| **UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q**

(Mark One)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **[X]  Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| For the quarterly period ended January 1, 2006                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
| **[  ]  Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| For the transition period from _________ to _________                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| ****                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| Commission File Number:  1-5761                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| **                                                                                                                                                                        ** |
| **LaBarge, Inc.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | (Exact name of registrant as specified in its charter.) |   |
|                                                                                                                                                                                   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | Delaware |                              | 73-0574586 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | (State or Other Jurisdiction of Incorporation or Organization) |           | (I.R.S. Employer Identification Number) |              |
|                                                                                                                                                                              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 9900 Clayton Road, St. Louis, Missouri |     | 63124 |      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | (Address of Principal Executive Offices) |   | (Zip Code) |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | (314) 997-0800 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | (Registrant’s Telephone Number, Including Area Code) |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                      |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | N/A |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                                                                                                                         |   |   |

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that theregistrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes [X]  No [  ]Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer.  See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.  (Checkone): 

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

Indicate the number of shares outstanding of each of the Issuer’s classes of common stock as of January 1, 2006: 15,160,198 shares of common stock.

**This document constitutes part of a prospectus covering securities that have been registered under the Securities Act of 1933.**

----

| **LaBarge, Inc.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| **FORM 10-Q**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| **For the Quarter Period Ended January 1, 2006**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| **Table of Contents**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                                                                                                                                                                              |

|                                                                                            |                         |                                                                                                                              |
|------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **Part I**                                                                                           |                                                                                                                                            | **Financial Information (Unaudited)**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                                                                                       |
|                                                                                                      | Item 1.                                                                                                                                    | Financial Statements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                                                                                 |
|                                                                                                      | Consolidated Statements of Income                                                                                                          |
|                                                                                                 | Consolidated Balance Sheets                                                                                                                |
|                                                                                                 | Consolidated Statements of Cash Flows                                                                                                      |
|                                                                                                 | Notes to Financial Statements                                                                                                              |
|                                                                                                 |
|                                                                                                      | Item 2.                                                                                                                                    | Management’s Discussion and Analysis of Financial Conditions and Results of Operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| **                ** |
|                                                                                                      | Item 3.                                                                                                                                    | Quantitative and Qualitative Disclosures About Market Risk                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                                                                                                 |                                                                                                                                            |
|                                                                                                      | Item 4.                                                                                                                                    | Controls and Procedures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |
|                                                                                                 |
| **Part II**                                                                                          |                                                                                                                                            | **Other Information**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |  |
|                                                                                                 |
|                                                                                                      | Item 4.                                                                                                                                    | Submission of Matter to a Vote of Security Holders                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                      | Item 6.                                                                                                                                    | Exhibits                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |
| Signature                                                                                            |
|                                                                                                 |
|                                                                                                      |

----

LaBARGE, INC.CONSOLIDATED STATEMENTS OF INCOME*(Unaudited)*

***(Amounts In Thousands -- Except Per-Share Amounts)***
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                         |                                                            | Three Months Ended                                                                                                                             |                                                                                     | Six Months Ended                                                                                 |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                    |                                                                                                                                                |                                                                                          |                                                                                                  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                               | **January 1,**                                                                                                                                 |                                                                                          | January 2,                                                                                       |   | **January 1,** |  | January 2, |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                               | **2006**                                                                                                                                       |                                                                                          | 2005                                                                                             |   | **2006** |  | 2005 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | **Net sales**                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                    |                                                                                                                                                | **$**                                                                                    | **48,147**                                                                                       |  | $ | 48,718 |  | **$** | **87,786** |  | $ | 92,352 |  |
|                                                                                                                                                                                                |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | **Costs and expenses:**                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                               |                                                                                                                                           |                                                                                     |                                                                                                  |  |   |  |  |  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                     | Cost of sales                                                                                                                                                                      | **                       ** | **37,680**                                                                               |                                                                                                  |  | 38,176 |  |  | **67,821** |  |  | 71,770 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                     | Selling and administrative expense                                                                                                                                                 | **     **                                                                                                             | **5,835**                                                                                |                                                                                                  |  | 5,812 |  | **    ** | **11,460** |  |    | 11,670 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                     | Interest expense                                                                                                                                                                   | **449**                                                                                                                                        |                                                                                          |                                                                                                  | 405 |  |  | **853** |  |  | 919 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                     | Other income, net                                                                                                                                                                  | **(114**                                                                                                                                       | **)**                                                                                    |                                                                                        | (113 | ) | **    ** | **(146** | **)** |  | (202 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | Earnings from continuing operations  before income taxes                                                                                                                                                                                                                                                                                                                                                                            | **      **                                                                                                                                           | **4,297**                                                                                                                                      |                                                                                          |                                                                                                  | 4,438 |  |  | **7,798** |  |  | 8,195 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | Income tax expense                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                                                    | **1,634**                                                                                                                                      |                                                                                          |                                                                                                  | 1,717 |  |  | **3,105** |  |  | 3,171 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | **Net earnings**                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                           |                                                                                                                                 |                                                                                          | **$**                                                                                            | **2,663** |  | $ | 2,721 |  | **$** | **4,693** |  | $ | 5,024 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                    |                                                                                                                                                |                                                                                          |                                                                                                  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | **Basic net earnings per common share:**                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                                                                    |                                                                                                                                                | **              ** |                                                                                                  |  |  |  |  | **                   ** |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | **Basic net earnings**                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                    |                                                                                                                                                | **$**                                                                                    | **0.18**                                                                                         |  | $ | 0.18 |  | **$** | **0.31** |  | $ | 0.34 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | **                                                                      ** |                                                                                                                                                                                    |                                                                                                                                                |                                                                                          |                                                                                                  |  |  |  |  |  |  |  |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | **Average common shares outstanding**                                                                                                                                                                                                                                                                                                                                                                                                    | **15,149**                                                                                                                                                                         |                                                                                                                                                |                                                                                          | 15,006                                                                                           |  |  | **15,116** |  |  | 14,990 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                    |                                                                                                                                                |                                                                                          |                                                                                                  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | **                                                                    **             | **                             ** | ** **                                                                                                                                     |                                                                                     |                  |   | **  ** | **                   ** | **   ** |    |                   |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | **Diluted net earnings per share:**                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                    |                                                                                                                                                |                                                                                          |                                                                                                  |  |  |  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | **Diluted net earnings**                                                                                                                                                                                                                                                                                                                                                                                                                 | **$**                                                                                                                                                                              | **0.17**                                                                                                                                       |                                                                                          | $                                                                                                | 0.17 |  | **$** | **0.29** |  | $ | 0.32 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | **                                                                     **       |                                                                                                                                                                                    |                                                                                                                                                |                                                                                          |                                                                                                  |  |  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | **Average diluted common   shares outstanding**                                                                                                                                                                                                                                                                                                                                                                                | **16,056**                                                                                                                                                                         |                                                                                                                                                |                                                                                          | 15,816                                                                                           |  |  | **16,065** |  |  | 15,733 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                    |                                                                                                                                                |                                                                                          |                                                                                                  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                    |                                                                                                                                                |                                                                                          |                                                                                                  |  |  |  |  |  |  |  |  |

See accompanying notes to consolidated financial statements.

----

LaBARGE, INC.CONSOLIDATED BALANCE SHEETS***(Amounts In Thousands -- Except Share Amounts)***
| **   **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | ** **                                                                                                                                               | **January 1, 2006**                                                                                                                                                                                                                                                                                                                  |                                                                                          |             | July 3, 2005 |                                                                                                                      |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------|-------------|--------------|----------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                      |                                                                                          |             |              |
| **                                                                                                                    **                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                      | *(Unaudited)*                                                                            |             |              | *                   * |  |
| **ASSETS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                      |                                                                                          |             |         |                                                                                                                      |   |
| **Current assets:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                      |                                                                                          |             |         |                                                                                                                 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Cash and cash equivalents                                                                                                                                |                                                                                                                                                                                                                                                                                                                                 | **$**                                                                                    | **435**     |         | $                                                                                                                    | 820 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Accounts and other receivables, net                                                                                                                      |                                                                                                                                                                                                                                                                                                                                 |                                                                                          | **27,713**  |              |                                                                                                                 | 23,371 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Inventories                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                 |                                                                                          | **47,619**  |              |                                                                                                                      | 41,342 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Prepaid expenses                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                 |                                                                                          | **1,203**   |              |                                                                                                                 | 974 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Deferred tax assets, net                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                 |                                                                                          | **1,452**   |              |                                                                                                                      | 1,387 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                      |                                                                                          |             |              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | **Total current assets**                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                 |                                                                                          | **78,422**  |              |                                                                                                                      | 67,894 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                      |                                                                                          |             |              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                      |                                                                                          |             |         |
| Property, plant and equipment, net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                      | **20,068**                                                                               |             |              | 18,849                                                                                                               |   |
| Intangible assets, net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                      | **2,967**                                                                                |             |         | 3,388                                                                                                                |   |
| Goodwill, net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                      | **24,292**                                                                               |             |         | 24,292                                                                                                               |  |
| Other assets, net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                      | **5,680**                                                                                |             |         | 5,514                                                                                                                |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                      |                                                                                          |             |              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | **Total assets**                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                 | **$**                                                                                    | **131,429** |              | $                                                                                                                    | 119,937 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                      |                                                                                          |             |              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                      |                                                                                          |             |              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                      |                                                                                          |             |              |
|                                                                                                                                                                                  |
| **LIABILITIES AND STOCKHOLDERS’ EQUITY**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                     |                                                        |
| **Current liabilities:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                      | **              ** |             |              |                                                                    |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Short-term borrowings                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                      | **$**                                                                                    | **10,725**  |              | $                                                                                                                    | 1,650 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Current maturities of long-term debt                                                                                                                     |                                                                                                                                                                                                                                                                                                                                 |                                                                                          | **5,283**   |              |                                                                                                                      | 4,661 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Trade accounts payable                                                                                                                                   |                                                                                                                                                                                                                                                                                                                                 |                                                                                          | **15,797**  |              |                                                                                                                 | 10,026 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Accrued employee compensation                                                                                                                            |                                                                                                                                                                                                                                                                                                                                 |                                                                                          | **7,570**   |              |                                                                                                                 | 9,511 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Other accrued liabilities                                                                                                                                |                                                                                                                                                                                                                                                                                                                                 |                                                                                          | **1,353**   |              |                                                                                                                 | 2,609 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Cash advances                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                      |                                                                                          | **7,699**   |              |                                                                                                                 | 11,445 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                      |                                                                                          |             |              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | **Total current liabilities**                                                                                                                            |                                                                                                                                                                                                                                                                                                                                 |                                                                                          | **48,427**  |              |                                                                                                                      | 39,902 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                      |                                                                                          |             |              |
| Long-term advances from customers for purchase of materials                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                      | **3,382**                                                                                |             |              | 3,854                                                                                                                |   |
| Deferred tax liabilities, net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                      | **498**                                                                                  |             |         | 746                                                                                                                  |  |
| Long-term debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                      | **19,424**                                                                               |             |              | 21,605                                                                                                               |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                      |                                                                                          |             |              |
|                                                                                                                                                                                  |
| **Stockholders’ equity:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                     |                                                        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Common stock, $.01 par value.  Authorized 40,000,000 shares; 15,773,253 issued at January 1, 2006 and at July 3, 2005, including shares in treasury |                                                                                                                                                                                                                                                                                                                                 |                                                                                          | **158**     |              |                                                                                                                 | 158 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Additional paid-in capital                                                                                                                               |                                                                                                                                                                                                                                                                                                                                 |                                                                                          | **14,474**  |              |                                                                                                                 | 13,722 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Retained earnings                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                 |                                                                                          | **47,416**  |              |                                                                                                                      | 42,723 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Accumulated other comprehensive income                                                                                                                   |                                                                                                                                                                                                                                                                                                                                      | **62**                                                                                   |             | ---          |                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Less cost of common stock in treasury, shares of 613,055 at January 1, 2006 and 723,345 at July 3, 2005                                                  |                                                                                                                                                                                                                                                                                                                                      | **(2,412**                                                                               | **)**       | (2,773       | )                                                                                                                    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                      |                                                                                          |             |              |
|                                                                                                                                                                                       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | **Total stockholders’ equity**                                                                                                                     |                                                                                                                                                                                                                                                                                                                                 |                                                                                          | **59,698**  |              |                                                                                                                 | 53,830 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                      |                                                                                          |             |              |
|                                                                                                                                                                                  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                          | **Total liabilities and stockholders’ equity**                                                                                                                                                                                                                                                                                 |                                                                                     | **$**       | **131,429**  |                                                                                                                      | $ | 119,937 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                      |                                                                                          |             |              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                      |                                                                                          |             |              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                      |                                                                                          |             |              |

See accompanying notes to consolidated financial statements.

----

LaBARGE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

***(Amounts In Thousands)***
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                     | Six Months Ended                   |                                                                                                                     |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------|------------------------------------|--------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                     |                                    |                                                                                                                          |
| **                                                                                          ** | ** **                                                          | **January 1, 2006**                | **  **                                                                                                         | January 2, 2005 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                     |                                    |                                                                                                                          |  |  |
| **Cash flows from operating activities:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                |                                    |                                                                                                                          |  |  |  |  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Net earnings                                                        |                               | **$**                                                                                                                    | **4,693** | ** ** | $ | 5,024 |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Adjustments to reconcile net cash provided by operating activities: |                               | ** **                                                                                                               |  | ** ** |   |  |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Depreciation and amortization                                       |                               |                                                                                                                     | **2,236** |  |   | 2,140 |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Stock-based compensation                                            |                                    |                                                                                                                          | **846** |  |  | 21 |  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Realized gain on sale of investment                                 |                                    |                                                                                                                          | **(30** | **)** |  | --- |  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Deferred taxes                                                      |                               |                                                                                                                     | **(350** | **)** |   | 98 |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Other                                                               |                               |                                                                                                                     | **1** |  |   | (1 | ) |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Changes in assets and liabilities, net of acquisitions:             |                               |                                                                                                                     | **              ** |  |   |  |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                | Accounts and notes receivable, net |                                                                                                                     |   | **(4,342** | **)** |   | (4,508 | ) |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                | Inventories                        |                                                                                                                     |   | **(6,277** | **)** |   | (3,030 | ) |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                | Prepaid expenses                   |                                                                                                                     |   | **(229** | **)** |   | 64 |  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                     | Trade accounts payable             |                                                                                                                          |  | **5,663** |  |  | (1,173 | ) |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                | Accrued liabilities                |                                                                                                                     |   | **(3,260** | **)** |   | (676 | ) |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                     | Advance payments                   |                                                                                                                          |  | **(4,218** | **)** |  | 2,943 |  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                     |                                    |                                                                                                                          |  |  |
| **Net cash (used) provided by operating activities**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                     |                                    | **(5,267**                                                                                                               | **)** |  | 902 |  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                     |                                    |                                                                                                                          |  |  |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                     |                                    |                                                                                                                          |  |  |   |
| **Cash flows from investing activities:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                |                               |                                                                                                                     |   |   |  |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Additions to property, plant and equipment                          |                               |                                                                                                                     | **(2,052** | **)** |  | (1,728 | ) |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Proceeds from disposal of property and equipment                    |                                    |                                                                                                                          | **62** |  |  | --- |  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Additions to other assets and intangibles                           |                               |                                                                                                                     | **(399** | **)** |  | (132 | ) |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Proceeds from sale of Norwood Abbey stock                           |                                    |                                                                                                                          | **89** |  |  | --- |  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                     |                                    |                                                                                                                          |  |  |
| **Net cash (used) by investing activities**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                |                               | **(2,300**                                                                                                               | **)** |  | (1,860 | ) |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                     |                                    |                                                                                                                          |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                     |                                    |                                                                                                                          |  |  |   |
| **Cash flows from financing activities:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                |                               |                      |  |  |                             |  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Borrowings on revolving credit facility                             |                               |                                                                                                                     | **30,975** |  |  | 35,600 |  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Payments of revolving credit facility                               |                                    |                                                                                                                          | **(21,900** | **)** |  | (33,175 | ) |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Repayments of long-term senior debt                                 |                               |                                                                                                                     | **(2,223** | **)** |  | (2,212 | ) |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Additional capital contribution disqualifying                       |                                    |                                                                                                                          |  |  |  |  |  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  stock option                                                  |                                    |                                                                                                                          | **73** |  |  | 58 |  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Issuance of stock                                                   |                               |                                                                                                                     | **353** |  |  | 668 |  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Purchase of treasury stock                                          |                               |                                                                                                                     | **(96** | **)** |  | (478 | ) |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                     |                                    |                                                                                                                          |  |  |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                     |                                    |                                                                                                                          |  |  |   |
| **Net cash provided by financing activities**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                |                               | **7,182**                                                                                                                |  |  | 461 |  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                     |                                    |                                                                                                                          |  |  |
| **Net increase (decrease) in cash and cash equivalents**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                |                               | **(385**                                                                                                                 | **)** |  | (497 | ) |   |
| **Cash and cash equivalents at beginning of year**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                | ** **                         | **820**                                                                                                                  |  |  | 793 |  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                     |                                    |                                                                                                                          |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                     |                                    |                                                                                                                          |  |  |   |
| **Cash and cash equivalents at end of period**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                     | **$**                              | **435**                                                                                                                  |  | $ | 296 |  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                     |                                    |                                                                                                                          |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                     |                                    |                                                                                                                          |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                     |                                    |                                                                                                                          |  |  |
| **Non-cash transactions:** |                                       |        | **             ** | **          ** |               |                                            |              |     |
|----------------------------|---------------------------------------|--------|------------------------------------------------------------------------------------|------------------------------------------------------------------|------------------------------------------------------------|--------------------------------------------|--------------------------------------------------------------------------|-----|
|                       | Increase in capital lease obligations |   | **$**                                                                              | **664**                                                          | **         ** |         | $                                                                        | --- |   |

See accompanying notes to consolidated financial statements.

----

|         | **LaBarge, Inc****.**                          |          |
|--------------------------------------------|------------------------------------------------|--------------------------------------------------|
|                                            | **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** |                                                  |
|                                            | (Unaudited)                                    |                                                  |
| **1.** | **  ** | **CONSOLIDATED FINANCIAL STATEMENTS -- BASIS OF PRESENTATION** |
|--------|------------------|----------------------------------------------------------------|

The consolidated balance sheets at January 1, 2006, the related consolidated statements of income for the three and six months ended January 1, 2006 and January 2, 2005, and the consolidated statements of cash flows for thesix months ended January 1, 2006 and January 2, 2005, have been prepared by LaBarge, Inc. (the “Company”) without audit.  In the opinion of management, adjustments, all of a normal and recurring nature, necessary to present fairly the financialposition and the results of operations and cash flows for the aforementioned periods, have been made.  Certain prior-year amounts have been reclassified to conform to the current year’s presentation.

Certain information and footnote disclosures normally included in consolidated financial statements prepared in conformity with generally accepted accounting principles have been condensed or omitted.  These consolidatedfinancial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended July 3, 2005.

***Stock-Based Compensation***As of January 1, 2006, the Company had previously established a number of share incentive programs, which are discussed in more detail in Note 11.  Prior to fiscal 2006, the Company applied the intrinsic value-based method as outlined in Accounting PrinciplesBoard Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB No. 25”) and related interpretations, in accounting for stock options and share units granted under these programs. Under the intrinsic value-based method, no compensationexpense was recognized if the exercise price of the Company’s employee stock options were equal to or greater than the market price of the underlying stock on the date of the grant. Accordingly, prior to fiscal year 2006, no compensation cost was recognized inthe accompanying consolidated statements of income on stock options granted to employees, since all options granted under the Company’s share incentive programs had an exercise price equal to or greater than the market value of the underlying common stock onthe date of the grant.

Effective July 4, 2005, the Company adopted Statement of Financial Accounting Standards (“SFAS”) “Share-Based Payment” (“SFAS 123R”). This statement replaces SFAS No. 123, “Accountingfor Stock-Based Compensation,” and supersedes APB No. 25.  SFAS No. 123R requires that all stock-based compensation be recognized as an expense in the financial statements and that such cost be measured at the fair value of the award.  This statementwas adopted using the modified prospective method of application, which requires the Company to recognize compensation expense on a prospective basis. Therefore, prior period financial statements have not been restated. Under this method, in addition to reflectingcompensation expense for new share-based awards, expense is also recognized to reflect the remaining service period of awards that had been included in pro forma disclosures in prior periods. SFAS No. 123R also requires that excess tax benefits related to stockoption exercises be reflected as financing cash inflows instead of operating cash inflows.During the quarter ended January 1, 2006, the Company was notified that shares issued upon the exercise of incentive stock options (ISOs) were sold priorto being held by the employee for twelve months.  These disqualifying dispositions resulted in an excess tax benefit for the Company.  Since the ISOs were vested prior to adoption of FAS 123R, the entire tax benefit of $73,000 was charged to additional paidin capital.

Total stock-based compensation in the second fiscal quarter of 2006 was $371,000 ($232,000 after tax), or $0.02 basic and $0.01 diluted earnings per share. For the six months ended January 1, 2006, totalstock-based compensation was $846,000 ($529,000 after tax), or $0.04 basic and $0.03 diluted earnings per share.

Included in total stock-based compensation expense for the second fiscal quarter of 2006 is $128,000 ($80,000 after tax), or $0.01 basic and diluted earnings per share, attributable to the Company’s adoptionof SFAS 123R. For the six months ended January 1, 2006, stock-based compensation attributable to the adoption of SFAS 123R was $373,000 ($233,000 after tax), or $0.02 basic and diluted earnings per share.

As of January 1, 2006, the total unrecognized compensation expense related to non-vested awards, including stock options and performance units, was $944,000 and the related weighted-average period over which it isexpected to be recognized is approximately 1.2 years.

The following table illustrates the effect on net income and earnings per share as if SFAS 123R had been applied to all outstanding awards for the six months ended January 1, 2006 and January 2, 2005:

*(dollars in thousands, except per-share amounts)*

**
|                                                                                                                                                                                                                                                                                                                                                                                                                                                            | Three Months Ended |                                                                                                                                                            | Six Months Ended                                                                                                                                     |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                    |                                                                                                                                                            |                                                                                                                                                      |  |  |
| **                                                                         ** | **January 1,**     | January 2,                                                                                                                                                 | **January****1,**                                                                                                                                    | January 2, |
| **   **                                                                                                                                                                                                                                                                                                                                                                                                                                     |                    | **2006**                                                                                                                                                   | 2005                                                                                                                                                 | **2006** | 2005 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                    |                                                                                                                                                            |                                                                                                                                                      |  |  |  |  |  |  |  |  |  |  |
| Net earnings, as reported                                                                                                                                                                                                                                                                                                                                                                                                                                  |                    | **$**                                                                                                                                                      | **2,663**                                                                                                                                            |   | $ | 2,721 |   | **$** | **4,693** |   | $ | 5,024 |  |
| Add: Stock-based employee compensation                                                                                                                                                                                                                                                                                                                                                                                                                     |                    |                                                                                                                                                            | **          **                                                                                     |  |  |  |  |  |  |  |  |  |
|  expense included in reported net income, net                                                                                                                                                                                                                                                                                                                                                                                                         |                    |                                                                                                                                                            |                                                                                                                                                      |  |  |  |  |  |  |  |  |  |
|  of related tax effects                                                                                                                                                                                                                                                                                                                                                                                                                               |                    |                                                                                                                                                            | **232**                                                                                                                                              |  |  | 7 |  |  | **529** |  | 14 |  |
| Deduct: Total stock-based employee                                                                                                                                                                                                                                                                                                                                                                                                                         |                    |                                                                                                                                                            |                                                                                                                                                      |  |  |  |  |  |  |  |  |  |
|  compensation expense determined under fair                                                                                                                                                                                                                                                                                                                                                                                                           |                    |                                                                                                                                                            |                                                                                                                                                      |  |  |  |  |  |  |  |  |  |
|  value-based method for all awards, net of                                                                                                                                                                                                                                                                                                                                                                                                            |                    |                                                                                                                                                            |                                                                                                                                                      |  |  |  |  |  |  |  |  |  |
|  related tax effects                                                                                                                                                                                                                                                                                                                                                                                                                                  |                    |                                                                                                                                                            | **(232**                                                                                                                                             | **)** |  | (163 | ) |  | **(529** | **)** | (325 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                    |                                                                                                                                                            |                                                                                                                                                      |  |  |  |  |  |  |  |  |  |  |
|   Pro forma net earnings                                                                                                                                                                                                                                                                                                                                                                                                                         |                    | **$**                                                                                                                                                      | **2,663**                                                                                                                                            |  | $ | 2,565 |  | **$** | **4,693** |  | $ | 4,713 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                    |                                                                                                                                                            |                                                                                                                                                      |  |  |  |  |  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                    |                                                                                                                                                            |                                                                                                                                                      |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                    |                                                                                                                                                            |                                                                                                                                                      |  |  |  |  |  |  |  |  |  |  |
| **Net earnings per share:**                                                                                                                                                                                                                                                                                                                                                                                                                                |                    | **                         ** | **                        ** | **                        ** | **                           ** |
| Basic--as reported                                                                                                                                                                                                                                                                                                                                                                                                                                         |                    | **$**                                                                                                                                                      | **0.18**                                                                                                                                             |  | $ | 0.18 |  | **$** | **0.31** |  | $ | 0.34 |  |
| Basic--pro forma                                                                                                                                                                                                                                                                                                                                                                                                                                           |                    |                                                                                                                                                            | **0.18**                                                                                                                                             |  |  | 0.17 |  |  | **0.31** |  | 0.31 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                    |                                                                                                                                                            |                                                                                                                                                      |  |  |  |  |  |  |  |  |  |  |
| Diluted--as reported                                                                                                                                                                                                                                                                                                                                                                                                                                       |                    | **$**                                                                                                                                                      | **0.17**                                                                                                                                             |  | $ | 0.17 |  | **$** | **0.29** |  | $ | 0.32 |  |
| Diluted--pro forma                                                                                                                                                                                                                                                                                                                                                                                                                                         |                    |                                                                                                                                                            | **0.17**                                                                                                                                             |  |  | 0.16 |  |  | **0.29** |  | 0.30 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                    |                                                                                                                                                            |                                                                                                                                                      |  |  |  |  |  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                    |                                                                                                                                                            |                                                                                                                                                      |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                    |                                                                                                                                                            |                                                                                                                                                      |  |  |  |  |  |  |  |  |  |  |

No new stock options were issued in the three- and six-month periods ended January 1, 2006. On January 11, 2005, the Company awarded performance units tied to fiscal year 2006 financial performance to certain key executives.Compensation expense related to these awards was recognized in the second fiscal quarter, but no shares are included in the dilutive shares, as the performance condition had not been met at January 1, 2006.

The fair value of stock options granted is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions: risk-free interest rate of 3.8%; expected dividend yieldof 0%; expected life of 6 years; and expected volatility of 66.5%.

All stock options outstanding at January 1, 2006 and January 2, 2005 were dilutive and included in the computation of diluted earnings per share.  These options expire in various periods through2011.
| **2.** | **  ** | **GROSS AND NET SALES** |
|--------|------------------|-------------------------|

Gross and net sales consist of the following:*(dollars in thousands)*
| **                                                              ** | ** ** | Three Months Ended |       | Six Months Ended |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------|------------|------------------|
|                                                                                                                                                                                                                                                                                                                                                                                          |            |                    |            |                  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                          |            | **January 1,**     | ** ** | January 2,       | ** ** | **January 1,** | ** ** | January 2, |
| **   **                                                                                                                                                                                                                                                                                                                                                                   |            | **2006**           |            | 2005             |  | **2006** |  | 2005 |
|                                                                                                                                                                                                                                                                                                                                                                                          |            |                    |            |                  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                          |            |                    |            |                  |  |  |  |  |
| Gross sales                                                                                                                                                                                                                                                                                                                                                                              |       | **$**              | **48,407** |        |   | $ | 48,838 |   | $ | 88,314 |  |   | $ | 92,640 |  |
| Less sales discounts                                                                                                                                                                                                                                                                                                                                                                     |            |                    | **260**    |                  |  |  | 120 |  |  | 528 |  |  | 288 |  |
|                                                                                                                                                                                                                                                                                                                                                                                          |            |                    |            |                  |  |  |  |  |
| Net sales                                                                                                                                                                                                                                                                                                                                                                                |            | **$**              | **48,147** |                  |  | $ | 48,718 |  | $ | 87,786 |  |  | $ | 92,352 |  |
|                                                                                                                                                                                                                                                                                                                                                                                          |            |                    |            |                  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                          |            |                    |            |                  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                          |            |                    |            |                  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                          |            |                    |            |                  |  |  |  |  |

**Geographic Information**The Company has no sales offices or facilities outside of the United States.  Sales for exports did not exceed 10% of total sales in any period.

For the three months ended January 1, 2006, the Company’s three largest customers were Schlumberger Ltd., 12.4%; Northrop Grumman Corp., 10.8%; and Modular Mining Systems, 10.4%.  For the six monthsended January 1, 2006, the Company’s three largest customers were Schlumberger, Ltd., 11.8%; Owens Illinois, 9.8%; and Northrop Grumman Corp., 9.1%.
| **3.** | **  ** | **ACCOUNTS AND OTHER RECEIVABLES** |
|--------|------------------|------------------------------------|

Accounts and other receivables consist of the following:*(dollars in thousands)*
|                                                                                           | **January 1,**     | July 3,    |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------|------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | **2006**           | 2005       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                    |            |
| Billed shipments, net of progress payments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |     | **$**      | **27,787** | **             ** | $ | 23,352 |   |
| Less allowance for doubtful accounts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                    | **212**    | ** ** |  | 326 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                    |            |
| Trade receivables, net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                    | **27,575** |  | 23,026 |   |
| Other current receivables                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                    | **138**    | ** ** | 345 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                    |            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | **$**              | **27,713** | ** ** | $ | 23,371 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                    |            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                    |            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                    |            |

Progress payments are payments from customers in accordance with contractual terms for contract costs incurred to date.  These payments are recognized as revenue when the completed units are shipped.

At January 1, 2006, the amounts due from the three largest accounts receivable debtors and the percentage of total accounts receivable represented by those amounts were $4.2 million, 15%; $3.6 million, 13%; and$2.7 million, 10%. This compares with $4.7 million, 20%; $2.9 million, 12%; and $2.4 million, 10% at July 3, 2005.
| **4.** | **  ** | **INVENTORIES** |
|--------|------------------|-----------------|

Inventories consist of the following:*(dollars in thousands)*
|    |                                                                                                                                                                                                                                                                                                                                                                                                                 |                    |           |     | **January 1,** |     |      |                                                | July 3, |     |
|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------|--------------------------------------------------------|--------------------|----------------|--------------------|--------------------------|--------------------------------------------------------------------|---------|--------------------|
|         |                                                                            | **2006**                                                                                                     |                                                        |                    |                | 2005               |                          |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                              |                                                        |                    |
|         | Raw materials                                                                                                                                                                                                                                                                                                                                                                                                                                                | **$**                                                                                                        | **34,589**                                             |     |      | $                  | 29,324                   |             |
|              | Work in progress                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                    | **13,030**                                             |                    |                |     | 12,018                   |                                                                    |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                              |                                                        |                    |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                               | **$**                                                  | **47,619**         |                |                    | $                        | 41,342                                                             |         |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                              |                                                        |                    |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                              |                                                        |                    |                |                    |                          |                                                                    |         |                    |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                              |                                                        |                    |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                              |                                                        |                    |                |                    |                          |                                                                    |         |                    |

In accordance with contractual agreements, the U.S. Government has a security interest in inventories identified with related contracts for which progress payments have been received.

For the three months ended January 1, 2006 and January 2, 2005, expense for obsolescence charged to income before taxes was $171,000 and $160,000, respectively.  For the six months ended January 1, 2006 and January 2,2005, expense for obsolescence charged to income before taxes was $287,000 and $240,000, respectively.
| **5.** | **  ** | **INTANGIBLE ASSETS, NET** |
|--------|------------------|----------------------------|

Intangible assets, net, is summarized as follows:*(dollars in thousands)*
|          |                                                                                                                                                                                                                                                                                                                                                                       |                    |           |     | **January 1,** |                       |      |                  | July 3, |      |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------|--------------------------------------------------------|--------------------|----------------|--------------------------------------|--------------------------|--------------------------------------|---------|--------------------------|
|               |                                                                     |                                                                                                              | **2006**                                               |                    |                |                                      | 2005                     |                                      |
|                    |                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                              |                                                        |                    |
|                    | Software                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                          | **$**                                                  | **2,861**          |                |                                      | $                        | 2,722                                |         |
|                    | Less accumulated amortization                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                     | **2,410**                                              |                    |           |        | 2,192                    |        |
|                    |                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                              |                                                        |                    |
|          | Net software                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                              |                                                        | **451**            |                |                                      |                          | 530                                  |         |
|                    |                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                              |                                                        |                    |
|                    | Customer list                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                              | **3,400**                                              |                    |                |                                      | 3,400                    |                                      |
|                    | Less accumulated amortization                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                              | **1,068**                                              |                    |                |                                      | 785                      |                                      |
|                    |                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                              |                                                        |                    |
|          | Net customer list                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                              | **2,332**                                              |                    |                |                                      | 2,615                    |                                      |
|                    |                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                              |                                                        |                    |
|               | Other, net                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                              |                                                        | **184**            |                |                                      |                          | 243                                  |         |
|                    |                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                              |                                                        |                    |
|     | Total intangible assets, net                                                                                                                                                                                                                                                                                                                                                                                       | **$**                                                                                                        | **2,967**                                              |                    |                | $                                    | 3,388                    |                                      |
|                    |                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                              |                                                        |                    |
|                    |                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                              |                                                        |                    |                |                                      |                          |                                      |         |                          |
|                    |                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                              |                                                        |                    |
|                    |                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                              |                                                        |                    |                |                                      |                          |                                      |         |                          |

Intangibles are amortized over a three- to six-year period.  Amortization expense was $349,000 and $238,000 for the three months ended January 1, 2006 and January 2, 2005, respectively. 

The Company anticipates that amortization expense will approximate $1.3 million for fiscal year 2007, $1.2 million for fiscal year 2008, $1.0 million for fiscal year 2009 and $0.8 million for fiscal year 2010.
| **6.** | **  ** | **GOODWILL** |
|--------|------------------|--------------|

Goodwill is summarized as follows:*(dollars in thousands)*
|    |                                                                          | **January 1,**     |     |            |      | July 3,            |     |
|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------|--------------------|--------------------------------|--------------------------|--------------------|--------------------|
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                             |                    |                    |                                | **2006**                 |                    |                    |  | 2005 |  |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                    |                    |                                |
|         | Goodwill                                                                                                                                                                                                                                                                                                                                                                                                                                         | **$**              | **24,492**         |       |                | $                  | 24,492             |             |
|              | Less accumulated amortization                                                                                                                                                                                                                                                                                                                                                                                                                    |     | **200**            |                                |                          |     | 200                |  |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                    |                    |                                |
|              |   Net goodwill                                                                                                                                                                                                                                                                                                                                                                                                                         |                    | **$**              | **24,292**                     |                          |                    | $                  | 24,292 |  |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                    |                    |                                |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                    |                    |                                |                          |                    |                    |  |  |  |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                    |                    |                                |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                             |                    |                    |                                |                          |                    |                    |  |  |  |

Impairment is tested annually in the fourth quarter of each fiscal year, or more frequently if events or circumstances change.  There was no impairment of goodwill at January 1, 2006 and July 3, 2005.
| **7.** | **  ** | **OTHER ASSETS** |
|--------|------------------|------------------|

Other assets is summarized as follows:*(dollars in thousands)*
|    |                                                                            | **January 1,**                                   |     |            |      | July 3,            |     |
|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------|--------------------|--------------------------------|--------------------------|--------------------|--------------------|
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                  |                    |                                | **2006**                 |                    |                    |  | 2005 |  |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                  |                    |                                |
|         | Cash value of life insurance                                                                                                                                                                                                                                                                                                                                                                                                                                 | **$**                                            | **4,196**          |       |                | $                  | 3,934              |             |
|              | Deposits, licenses and other, net                                                                                                                                                                                                                                                                                                                                                                                                                            |                                   | **615**            |                                |                          |     | 688                |  |
|              | Securities held for sale                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                  | **544**            |                                |                          |                    | 504                |  |
|              | Deferred financing costs, net                                                                                                                                                                                                                                                                                                                                                                                                                                |          |                    | **207**                        |                          |                    |                    | 239 |  |
|              | Other                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                  |                    | **118**                        |                          |                    |                    | 149 |  |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                  |                    |                                |
|              |                                                                                                                              |                                                  | **$**              | **5,680**                      |                          |                    | $                  | 5,514 |  |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                  |                    |                                |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                  |                    |                                |                          |                    |                    |  |  |  |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                  |                    |                                |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                  |                    |                                |                          |                    |                    |  |  |  |

In December 1999, the Company received 640,008 shares and options to acquire 5.2 million shares of Norwood Abbey Ltd. in partial settlement of a note receivable.  At that time, Norwood Abbey Ltd. was a newly formedAustralian company.  These shares and options were valued at $100,000.  Norwood Abbey was listed on the Australian Stock Exchange in August 2000.  Options to acquire 2.4 million shares expired, unexercised, due to the market price.  During thequarter ended December 28, 2003, the Company exercised options for 2.0 million shares at a per-share price of 1.00 Australian dollars, or $0.70 U.S. dollars, totaling $1.4 million U.S. dollars.  During the 12 months ended June 27, 2004, 850,000 shares were sold,resulting in a pretax gain of $225,000. During the 12 months ended July 3, 2005, no additional shares were sold, but an other-than-temporary impairment of $415,000 was recorded.  The remaining shares were valued at $0.28, totaling $504,000. During the quarterended October 2, 2005, 50,000 shares were sold, resulting in a pretax gain of $5,000.  During the quarter ended January 1, 2006, 160,000 shares were sold, resulting in a pretax gain of $25,000. The remaining 1.6 million shares are held as available-for-salesecurities and reported at fair value of $544,000, with an unrealized gain of $62,000, net of tax, reported as accumulated other comprehensive income in stockholders’ equity.

The Company entered into a senior loan agreement on February 17, 2004.  See Note 8.  The Company incurred $330,000 of financing costs that were deferred and are being amortized over a period beginning May 2004 andending February 2009.  At January 1, 2006, the unamortized amount was $206,000.
| **8.** | **  ** | **SHORT- AND LONG-TERM OBLIGATIONS** |
|--------|------------------|--------------------------------------|

Short-term borrowings, long-term debt and current maturities of long-term debt consist of the following:*(dollars in thousands)*
|    |                                                                            | **January 1,**           |                                                                |      | July 3,            |     |
|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------|------------------------------------------------------------------------------------|--------------------------|--------------------|--------------------|
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                          |                                                                                    |                          | **2006**           |                    |  | 2005 |  |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                          |                                                                                    |                          |
|              | **Short-term borrowings:**                                                                                                                                                                                                                                                                                                                                                                                                                                   |                          | **             ** |                          |                    |                    |              |  |
|              |  Revolving credit agreement:                                                                                                                                                                                                                                                                                                                                                                                                                            |                          |                                                                                    |                          |                    |                    |  |  |
|              |   Balance at quarter-end                                                                                                                                                                                                                                                                                                                                                                                                                           | **$**                    | **10,725**                                                                         |                          |                    | $                  | 1,650 |  |
|              |   Interest rate at quarter-end                                                                                                                                                                                                                                                                                                                                                                                                                     |                          | **7.00**                                                                           | **%**                    |                    |                    | 6.25 | % |
|              |   Average amount of short-term borrowings                                                                                                                                                                                                                                                                                                                                                                                                          | **  **         |                                                                                    |                          |                    |                    |  |  |
|              |    outstanding during period                                                                                                                                                                                                                                                                                                                                                                                                                  | **$**                    | **6,161**                                                                          |                          |                    | $                  | 7,922 |  |
|              |   Average interest rate for fiscal quarter                                                                                                                                                                                                                                                                                                                                                                                                         |                          | **6.20**                                                                           | **%**                    |                    |                    | 4.48 | % |
|              |   Maximum short-term borrowings at                                                                                                                                                                                                                                                                                                                                                                                                                 |                          |                                                                                    |                          |                    |                    |  |  |
|              |    any month-end                                                                                                                                                                                                                                                                                                                                                                                                                              | **$**                    | **10,725**                                                                         |                          |     | $                  | 11,650 |  |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                          |                                                                                    |                          |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                          |                                                                                    |                          |                    |                    |  |  |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                          |                                                                                    |                          |
|              | **Senior long-term debt:**                                                                                                                                                                                                                                                                                                                                                                                                                                   |                          |                                                                                    |                          |                    |                    |                      |  |
|              |  Senior lender:                                                                                                                                                                                                                                                                                                                                                                                                                                         |                          |                                                                                    |                          |                    |                    |  |  |  |
|              |    Term loan                                                                                                                                                                                                                                                                                                                                                                                                                                  |                          | **$**                                                                              | **18,000**               |                    |                    | $ | 20,000 |  |
|              |    Mortgage loan                                                                                                                                                                                                                                                                                                                                                                                                                              |      | **5,611**                                                                          |                          |                    |               | 5,738 |  |
|         |  Other                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                          | **1,096**                                                                          |                          |                    |                    | 528 |  |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                          |                                                                                    |                          |
|         | Total senior long-term debt                                                                                                                                                                                                                                                                                                                                                                                                                                  |                          | **24,707**                                                                         |                          |                    |                    | 26,266 |  |
|              | Less current maturities                                                                                                                                                                                                                                                                                                                                                                                                                                      |                          |                                                                                    | **5,283**                |                    |                    |  | 4,661 |  |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                          |                                                                                    |                          |
|              | Long-term debt, less current maturities                                                                                                                                                                                                                                                                                                                                                                                                                      | **$**                    | **19,424**                                                                         |                          |                    | $                  | 21,605 |  |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                          |                                                                                    |                          |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                          |                                                                                    |                          |                    |                    |  |  |  |  |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                          |                                                                                    |                          |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                          |                                                                                    |                          |                    |                    |  |  |  |  |

The average interest rate was computed by dividing the sum of daily interest costs by the sum of the daily borrowings for the respective periods.

***Senior Lender:***The Company entered into a senior secured loan agreement with a group of banks on February 17, 2004.  The following is a summary of the agreement:
|  •                   |   | A revolving credit facility up to $20.0 million, available for direct borrowings or letters of credit.  The facility is based on a borrowing base formula equal to the sum of 85% of eligible receivables and 35% of eligibleinventories. As of January 1, 2006, outstanding loans under the revolving credit facility were $10.7 million.  Letters of credit outstanding were $1.6 million, and $7.7 million was available. This credit facility matures on February 17, 2009.                                                                                                                                                                                                                                                                                                                                                                                             |              |
|--------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------|
|       |   |                                                                                                                                                                                    |                                                                          |
|  •                   |   | A $25.0 million term loan amortized beginning May 2004, at a quarterly rate of $1.0 million, increasing to $1.25 million in May 2006 and increasing to $1.5 million in May 2007.  Final maturity is February2009.  As of January 1, 2006, the amount outstanding was $18.0 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                          |
|            |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                          |
|  •                   |        | On April 15, 2004, the Company entered into an Interest Rate Cap Agreement with a bank.  This Cap Agreement caps the Company’s exposure to increases in LIBOR at 4% for a period of three years on a notional amountbeginning at $24.0 million and amortizing on a schedule that matches amortization of the $25.0 million term loan dated February 17, 2004. For the three- and six-month periods ended January 1, 2006, interest expense was reduced by $7,000 as a result of this CapAgreement.                                                                                                                                                                                                                                                                                                                                                                              |                                                                          |
|                                |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                          |
|  •                   |        | Interest on both loans is at a percentage of prime or a stated rate over LIBOR based on certain ratios.  For the quarter ended January 1, 2006, the average rate was approximately 5.5%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                          |
|       |   |                                                                                                                                                 |                                                                          |
|  •                   |   | Both loans are secured by substantially all the assets of the Company other than real estate.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                          |
|                           |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                          |
|  •                   |        | Covenants and performance criteria consist of Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) in relation to debt, EBITDA in relation to fixed charges and minimum net worth.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                          |
|            |   |                                                                                                                                                           |                                                                     |

***Other Long-term Debt:****Mortgage Loan:*The Company has a $6.4 million term loan secured by the Company’s headquarters building in St. Louis, Missouri.  The loan repayment schedule is based on a 25-year amortization with a final balloon payment due in October2009.  The balance at January 1, 2006 was $5.6 million.  Interest is at a percentage of prime or a stated rate over LIBOR based on certain ratios.  For the quarter ended January 1, 2006, the average rate was approximately 4.6%.

*****Industrial Revenue Bonds:*In July 1998, the Company acquired tax-exempt Industrial Revenue Bond financing in the amount of $1.3 million.  The debt is payable over 10 years with an interest rate of 5.28%.  This funding was used to expand the Berryville,Arkansas, facility.  The outstanding balance at January 1, 2006 was $0.4 million.

*Capital Lease Obligations:*

In October 2005, the Company entered into a capital lease agreement to fund the purchase of machinery with a fair market value of $664,000. The lease is for five years with an interest rate of 6.11%. The obligation outstandingat January 1, 2006 was $645,000.

The aggregate maturities of long-term obligations are as follows:*(dollars in thousands)*
| **Fiscal Year**               |
|-------------------------------|
|                               |
| 2006                          | ...............................................................  | $ | 2,515 |   |
| 2007                          | ...............................................................  |      | 5,791 |   |
| 2008                          | ...............................................................  |       | 6,553 |   |
| 2009                          | ...............................................................  |       | 4,936 |   |
| 2010                          | ...............................................................  |       | 4,861 |   |
| Thereafter                    | ...............................................................  |       | 51 |   |
|                               |
|     Total | ...............................................................  |  $ | 24,707 |   |
|                               |
| **9.** | **  ** | **CASH FLOWS** |
|--------|------------------|----------------|

****

Total cash payments for interest for the three months ended January 1, 2006 and January 2, 2005 amounted to $365,000 and $397,000, respectively.  Total cash payments for interest for the six months endedJanuary 1, 2006 and January 2, 2005 amounted to $728,000 and $839,000, respectively.  Net cash payments for federal and state income taxes were $3.9 million and $4.6 million for the three and six months ended January 1, 2006, respectively, compared with netcash payments for federal and state income taxes of $2.6 million and $3.1 million for the three and six months ended January 2, 2005, respectively.
| **10.** | **  ** | **EARNINGS PER COMMON SHARE** |
|---------|------------------|-------------------------------|

Basic and diluted earnings (loss) per share are computed as follows:*(amounts in thousands, except per-share amounts)*
| **                                                               ** | ** **         | Three Months Ended |                                                                          | Six Months Ended |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------|--------------------|--------------------------------------------------------------------------|------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                |                    |                    |                                                                          |                  |  |  |  |  |
| ** **                                                                                                                                                                                                                                                                                                                                                                                     |                    | **January 1,**     |                                                                          | January 2,       |  | **January 1,** |  | January 2, |
| **                                                          **                               |                    | **2006**           |                                                                          | 2005             |  | **2006** |  | 2005 |
|                                                                                                                                                                                                                                                                                                                                                                                                |                    |                    |                                                                          |                  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                |                    |                    |                                                                          |                  |  |  |  |  |
| Net earnings                                                                                                                                                                                                                                                                                                                                                                                   |     | **$**              | **2,663**                                                                |                  |  | $ | 2,721 |  | $ | **4,693** |  | $ | 5,024 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                |                    |                    |                                                                          |                  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                |                    |                    |                                                                          |                  |  |  |  |  |  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                |                    |                    |                                                                          |                  |  |  |  |  |
| **     **                                                                                                                                                                                                                                                                                                                                                             |                    |                    |                                                                          |                  |  |  |  |  |  |  |  |       |  |  |
| **Basic net earnings per share**                                                                                                                                                                                                                                                                                                                                                               |                    | **$**              | **0.18**                                                                 | ** **       |  | $ | 0.18 |  | $ | **0.31** |  | $ | 0.34 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                |                    |                    |                                                                          |                  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                |                    |                    |                                                                          |                  |  |  |  |  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                |                    |                    |                                                                          |                  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                            |                    |                    |              |                  |  |  |  |  |  |  |  |                |  |
| **Diluted earnings per share**                                                                                                                                                                                                                                                                                                                                                                 |                    | **$**              | **0.17**                                                                 |                  |  | $ | 0.17 |  | $ | **0.29** |  | $ | 0.32 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                |                    |                    |                                                                          |                  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                |                    |                    |                                                                          |                  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                |                    |                    |                                                                          |                  |  |  |  |  |

Basic earnings per share are calculated using the weighted-average number of common shares outstanding during the period.  Diluted earnings per share are calculated using the weighted-average number of common sharesoutstanding during the period plus shares issuable upon the assumed exercise of dilutive common share options by using the treasury stock method.

*(share amounts in thousands)*
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | Three Months Ended | Six Months Ended |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------|------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                    | **January 1,**   | January 2, | **January 1,** | January 2, |
| **                                                                            ** | ** **         | **2006**         |  | 2005 |  | **2006** | 2005 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                    |                  |  |  |  |  |  |
| Average common shares outstanding -- basic                                                                                                                                                                                                                                                                                                                                                                                                                                   |               |                  | **15,149** |  |   | 15,006 |   |  | **15,116** |  |   |  | 14,990 |  |
| Dilutive options                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                    |        | **907** | ** ** |  | 810 |   |  | **949** |  |  | 743 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                    |                  |  |  |  |  |  |  |  |  |  |  |  |
| Adjusted average common shares   outstanding -- diluted                                                                                                                                                                                                                                                                                                                                                                                                            |          |                  | **16,056** |  |  | 15,816 |  |  | **16,065** | **  ** |  | 15,733 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                    |                  |  |  |  |  |  |  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                    |                  |  |  |  |  |  |  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                    |                  |  |  |  |  |  |  |  |  |  |  |  |

All stock options outstanding at January 1, 2006 were dilutive for the three and six months ended on that date. These options expire in various periods through 2011. The Company has awarded certain key executives performanceunits tied to the Company’s fiscal year 2006 financial performance. The compensation expense related to these awards is recognized quarterly, but no shares are included in the dilutive shares, as the performance condition had not been met at January 1,2006.
| **11.** | **  ** | **STOCK PROGRAMS** |
|---------|------------------|--------------------|

The Company has established the 1993 Incentive Stock Option Plan, the 1995 Incentive Stock Option Plan, and the 1999 Non-Qualified Stock Option Plan (collectively, the “Plans”). The Plans provide for the issuanceup to 2,200,000 shares to be granted in the form of stock-based awards to key employees of the Company. In addition, pursuant to the 2004 Long Term Incentive Plan (“LTIP”), the Company provides for the issuance up to 850,000 shares to be granted in theform of stock-based awards to certain key employees and non-employee directors. The Company may satisfy the awards upon exercise with either new or treasury shares. The Company’s stock compensation awards outstanding at January 1, 2006 include stock options,restricted stock and performance units.

Also, the Company has an Employee Stock Purchase Plan (“ESPP”) that allows any eligible employee to purchase common stock at the end of each quarter at 15% below the market price as of the first or last day of thequarter, whichever is lower. The Company has always recognized as expense the difference between the price the employee pays and the market price of the stock on the last day of the quarter.

Total net stock-based compensation expense is attributable to the granting of, and the remaining requisite service periods of, stock options, restricted stock and performance units, and shares sold under the ESPP. Compensationexpense attributable to net stock-based compensation in the three months ended January 1, 2006 was $371,000 ($232,000 after tax), or $0.02 for basic and $0.01 for diluted earnings per share. As of January 1, 2006, the total unrecognized compensation costs related tononvested stock awards was $944,000 and the related weighted-average period over which it is expected to be recognized is approximately 1.2 years.

A summary of the Company’s stock option programs as of January 1, 2006 and changes during the three-month period then ended is presented below:

*(share amounts in thousands)*
| **                                                           ** | **Shares**            |                    | **Weighted-Average Exercise Price** |   | **Aggregate Intrinsic Value (1) (in millions)**        |      | **Weighted-Average Contractual Life Remaining in Years** |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------|--------------------|-------------------------------------|---|--------------------------------------------------------|------|----------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                        |                       |                    |                                     |   |                                                        |      |                                                          |
| Outstanding at July 3, 2005                                                                                                                                                                                                                                                                                                                                            | 1,880,576             |     |                                     | $ | 3.96                                                   |      |                                                          |                              |  |                                      |
|                                                                                                                                                                                                                                                                                                                                                         | Granted at fair value | ---                |                      |   |                                                        | ---  |                                                          |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                        | Exercised             | (19,750            | )                                   |   |                                                        | 3.87 |                                                          |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                        | Expired               | ---                |                                     |   |           | ---  |                                                          |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                        | Forfeited             | (3,750             | )                                   |   |                                                        | 8.54 |                                                          |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                        |                       |                    |                                     |   |                                                        |      |                                                          |
| Outstanding at October 2, 2005                                                                                                                                                                                                                                                                                                                                         | 1,857,076             |     |                                     | $ | 3.95                                                   |      |                                                          | $ | 16.7 |  |  | 5.8 |
|                                                                                                                                                                                                                                                                                                                                                                        |                       |                    |                                     |   |                                                        |      |                                                          |
|                                                                                                                                                                                                                                                                                                                                                                        |                       |                    |                                     |   |                                                        |      |                                                          |
|                                                                                                                                                                                                                                                                                                                                                                        |                       |                    |                                     |   |                                                        |      |                                                          |
|                                                                                                                                                                                                                                                                                                                                                                        |                       |                    |                                     |   |                                                        |      |                                                          |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                         | Granted at fair value | ---                |                      |   |                                                        | ---  |                                                          |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                        | Exercised             | (29,300            | )                                   |   |                                                        | 3.91 |                                                          |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                        | Expired               | ---                |                                     |   |           | ---  |                                                          |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                        | Forfeited             | ---                |                                     |   |                                                        | ---  |                                                          |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                        |                       |                    |                                     |   |                                                        |      |                                                          |
| Outstanding at January 1, 2006                                                                                                                                                                                                                                                                                                                                         | 1,827,776             |                    |                                     |   | 3.95                                                   |      |                                                          | $ | 19.0 |  |  | 5.5 |
|                                                                                                                                                                                                                                                                                                                                                                        |                       |                    |                                     |   |                                                        |      |                                                          |
|                                                                                                                                                                                                                                                                                                                                                                        |                       |                    |                                     |   |                                                        |      |                                                          |
|                                                                                                                                                                                                                                                                                                                                                                        |                       |                    |                                     |   |                                                        |      |                                                          |
| Exercisable at January 1, 2006                                                                                                                                                                                                                                                                                                                                         | 1,629,744             |                    |                                     |   | 3.54                                                   |      |                                                          | $ | 17.6 |  |  | 5.2 |
|                                                                                                                                                                                                                                                                                                                                                                        |                       |                    |                                     |   |                                                        |      |                                                          |
|                                                                                                                                                                                                                                                                                                                                                                        |                       |                    |                                     |   |                                                        |      |                                                          |
|                                                                                                                                                                                                                                                                                                                                                                        |                       |                    |                                     |   |                                                        |      |                                                          |
|                                                                                                                                                                                                                                                                                                                                                         |                       |                    |                                     |   |                                                        |      |                                                          |

The intrinsic value of a stock option is the amount by which the current market value of the underlying stock exceeds the exercise price of the option.

The total intrinsic value of stock options exercised during the three months ended January 1, 2006 and January 2, 2005 was $300,000 and $131,000, respectively. The exercise period for all stock options generally may not exceed10 years from the date of grant. Stock option grants to individuals generally become exercisable over a service period of one to five years.

There were no stock options granted in the three months ended January 1, 2006.

*Performance Units*

The Company made awards under the LTIP in January 2005. The Company’s LTIP provides for the issuance of performance units, which will be settled in stock subject to the achievement of the Company’s financial goals.Settlement will be made pursuant to a range of opportunities relative to net earnings. No settlement will occur for results below the minimum threshold and additional shares shall be issued if the performance exceeds the targeted goals. The compensation cost ofperformance units is subject to adjustment based upon the attainability of the target goals.

Upon achievement of the performance goals, restricted shares are awarded in the employee’s name but are still subject to a two-year vesting condition. If employment is terminated (other than due to death or disability)prior to the vesting period, the shares are forfeited. Compensation expense is recognized over the performance period plus vesting period. The awards are treated as a liability award during the performance period and as an equity award once the performance targetsare settled.

During the three and six months ended January 1, 2006, the Company issued 57,751 shares of restricted stock, subject to the two-year vesting condition, associated with the fiscal 2005 award. In addition, the Company beganrecording compensation expense for the awards granted for fiscal 2006.

The Company recorded compensation expense of $218,000 ($136,000 after tax) related to the LTIP in the quarter ended January 1, 2006, compared with no expense in the quarter ended January 2, 2005.

On October 3, 2005, a member of the Board of Directors was granted 1,500 shares of LaBarge common stock. The shares issued were in the form of restricted stock and vest in August 2007. The weighted-average grant date fairvalue of these restricted shares was $19,785. No other restricted stock was granted in the three months ended January 1, 2006.
| **12.** | **  ** | **RELATED PARTY TRANSACTIONS** |
|---------|------------------|--------------------------------|

During the quarter ended January 2, 2005, a shareholder, holding more than 10% of the Company’s outstanding shares, sold shares of LaBarge Common Stock in transactions deemed to be short-swingsales.  Under Section 16(b) of the Securities Exchange Act of 1934, the shareholder was required to disgorge to the Company the profits realized from the stock sale in the amount of approximately $58,000.  The Company accounted for the cash receipt as acontribution from a shareholder and reflected the proceeds as an increase to additional paid-in capital in its financial statements.  Proceeds from this sale did not effect the Company’s condensed consolidated statement of operations.
| **13.** | **  ** | **LITIGATION AND CONTINGENCIES** |
|---------|------------------|----------------------------------|

In March 2004, the Company received notice from the Library of Congress (“LOC”) that the LOC seeks financial restitution in the amount of $1.8 million stemming from the Company’s production of audiocassettemachines during the period 1992 through 1996. The LOC claims the machines are defective.  The Company advised the LOC that the machines were tested and certified by an independent laboratory, were manufactured to the requirements of the contract and the allegedfailure could not be recreated under any usual and typical operating conditions. These issues are now in litigation in the Court of Federal Claims. The Company intends to vigorously defend its position. The discovery period commenced in September 2005, and trial willlikely be scheduled for 2007.

After consultation with legal counsel, it is management’s belief that the LOC claim against the Company will not prevail.
|                              | **LaBARGE, INC.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                             |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                          | **FORM 10-Q**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                    |
|                                                                                                                                                                          | **                                                                                                            ** |                                                                                                                                                                    |
|                                                                                                                                                                          | **MANAGEMENT’S DISCUSSION AND ANALYSIS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                    |
|                                                                                                                                                                          | **OF FINANCIAL CONDITION AND**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                    |
|                                                                                                                                                                          | **RESULTS OF OPERATIONS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                                    |

**Forward-Looking Statements**

*This report contains forward-looking statements that relate to future events or our future financial performance.  We have attempted to identify these statements by terminology including “believe,”“anticipate,” “plan,” “expect,” “estimate,” “intend,” “seek,” “goal,” “may,” “will,” “should,” “can,” “continue,” or thenegative of these terms or other comparable terminology.  These statements include statements about our market opportunity, our growth strategy, competition, expected activities, and the adequacy of our available cash resources.  These statements may befound in the section of this report entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”  Readers are cautioned that matters subject to forward-looking statements involve known and unknown risks anduncertainties, including the impact of increasing competition or deterioration of economic conditions in our markets; cutbacks in defense spending by the U.S. Government; loss of one or more large customers; our ability to replace completed and expired contracts on atimely basis; our ability to integrate recently acquired businesses; the outcome of litigation we may be party to; increases in the cost of raw materials, labor and other resources necessary to operate our business; the availability, amount, type and cost offinancing and any changes to that financing; and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance orachievements expressed or implied by these forward-looking statements. For a more complete discussion of these risk uncertainties, please refer to our most recent Annual Report on Form 10-K on file with the Securities and Exchange Commission and available inthe  Investor Relation section of our Web site at www.labarge.com. These statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions.*

**General**General Development of Business and Information about Business ActivityLaBarge, Inc. (“LaBarge” or the “Company”) is a Delaware corporation that manufactures and designs high-performance electronics and interconnect systems for customers in diverse technology-driven markets.  TheCompany’s core competencies are to provide complete electronic systems solutions, including the manufacturing, engineering and design of interconnect systems, circuit card assemblies and high-level assemblies for its customers’ specializedapplications.

The Company markets its services to customers who are looking for an engineering and manufacturing partner capable of developing and providing high-reliability electronic equipment, including products capable of performing inharsh environmental conditions, such as high and low temperatures, severe shock and vibration.   The Company serves customers in a variety of markets including defense, government systems, aerospace, natural resources, industrial and other commercialmarkets.  The Company’s engineering and manufacturing facilities are located in Arkansas, Missouri, Oklahoma, Pennsylvania and Texas.  The Company employs approximately 1,090 people, including approximately 925 people (of which 32 are engineers) whoprovide support for production activities and approximately 165 people who provide administrative support.

**Results of Operations - Three and Six Months Ended January 1, 2006**

***Net Sales****(dollars in thousands)*
|                                                                                                                                                                                                                                                                                    | ** **                                                             | Three Months Ended |            | Six Months Ended |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------|--------------------|------------|------------------|
|                                                                                                                                                                                                                                                                                    |                                                                        |                    |            |                  |  |  |  |  |
|                                                                                                                                                                                                                                                                                    | **  **                                                       | **January 1,**     |            | January 2,       | ** ** | **January 1,** | ** ** | January 2, |
| **                                             ** | **           ** | **2006**           | ** ** | 2005             |  | **2006** |  | 2005 |
|                                                                                                                                                                                                                                                                                    |                                                                        |                    |            |                  |  |  |  |  |
|                                                                                                                                                                                                                                                                                    |                                                                        |                    |            |                  |  |  |  |  |
| Net sales                                                                                                                                                                                                                                                                          |                                                                   | **$**              | **48,147** |             | $ | 48,718 |   | **$** | **87,786** |  |   | $ | 92,352 |  |
|                                                                                                                                                                                                                                                                                    |                                                                        |                    |            |                  |  |  |  |  |
|                                                                                                                                                                                                                                                                                    |                                                                        |                    |            |                  |  |  |  |  |
|                                                                                                                                                                                                                                                                                    |                                                                        |                    |            |                  |  |  |  |  |
|                                                                                                                                                                                                                                                                                    |                                                                        |                    |            |                  |  |  |  |  |

The largest contributor to fiscal 2006 second-quarter revenues was shipments to defense customers that generated $19.5 million of sales, versus $23.6 million in 2005. During the current year’s second quarter, LaBargeprovided cables and electronic assemblies for a variety of defense applications, including military aircraft, radar systems and shipboard programs.  In addition, shipments of capital equipment to natural resources customers, including downhole tools and miningsystems, represented $11.9 million of fiscal 2006 second-quarter revenues, compared with $8.8 million in the year-ago period.  Sales to industrial customers represented $7.2 million of fiscal 2006 second-quarter revenues, compared with $8.8 million in theyear-ago period.

For the six months ended January 1, 2006, shipments to defense customers contributed 40.9% of total sales, compared with 44.6% in the six months ended January 2, 2005.  Shipments to natural resources customers represented23.0% of total revenues compared with 19.3% in the year-ago period.  Sales to industrial customers represented 16.5% of sales for the first six-months of fiscal 2006, compared with 19.0% in the first six months of fiscal 2005.

Sales to the Company’s 10 largest customers represented 71.3% of total revenue in the second quarter of fiscal 2006, compared with 73.0% for the same period of fiscal 2005.  The Company’s topthree customers and the portion of total second-quarter sales they represented were as follows:  Schlumberger, Ltd., 12.4%; Northrop Grumman Corp., 10.8%; Modular Mining Systems; 10.4%.

The backlog of unshipped orders at January 1, 2006 was $179.0 million, compared with  $164.9 million at July 3, 2005, and $145.0 million at January 2, 2005.  The growth in backlog is the result of a sales andmarketing effort that focuses on needs of targeted large customers in a variety of industries. Approximately $43.5 million of the backlog at January 1, 2006 is scheduled to ship beyond the next 12 months pursuant to the shipment schedules contained in thosecontracts. This compares with $32.4 million at fiscal year end 2005.

***Gross Profit****(dollars in thousands)*
|                                                                                                                                                                                                                                                                                    | ** **                                                             | Three Months Ended |            | Six Months Ended |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------|--------------------|------------|------------------|
|                                                                                                                                                                                                                                                                                    |                                                                        |                    |            |                  |  |  |  |  |
|                                                                                                                                                                                                                                                                                    |                                                                        | **January 1,**     | ** ** | January 2,       | ** ** | **January 1,** | ** ** | January 2, |
| **                                             ** | **           ** | **2006**           |            | 2005             |  | **2006** |  | 2005 |
|                                                                                                                                                                                                                                                                                    |                                                                        |                    |            |                  |  |  |  |  |
|                                                                                                                                                                                                                                                                                    |                                                                        |                    |            |                  |  |  |  |  |
| Gross profit                                                                                                                                                                                                                                                                       |                                                                   | **$**              | **10,467** |             | $ | 10,542 |   | **$** | **19,965** | ** ** | $ | 20,582 |  |
| Gross margin                                                                                                                                                                                                                                                                       |                                                                        | **  **   | **21.7**   | **%**            |   | 21.6 | % |  | **22.7** | **%** |  | 22.3 | % |
|                                                                                                                                                                                                                                                                                    |                                                                        |                    |            |                  |  |  |  |  |
|                                                                                                                                                                                                                                                                                    |                                                                        |                    |            |                  |  |  |  |  |
|                                                                                                                                                                                                                                                                                    |                                                                        |                    |            |                  |  |  |  |  |
|                                                                                                                                                                                                                                                                                    |                                                                        |                    |            |                  |  |  |  |  |

The Company’s gross profit margin percentage generally runs in a range of 20% to 23%, and gross margins for the three and six months ended January 1, 2006 were in this range. 

Gross profit margin in the quarter ended January 1, 2006 benefited from employee medical costs that were $0.2 million lower than those in the quarter ended January 2, 2005. This was due to recentfavorable claims experience versus the prior-year period.

***Selling and Administrative Expenses****(dollars in thousands)*
|                                                                                                                                                                                                                                                                                                                                                                        | ** **                                       | Three Months Ended |       | Six Months Ended |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------|--------------------|------------|------------------|
|                                                                                                                                                                                                                                                                                                                                                                        |                                                  |                    |            |                  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                        | **      **         | **January 1,**     | January 2, | **January 1,**   | ** ** | January 2, |
| **                                                           ** | **2006**                                         | 2005               | **2006**   |                  | 2005 |
|                                                                                                                                                                                                                                                                                                                                                                        |                                                  |                    |            |                  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                        |                                                  |                    |            |                  |  |  |  |  |
| Selling and administrative expenses                                                                                                                                                                                                                                                                                                                                    | **   **                           | **$**              | **5,835**  |             | $ | 5,812 |   | **$** | **11,460** |   | $ | 11,670 |  |
| Percent of sales                                                                                                                                                                                                                                                                                                                                                       |          |                    | **12.1**   | **%**            |   | 11.9 | % |  | **13.1** | **%** |  | 12.6 | % |
|                                                                                                                                                                                                                                                                                                                                                                        |                                                  |                    |            |                  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                        |                                                  |                    |            |                  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                        |                                                  |                    |            |                  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                        |                                                  |                    |            |                  |  |  |  |  |

Total selling and administrative expenses were virtually unchanged in the three months ended January 1, 2006 from the year-ago period.

For the six months ended January 1, 2006, selling and administrative expenses decreased versus the year-ago period primarily as the result of lower professional service fees.

For the three- and six-month periods ended January 1, 2006, included in selling and administrative expenses were $128,000 and $373,000, respectively, attributable to the adoption of SFAS 123R, “Share-BasedPayment.”

***Interest Expense****(dollars in thousands)*
|                                                                                                                                                                                                                                                                                    | ** **                                                       | Three Months Ended |    | Six Months Ended |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------|--------------------|---------|------------------|
|                                                                                                                                                                                                                                                                                    |                                                                  |                    |         |                  |  |  |  |  |
|                                                                                                                                                                                                                                                                                    | ** **                                                       | **January 1,**     |         | January 2,       |  | **January 1,** |  | January 2, |
| **                                             ** | **          ** | **2006**           |         | 2005             |  | **2006** |  | 2005 |
|                                                                                                                                                                                                                                                                                    |                                                                  |                    |         |                  |  |  |  |  |
|                                                                                                                                                                                                                                                                                    |                                                                  |                    |         |                  |  |  |  |  |
| Interest expense                                                                                                                                                                                                                                                                   |                                                             | **$**              | **449** |             | $ | 405 |   | **$** | **853** |   | $ | 919 |  |
|                                                                                                                                                                                                                                                                                    |                                                                  |                    |         |                  |  |  |  |  |
|                                                                                                                                                                                                                                                                                    |                                                                  |                    |         |                  |  |  |  |  |
|                                                                                                                                                                                                                                                                                    |                                                                  |                    |         |                  |  |  |  |  |
|                                                                                                                                                                                                                                                                                    |                                                                  |                    |         |                  |  |  |  |  |

Interest expense increased in the quarter ended January 1, 2006, when compared with the year-ago period, due to higher average interest rates on lower levels of debt. Interest expense for the six months ended January 1, 2006,when compared with the year-ago period, declined on lower average debt levels, partially offset by an increase in average interest rates.

Average debt levels for the three- and six-month periods ended January 1, 2006 were $31.4 million and $29.6 million, respectively.

Average debt levels for the three- and six-month periods ended January 2, 2005 were $39.6 million and $39.8 million, respectively.

Average interest rates in the quarter ended January 1, 2006 were 5.24%, compared with 4.5% in the year-ago period. For the six months ended January 1, 2006, average interest rates were 5.18%, as compared to 3.99% in theyear-ago period.

***Pretax Earnings from Continuing Operations****(dollars in thousands)*
|                                                                                                                                                                                                                                                                                                                                                      | ** **                                       | Three Months Ended |                                                                    | Six Months Ended |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------|--------------------|--------------------------------------------------------------------|------------------|
|                                                                                                                                                                                                                                                                                                                                                      |                                                  |                    |                                                                    |                  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                      | ** **                                       | **January 1,**     |                                                                    | January 2,       |  | **January 1,** | ** ** | January 2, |
| **                                                        ** | **2006**                                         | ** **         | 2005                                                               |                  | **2006** |  | 2005 |
|                                                                                                                                                                                                                                                                                                                                                      |                                                  |                    |                                                                    |                  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                      |                                                  |                    |                                                                    |                  |  |  |  |  |
| Pretax earnings from                                                                                                                                                                                                                                                                                                                                 |          |          |             |             |  |                 |  |  |                  |  |   |              |  |
|   continuing operations                                                                                                                                                                                                                                                                                                                    |                                                  | **$**              | **4,297**                                                          |                  | $ | 4,438 |  | **$** | **7,798** | **   ** | $ | 8,195 |  |
|                                                                                                                                                                                                                                                                                                                                                      |                                                  |                    |                                                                    |                  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                      |                                                  |                    |                                                                    |                  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                      |                                                  |                    |                                                                    |                  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                      |                                                  |                    |                                                                    |                  |  |  |  |  |

The decrease in pretax earnings for the quarter ended January 1, 2006, compared with the same period of fiscal 2005, is primarily attributable to slightly lower gross profit of $75,000 on a sales decrease of $571,000, plus anincrease in selling and administrative expenses of $23,000 and a $44,000 increase in interest expense. 

The decrease in pretax earnings for the six months ended January 1, 2006, compared with the same period of fiscal 2005, is primarily attributable to lower gross profit of $617,000 on a sales decrease of $4,566,000, partiallyoffset by decreases in selling and administrative expenses of $210,000 and lower interest expenses of $66,000.

***Tax Expense from Continuing Operations****(dollars in thousands)*
|                                                                                                                                                                                                                                                                                          | ** ** | Three Months Ended |                                                                                                        | Six Months Ended |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------|--------------------------------------------------------------------------------------------------------|------------------|
|                                                                                                                                                                                                                                                                                          |            |                    |                                                                                                        |                  |  |  |  |  |
|                                                                                                                                                                                                                                                                                          |            | **January 1,**     |                                                                                                        | January 2,       |  | **January 1,** |  | January 2, |
| **                                              ** | ** ** | **2006**           |                                                                                                        | 2005             |  | **2006** |  | 2005 |
|                                                                                                                                                                                                                                                                                          |            |                    |                                                                                                        |                  |  |  |  |  |
|                                                                                                                                                                                                                                                                                          |            |                    |                                                                                                        |                  |  |  |  |  |
| Tax expense from                                                                                                                                                                                                                                                                         |       |          |                   |             |  |                 |  |  |                  |  |   |            |  |
|  continuing operations                                                                                                                                                                                                                                                              |            | **$**              | **1,634**                                                                                              |                  | $ | 1,717 |  | **$** | **3,105** |  | $ | 3,171 |  |
|                                                                                                                                                                                                                                                                                          |            |                    |                                                                                                        |                  |  |  |  |  |
|                                                                                                                                                                                                                                                                                          |            |                    |                                                                                                        |                  |  |  |  |  |
|                                                                                                                                                                                                                                                                                          |            |                    |                                                                                                        |                  |  |  |  |  |
|                                                                                                                                                                                                                                                                                          |            |                    |                                                                                                        |                  |  |  |  |  |

The effective income tax rate for the three- and six-month periods ended January 1, 2006 was 37.5%.  For the three- and six-month periods ended January 2, 2005, the effective income tax rate was 38.7%.

**Financial Condition and Liquidity******The following table shows LaBarge’s equity and total debt positions:

***Stockholders’ Equity and Debt****(dollars in thousands)*
|                                                             | **January 1,**                                                                                                                                                                                                                                       | July 3,                                                                                                                                                                                                                              |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                            | **2006**                                                                                                                                                                                                                                             | 2005                                                                                                                                                                                                                                 |
|                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                      |
|                                                             | **                                        ** |                                        |
| Stockholders’ equity                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                            | **$**                                                                                                                                                                                                                                | **59,698** |             | $ | 53,830 |  |
| Debt                                                                                                                                                                                                                                                                                                                                                               | **             **                                                                                                                                                                   | **35,432**                                                                                                                                                                                                                           | **     ** |     | 27,916 |  |
|                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                      |

The Company’s operations used $5.2 million of net cash for the six months ended January 1, 2006, primarily to purchase inventory required for planned shipments during the remainder of the fiscal year, and fund theincrease in receivables driven by higher sales levels.

***Senior Lender:***The Company entered into a senior secured loan agreement with a group of banks on February 17, 2004.  The following is a summary of the agreement:
|  •                   |   | A revolving credit facility up to $20.0 million, available for direct borrowings or letters of credit.  The facility is based on a borrowing base formula equal to the sum of 85% of eligible receivables and 35% of eligibleinventories. As of January 1, 2006, outstanding loans under the revolving credit facility were $10.7 million.  Letters of credit outstanding were $1.6 million, and $7.7 million was available. This credit facility matures on February 17, 2009.                                                                                                                                                                                                                                                                                                                                                                                             |              |
|--------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------|
|       |   |                                                                                                                                                                                    |                                                                          |
|  •                   |   | A $25.0 million term loan amortized beginning May 2004, at a quarterly rate of $1.0 million, increasing to $1.25 million in May 2006 and increasing to $1.5 million in May 2007.  Final maturity is February2009.  As of January 1, 2006, the amount outstanding was $18.0 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                          |
|            |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                          |
|  •                   |        | On April 15, 2004, the Company entered into an Interest Rate Cap Agreement with a bank.  This Cap Agreement caps the Company’s exposure to increases in LIBOR at 4% for a period of three years on a notional amountbeginning at $24.0 million and amortizing on a schedule that matches amortization of the $25.0 million term loan dated February 17, 2004. For the three- and six-month periods ended January 1, 2006, interest expense was reduced by $7,000 as a result of this CapAgreement.                                                                                                                                                                                                                                                                                                                                                                              |                                                                          |
|                                |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                          |
|  •                   |        | Interest on both loans is at a percentage of prime or a stated rate over LIBOR based on certain ratios.  For the quarter ended January 1, 2006, the average rate was approximately 5.5%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                          |
|       |   |                                                                                                                                                 |                                                                          |
|  •                   |   | Both loans are secured by substantially all the assets of the Company other than real estate.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                          |
|                           |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                          |
|  •                   |        | Covenants and performance criteria consist of Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) in relation to debt, EBITDA in relation to fixed charges and minimum net worth.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                          |
|            |   |                                                                                                                                                           |                                                                     |

***Other Long-term Debt:****Mortgage Loan:*The Company has a $6.4 million term loan secured by the Company’s headquarters building in St. Louis, Missouri.  The loan repayment schedule is based on a 25-year amortization with a final balloon payment due in October2009.  The balance at January 1, 2006 was $5.6 million.  Interest is at a percentage of prime or a stated rate over LIBOR based on certain ratios.  For the quarter ended January 1, 2006, the average rate was approximately 4.6%.

*****Industrial Revenue Bonds:*In July 1998, the Company acquired tax-exempt Industrial Revenue Bond financing in the amount of $1.3 million.  The debt is payable over 10 years with an interest rate of 5.28%.  This funding was used to expand the Berryville,Arkansas, facility.  The outstanding balance at January 1, 2006 was $0.4 million.

*Capital Lease Obligations:*

In October 2005, the Company entered into a capital lease agreement to fund the purchase of machinery with a fair market value of $664,000. The lease is for five years with an interest rate of 6.11%. The obligation outstandingat January 1, 2006 was $645,000.

The aggregate maturities of long-term obligations are as follows:*(dollars in thousands)*
| **Fiscal Year**               |
|-------------------------------|
|                               |
| 2006                          | ...............................................................  | $ | 2,515 |   |
| 2007                          | ...............................................................  |      | 5,791 |   |
| 2008                          | ...............................................................  |       | 6,553 |   |
| 2009                          | ...............................................................  |       | 4,936 |   |
| 2010                          | ...............................................................  |       | 4,861 |   |
| Thereafter                    | ...............................................................  |       | 51 |   |
|                               |
|     Total | ...............................................................  |  $ | 24,707 |   |
|                               |

****

***Off-Balance Sheet Arrangements***The Company has no off-balance sheet arrangements.

***Critical Accounting Policies***The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions in certain circumstances that affect amountsreported in the accompanying consolidated financial statements.  In preparing these financial statements, management has made its best estimates and judgment of certain amounts included in the financial statements.  The Company believes there is alikelihood that materially different amounts would be reported under different conditions or using different assumptions related to the accounting policies described below.  Application of these accounting policies involves the exercise of judgment and use ofassumptions as to future uncertainties and, as a result, actual results could differ from these estimates.  The Company’s senior management discusses the accounting policies described below with the audit committee of the Company’s Board of Directorson a periodic basis.

The following discussion of critical accounting policies is intended to bring to the attention of readers those accounting policies that management believes are critical to the Company’s consolidated financial statementsand other financial disclosures.  It is not intended to be a comprehensive list of all of our significant accounting policies that are more fully described in Note 1 of the Notes to the Consolidated Financial Statements included in our 2005 Annual Report on Form10-K.

***Revenue Recognition and Cost of Sales***Revenue is generally recognized on the percentage-of-completion method based upon the units delivered.  The percentage-of-completion method gives effect to the most recent contract value and estimates of cost at completion. Whenappropriate, contract prices are adjusted for increased scope and other changes ordered or caused by the customer.  When percentage-of-completion is not appropriate, the Company recognizes revenue when title transfers, which is usually upon shipment. On a verylimited number of contracts, at a customers’ request, the Company will recognize revenue when ownership passes. As of January 1, 2006 and July 3, 2005, the Company has recognized revenue under these arrangements of $4.1 million and $2.0 million,respectively. The Company recognizes revenue for storage and other related services when the services are provided.

Management’s estimates of material, labor and overhead costs on long-term contracts are critical to the Company.  Since some contracts extend over a long period of time, revisions in cost during the progress of workhave the effect of adjusting current period earnings applicable to performance in prior periods.  When the current contract cost estimate indicates a loss, provision is made for the total anticipated loss in the period the loss becomes evident.

***Inventories***Inventories, which consist of materials, labor and manufacturing overhead, are carried at the lower of cost or market value. Inventory that has been held beyond specific time limits is automatically reserved. Inaddition, management regularly reviews inventory for obsolescence to determine whether any additional write-down is necessary.  Various factors are considered in making this determination, including expected program life, recent sales history, predicted trendsand market conditions.  If actual demand or market conditions are less favorable than those projected by management, additional inventory write-downs may be required.  For both the quarters ended January 1, 2006 and January 2, 2005, expense for obsolete orslow-moving inventory charged to income before income taxes was $0.2 million.

***Goodwill and Intangible Assets***The Company has adopted Statement of Financial Accounting Standard (“SFAS”) No. 142 “Goodwill and Other Intangible Assets.”  Under the provisions of this standard, intangible assets deemed to have indefinitelives and goodwill are not subject to amortization.  All other intangible assets are amortized over their estimated useful lives.  Goodwill and other intangible assets not subject to amortization are tested for impairment annually or more frequently ifevents or changes in circumstances indicate that the asset might be impaired.  This testing requires comparison of carrying values to fair values, and when appropriate, the carrying value of impaired assets is reduced to fair value.  During the fourthquarter of 2005, the Company completed its annual impairment test and determined that estimates of fair value are reasonable. Different assumptions regarding such factors as sales levels and price changes, labor and material cost changes, interest rates andproductivity could affect such valuations.

***New Accounting Pronouncements***In November 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 151, “Inventory Costs” (“SFAS No. 151”).  SFAS No. 151 requires that costs such as idle facility expense,freight handling costs and wasted material be recognized as current period charges, regardless of whether they are abnormal.  SFAS No. 151 was effective for LaBarge for inventory costs incurred after July 4, 2005.  Adoption of this pronouncement did nothave a material impact on the Company’s financial statements.

During December 2004, the FASB issued SFAS No. 123R, “Share-Based Payment” (“SFAS No. 123R”) which requires companies to measure and recognize compensation expense for all stock-basedpayments at fair value.  Stock-based payments include stock option grants and certain transactions under other Company stock plans.  SFAS No. 123R is effective for the first fiscal year beginning after June 15, 2005.  The Company adopted SFAS No. 123Rin the first quarter of fiscal 2006.  The Company has determined that the impact of the adoption of SFAS No. 123R will reduce fiscal year 2006 net earnings by approximately $393,000.

**PART I**

****
| **ITEM 3.**                                                                                                                                            | **Quantitative and Qualitative Disclosures About Market Risk**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|--------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **                        **   | **                                                                                                                                                       **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                                                        | *Foreign Currency Risk***No information has been included hereunder because the Company’s foreign sales in each of the three and six months ended January 1, 2006 and January 2, 2005 were less than 10% of total Company revenue.  All foreign contracts arepaid in U.S. dollars and the Company is not significantly exposed to foreign currency translation.  However, if the significance of foreign sales grows, management will continue to monitor whether it would be appropriate to use foreign currency risk managementinstruments to mitigate any exposures.*Interest Rate Risk* As of January 1, 2006, the Company had $35.4 million in total debt.  Industrial revenue bonds totaling $444,000 have a fixed rate and are not subject to interest rate risk.  The interest rate on the remaining $35.0 million is subject to fluctuation. OnApril 15, 2004, the Company entered into an Interest Rate Cap Agreement with a bank.  This Cap Agreement caps the Company's exposure to 90-day LIBOR at 4% for a period of three years on a notional amount beginning at $24.0 million and amortizing on a schedulethat matches amortization of the $25.0 million term loan dated February 17, 2004. The additional interest cost to the Company if interest rates increased 1% would be approximately $170,000 for one year.                                                                                                                  |
| ** **                                                                                                                                             | **                                                                                                                 **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |  |
| **ITEM 4.        **                                                                                            | **Controls and Procedures**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | **                                  ** |
|                           | The Company’s Chief Executive Officer and President, and the Company’s Vice President, Chief Financial Officer and Secretary, have conducted an evaluation of the design and effectiveness the Company’sdisclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as of the end of the period covered by this report.

The Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls, procedures and systems are functioning effectively to provide reasonable assurance that the Company can meetits disclosure obligations.  The Company’s disclosure controls system is based upon a chain of financial and general business reporting lines that converge in the headquarters of the Company in St. Louis, Missouri.  The reporting process is designedto ensure that information required to be disclosed by the Company in the reports that it files with or submits to the Securities and Exchange Commission is recorded, processed, summarized and reported within the time periods specified in the Commission’s rulesand forms.

During our first fiscal quarter, there were no significant changes in internal controls over financial reporting identified in connection with the evaluation that have materially affected or that are reasonably likely tomaterially affect these controls. |

**PART II**

****

****

****

**ITEM 4.               Submission of Matter to a Vote of Security Holders**

****

The Company held its Annual Meeting of Stockholders on November 16, 2005.

At the meeting, Messrs. Thomas A. Corcoran, Craig E. LaBarge and Jack E. Thomas, Jr. were elected as Class A Directors with terms expiring in 2008.  The votes with respect to each nominee and with respect to the othermatter voted on by shareholders at the meeting are set forth below:
| **Proposal No. 1**                                                                                                                                                                                                                                                                                                                                                                   | **Number of Votes FOR**                                                                                                                                                                                                                                                                                            | **Withheld Authority to Vote**                                                                                                                                                                                                                                                                               |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                              |
|                                                                     |                                                               |                                                    |
| **Thomas A. Corcoran**                                                                                                                                                                                                                                                                                                                                                               | 12,729,188                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                    | 20,155 |
| **Craig E. LaBarge**                                                                                                                                                                                                                                                                                                                                                                 | 12,731,361                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                              | 17,982 |
| **Jack E. Thomas, Jr.**                                                                                                                                                                                                                                                                                                                                                              | 12,685,591                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                              | 63,762 |
|                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                              |
|                                                                |                                                     |                                                                                                                                                                                                                                                                                               |                                               |
| **Proposal No. 2**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | **FOR**                                                                                                                                                | **AGAINST**                                                                                                                          | **ABSTAIN**                                                                                                                                      |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                        |                                                                                                                                      |
| **Ratification of KPMG LLP as Independent Registered Public Accounting Firm**                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | 12,666,482                                                                                                                                             | 72,287                                                                                                                               | 10,573                                                                                                                                           |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                        |                                                                                                                                      |
|                                                                                          |                           |                        |                          |

****

****

****

****
| **                     ** |                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **ITEM 6.**                                                                                                                        | **Exhibits**                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                |                                                                                                                                                                                                                                                                                                                                                                          |                                                                                |   |
|                                                                             | 31.1                                                                                                                                                                                                                                                                                                                                                                | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                   |   |
|                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                          | 31.2                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |   |
|                                                                                                                               |                                                                                                                                                                                                                                                                                                                                                 | 32.1                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | Certification of Chief Executive Officer pursuant to 18 U.S. C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |   |
|                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                          | 32.2                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | Certification of Chief Financial Officer pursuant to 18 U.S. C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |   |
|                                                                                                                                    | **  **                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                |   |

**** 

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|                                                                                       | LaBARGE, INC.                                                            |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | Date:  February 3, 2006                                        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | By:  /S/DONALD H. NONNENKAMP                                   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                          |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | Name:  Donald H. Nonnenkamp                                    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | Title:    Vice President and Chief Financial Officer |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                          |