006 |
| Paul                  O. Stump                    |                                           |                               |

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**SCHEDULE          II**

| **Allowance                    for doubtful accounts**     |   |   | **2006** |   |   | 2005   |   |   | 2004   |   |
|------------------------------------------------------------|--------|--------|----------|--------|--------|--------|--------|--------|--------|--------|
| Balance                    at beginning of year            |   |   | **144**  |   |   | 192    |   |   | 245    |   |
| Additions                    charged to costs and expenses |   |   | **14**   |   |   | 73     |   |   | 27     |   |
| Deductions                    from reserves:               |   |   |     |   |   |   |   |   |   |   |
| Accounts                    collected                      |   |   | **(10**  | **)**  |   | (8     | )      |   | (56    | )      |
| Write                    off of uncollectible accounts     |   |   | **(13**  | **)**  |   | (111   | )      |   | (34    | )      |
| Foreign                    currency translation adjustment |   |   | **6**    |   |   | (2     | )      |   | 10     |   |
| Balance                    at end of year                  |   |   | **141**  |   |   | 144    |   |   | 192    |   |

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