Table of Contents

| **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 December 31, 2006** |
| **or**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |  |
| **[  ] Transition Report Pursuant to Section 13 or 15(d) of the**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| **     **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | **Securities Exchange Act of 1934** |
| **      **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | For the transition period from _________ to _________ |
| ****                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| Commission File Number:  1-5761                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| **                                                                                                                                                              ** |
| **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 stockas of February 5, 2007: 15,235,307 shares of common stock.

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

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****

| **LaBarge, Inc.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| **FORM 10-Q**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| **For the Quarter Period Ended December 31, 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 Condition and Results of Operations |  |
| **                **                                                                                                         |
|                                                                                                                                                                                                              | Item 3. | Quantitative and Qualitative Disclosures About Market Risk |  |
|                                                                                                                                                                                                         |  |
| **                **                                                                                                         | Item 4. | Controls and Procedures |  |
|                                                                                                                                                                                                              |  |  |  |
|                                                                                                                                                                                                         |
| **Part II**                                                                                                                                                                                                  |  | **Other Information** |  |
|                                                                                                                                                                                                         |
|                                                                                                                                                                                                         | Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |  |
|                                                                                                                                                                                                              |   |  |
|                                                                                                                                                                                                    | Item 4. | Submission of Matters to a Vote of Security Holders |
|                                                                                                                                                                                                         |  |  |
|                                                                                                                                                                                                              | Item 6. | Exhibits |  |
|                                                                                                                                                                                     |
| Signature                                                                                                                                                                                                    |
|                                                                                                                                                                                                         |
|                                                                                                                                                                                                              |

Table of Contents

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

***(Amounts In Thousands -- Except Per-Share Amounts)***
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                         |                                                            | Three Months Ended                                                                                                                             |                                                                                     | Six Months Ended                                                                                 |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                    |                                                                                                                                                |                                                                                          |                                                                                                  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                               | **December 31,**                                                                                                                               |                                                                                          | January 1,                                                                                       |   | **December 31,** |  | January 1, |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                               | **2006**                                                                                                                                       |                                                                                          | 2006                                                                                             |   | **2006** |  | 2006 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | **Net sales**                                                                                                                                                                                                                                                                                                                                                                                                                            | **    **                                                                                                                                                       | **$**                                                                                                                                          | **60,820**                                                                               |                                                                                                  |      | $ | 48,147 |  | **   ** | **$** | **110,720** |  |     | $ | 87,786 |  |
|                                                                                                                                                                                                |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | **Costs and expenses:**                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                               |                                                                                                                                           |                                                                                     | **              **         | **      ** |   |  |  |  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                     | Cost of sales                                                                                                                                                                      | **                       ** | **48,314**                                                                               |                                                                                                  |  | 37,680 |  |  | **87,557** |  |  | 67,821 |  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                     | Selling and administrative expense                                                                                                                                                 | **     **                                                                                                             | **6,800**                                                                                |                                                                                                  |  | 5,835 |  | **    ** | **12,791** |  |    | 11,460 |  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                     | Interest expense                                                                                                                                                                   | **564**                                                                                                                                        |                                                                                          |                                                                                                  | 449 |  |  | **1,215** |  |  | 853 |  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                     | Other expense and (income), net                                                                                                                                                    | **(64**                                                                                                                                        | **)**                                                                                    |                                                                                        | (114 | ) | **    ** | **(20** | **)** |  | (146 | ) |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | Earnings before income taxes                                                                                                                                                                                                                                                                                                                                                                                                             | **      **                                                                                                                                           | **5,206**                                                                                                                                      |                                                                                          |                                                                                                  | 4,297 |  |  | **9,177** |  |  | 7,798 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | Income tax expense                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                                                    | **2,009**                                                                                                                                      |                                                                                          |                                                                                                  | 1,634 |  |  | **3,569** |  |  | 3,105 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | **Net earnings**                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                           |                                                                                                                                 |                                                                                          | **$**                                                                                            | **3,197** |  | $ | 2663 |  | **$** | **5,608** |  | $ | 4,693 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                    |                                                                                                                                                |                                                                                          |                                                                                                  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | **Basic net earnings per common share:**                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                                                                    |                                                                                                                                                | **              ** |                                                                                                  |  |  |  |  | **                   ** |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | **Basic net earnings**                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                    |                                                                                                                                                | **$**                                                                                    | **0.21**                                                                                         |  | $ | 0.18 |  | **$** | **0.37** |  | $ | 0.31 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | **                                                                      ** |                                                                                                                                                                                    |                                                                                                                                                |                                                                                          |                                                                                                  |  |  |  |  |  |  |  |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | **Average common shares outstanding**                                                                                                                                                                                                                                                                                                                                                                                                    | **15,112**                                                                                                                                                                         |                                                                                                                                                |                                                                                          | 15,149                                                                                           |  |  | **15,116** |  |  | 15,116 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                    |                                                                                                                                                |                                                                                          |                                                                                                  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | **                                                                    **             | **                             ** | ** **                                                                                                                                     |                                                                                     |                  |   | **  ** | **                   ** | **   ** |    |                   |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | **Diluted net earnings per share:**                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                    |                                                                                                                                                |                                                                                          |                                                                                                  |  |  |  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | **Diluted net earnings**                                                                                                                                                                                                                                                                                                                                                                                                                 | **$**                                                                                                                                                                              | **0.20**                                                                                                                                       |                                                                                          | $                                                                                                | 0.17 |  | **$** | **0.35** |  | $ | 0.29 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | **                                                                     **       |                                                                                                                                                                                    |                                                                                                                                                |                                                                                          |                                                                                                  |  |  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | **Average diluted common   shares outstanding**                                                                                                                                                                                                                                                                                                                                                                                | **16,008**                                                                                                                                                                         |                                                                                                                                                |                                                                                          | 16,056                                                                                           |  |  | **16,040** |  |  | 16,065 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                    |                                                                                                                                                |                                                                                          |                                                                                                  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                    |                                                                                                                                                |                                                                                          |                                                                                                  |  |  |  |  |  |  |  |  |

See accompanying notes to consolidated financial statements.

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LaBARGE, INC.CONSOLIDATED BALANCE SHEETS***(Amounts In Thousands -- Except Share Amounts)***
| **   **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | ** **                                                                                                                                              | **December 31, 2006**                                                                                                                                                                                                                                                                                                                |                                                                                                                                      |                                      | July 2, 2006                         |                                                                                                                      |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------|--------------------------------------|----------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                      |                                      |                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                      | *(Unaudited)*                                                                                                                        |                                      |                                      |                                                                                                                      |  |
| **                                                                                                                    ** |                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                      | *                 *                             |                                      |                  | *                   * |  |
| **ASSETS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                      |                        |                                 |                                      |                                                                                                                 |
| **Current assets:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                  |                                                                |                                      |                  |                       |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | Cash and cash equivalents                                                                                                                               |                                                                                                                                                                                                                                                                                                                                 | **  **                                                                                                                     | **$**                                | **1,535**                            |                                                                                   |     | $ | 947 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | Accounts and other receivables, net                                                                                                                     |                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                      | **27,940**                           |                                      |                                                                                                                 | 29,759 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | Inventories                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                      | **57,055**                           |                                      |                                                                                                                      | 53,819 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | Prepaid expenses                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                      | **1,129**                            |                                      |                                                                                                                 | 1,743 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | Deferred tax assets, net                                                                                                                                |                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                      | **1,278**                            |                                      |                                                                                                                      | 1,395 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                      |                                      |                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | **Total current assets**                                                                                                                                |                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                      | **88,937**                           |                                      |                                                                                                                      | 87,663 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                      |                                      |                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                      |                                      |                                 |
| Property, plant and equipment, net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                  | **20,976**                                                                                                                           |                                      |                                      | 20,453                                                                                                               |   |
| Intangible assets, net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                      | **2,361**                                                                                                                            |                                      |                                 | 2,743                                                                                                                |   |
| Goodwill, net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                      | **24,292**                                                                                                                           |                                      |                                 | 24,292                                                                                                               |  |
| Other assets, net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                      | **5,436**                                                                                                                            |                                      |                                 | 5,199                                                                                                                |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                      |                                      |                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | **Total assets**                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                 | **  **                                                                                                                     | **$**                                | **142,002**                          |                                                                                                                      |     | $ | 140,350 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                      |                                      |                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                      |                                      |                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                      |                                      |                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| **LIABILITIES AND STOCKHOLDERS’ EQUITY**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                    |                                                        |
| **Current liabilities:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                      | **              **                                             |        |                                      |                                                                    |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | Short-term borrowings                                                                                                                                   |                                                                                                                                                                                                                                                                                                                                      | **  **                                                                                                                     | **$**                                | **12,350**                           |                                                                                                                      |     | $ | 19,475 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | Current maturities of long-term debt                                                                                                                    |                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                      | **6,301**                            |                                      |                                                                                                                      | 5,791 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | Trade accounts payable                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                      | **19,089**                           |                                      |                                                                                                                 | 15,714 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | Accrued employee compensation                                                                                                                           |                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                      | **9,141**                            |                                      |                                                                                                                 | 7,783 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | Other accrued liabilities                                                                                                                               |                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                      | **1,996**                            |                                      |                                                                                                                 | 1,961 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | Cash advances                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                      | **6,571**                            |                                      |                                                                                                                 | 5,395 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                      |                                      |                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | **Total current liabilities**                                                                                                                           |                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                      | **55,448**                           |                                      |                                                                                                                      | 56,119 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                      |                                      |                                      |
| Long-term advances from customers for purchase of materials                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                      | **2,219**                                                                                                                            |                                      |                                      | 2,760                                                                                                                |   |
| Deferred tax liabilities, net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                      | **---**                                                                                                                              |                                      |                                 | 235                                                                                                                  |  |
| Long-term debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                      | **13,381**                                                                                                                           |                                      |                                      | 16,402                                                                                                               |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                      |                                      |                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| **Stockholders’ equity:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                    |                                                        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | Common stock, $.01 par value.  Authorized 40,000,000 shares; 15,773,253 issued at December 31, 2006 and July 2, 2006, including shares in treasury |                                                                                                                                                                                                                                                                                                                                 |                                                                                                                            | **158**                              |        |                                                                                                                 | 158 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | Additional paid-in capital                                                                                                                              |                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                      | **15,909**                           |                                      |                                                                                                                 | 15,185 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | Retained earnings                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                      | **58,040**                           |                                      |                                                                                                                      | 52,431 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | Accumulated other comprehensive loss                                                                                                                    |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                      | **(53**                              | **)**                                |                                                                                                                      | --- |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | Less cost of common stock in treasury, shares of 537,867 at December 31, 2006 and 606,262 at July 2, 2006                                               |                                                                                                                                                                                                                                                                                                                                      | **(3,100**                                                                                                                           | **)**                                | (2,940                               | )                                                                                                                    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                      |                                      |                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | **Total stockholders’ equity**                                                                                                                    |                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                      | **70,954**                           |                                      |                                                                                                                 | 64,834 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                      |                                      |                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                         | **Total liabilities and stockholders’ equity**                                                                                                                                                                                                                                                                                 |                                                                                                                                 | **  **                     | **$**                                | **142,002**                                                                                                          |  |     | $ | 140,350 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                      |                                      |                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                      |                                      |                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                      |                                      |                                      |

See accompanying notes to consolidated financial statements.

----

LaBARGE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

***(Amounts In Thousands)***
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                    | Six Months Ended                                                                   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------|------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                    |                                                                                    |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | **                                                                                          ** | ** **                                                                         | **December 31, 2006**                                                              | **  ** | January 1, 2006 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                    |                                                                                    |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | **Cash flows from operating activities:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                               |                                                                                    |  |  |     |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Net earnings                                                                       |                                                                               | **$** | **5,608** | ** ** | $ | 4,693 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Adjustments to reconcile net cash provided by operating activities:                |                                                                               | ** ** |  | ** ** |   |  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Depreciation and amortization                                                      |                                                                               |   | **2,485** |  |   | 2,236 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Stock-based compensation                                                           |                                                                                    |  | **672** |  |  | 846 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Realized gain on sale of investment                                                |                                                                                    |  | **---** |  |  | (30 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Other than temporary impairment of investments                                     |                                                                                    |  | **105** | **          ** |  | --- |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Deferred taxes                                                                     |                                                                               |   | **(170** | **)** |   | (350 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Other                                                                              |                                                                               |   | **(1** | **)** |   | 1 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Changes in assets and liabilities, net of acquisitions:                            |                                                                               |   | **              ** |  |   |  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                               | Accounts and notes receivable, net                                                 |   |   | **1,799** |  |   | (4,342 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                               | Inventories                                                                        |   |   | **(3,236** | **)** |   | (6,277 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                               | Prepaid expenses                                                                   |   |   | **614** |  |   | (229 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                    | Trade accounts payable                                                             |  |  | **3,256** |  |  | 5,663 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                               | Accrued liabilities                                                                |   |   | **1,519** |  |   | (3,260 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                    | Advance payments                                                                   |  |  | **635** |  |  | (4,218 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                    |                                                                                    |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | **Net cash (used) provided by operating activities**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                    |                                                                                    | **13,286** |  |  | (5,267 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                    |                                                                                    |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                    |                                                                                    |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | **Cash flows from investing activities:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                          |                                                                               |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Additions to property, plant and equipment                                         |                                                                                    | **(2,284** | **)** |  | (2,052 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Proceeds from disposal of property and equipment                                   |                                                                                    | **25** |  |  | 62 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Additions to other assets and intangibles                                          |                                                                                    | **(569** | **)** |  | (399 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Proceeds from sale of securities available for sale                                |                                                                                    | **---** |  |  | 89 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                    |                                                                                    |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | **Net cash (used) by investing activities**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                    | **(2,828**                                                                         | **)** |  | (2,300 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                    |                                                                                    |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                    |                                                                                    |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | **Cash flows from financing activities:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                    |                                                      |  |     |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Borrowings on revolving credit facility                                            |                                                                                    | **27,000** |  |  | 30,975 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Payments of revolving credit facility                                              |                                                                                    | **(34,125** | **)** |  | (21,900 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Borrowings of long-term debt                                                       |                                                                                    | **258** |  |  | --- |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Repayments of long-term senior debt                                                |                                                                                    | **(2,769** | **)** |  | (2,223 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Excess tax benefits from stock option                                              |                                                                                    | **194** |  |  | 73 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Issuance of stock                                                                  |                                                                                    | **461** |  |  | 353 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Purchase of treasury stock                                                         |                                                                                    | **(889** | **)** |  | (96 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                    |                                                                                    |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                    |                                                                                    |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | **Net cash (used) provided by financing activities**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                    | **(9,870**                                                                         | **)** |  | 7,182 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                    |                                                                                    |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | **Net increase (decrease) in cash and cash equivalents**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                    | **588**                                                                            |  |  | (385 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | **Cash and cash equivalents at beginning of year**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                    | **947**                                                                            |  |  | 820 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                    |                                                                                    |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                    |                                                                                    |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | **Cash and cash equivalents at end of period**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                    | **$**                                                                              | **1,535** |  |  | $ | 435 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                    |                                                                                    |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                    |                                                                                    |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                    |                                                                                    |  |  |
| **                                                                                          ** |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | **             ** |                                                                                    |  |  |    |  |  |
| **Non-cash transactions:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                    | **             ** |  |  |  |              |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Increase in capital lease obligations                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                               | **$**                                                                              | **8** | **         ** |         | $ | 664 |          |

See accompanying notes to consolidated financial statements.

----

Table of Contents

|                 | **LaBarge, Inc****.**                          |          |
|--------------------------------------------------------------------------------------------|------------------------------------------------|--------------------------------------------------|
|                                                                                            | **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** |                                                  |
|                                                                                            | (Unaudited)                                    |                                                  |

| **1.** | **  ** | **CONSOLIDATED FINANCIAL STATEMENTS -- BASIS OF PRESENTATION** |
|--------|------------------|----------------------------------------------------------------|

The consolidated balance sheet at December 31, 2006, the related consolidated statements of income for the three and six months ended December 31, 2006 and January 1, 2006, and the consolidated statements of cash flows for thethree and six months ended December 31, 2006 and January 1, 2006, 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 thefinancial position and the results of operations and cash flows for the aforementioned periods, have been made.

Certain information and footnote disclosures normally included in consolidated financial statements prepared in conformity with U.S. generally accepted accounting principles have been condensed or omitted.  Theseconsolidated financial 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 2, 2006.

**Stock-Based Compensation**For the six months ended December 31, 2006 total stock-based compensation was $0.7 million ($0.4 million after tax), equivalent to earnings per basic and diluted share of $0.03. For the six months ended January 1,2006, total stock based compensation was $0.8 million ($0.5 million after tax), or $0.04 and $0.03 for basic and diluted earnings per share, respectively.

As of December 31, 2006, the total unrecognized compensation expense related to nonvested awards was $0.7 million pretax, and the period over which it is expected to be recognized is approximately 1.2 years. At January 1,2006, the total unrecognized compensation expense, including stock options and performance units, was $0.9 million pretax, and the period over which it was expected to be recognized was 1.4 years.

No stock options were issued in the six months ended December 31, 2006 and January 1, 2006, respectively. On January 11, 2005, the Company awarded performance units to certain key executives tied to fiscal year 2007 financialperformance. Compensation expense related to this award was recognized in the six months ended December 31, 2006, but no shares are included in the dilutive shares, as the performance condition had not been met at December 31, 2006.

All stock options outstanding at December 31, 2006 and January 1, 2006 were dilutive and included in the computation of diluted earnings per share.  These options expire in various periods through 2014.

**Recently Issued Accounting Standards**In June 2006, the FASB issued FASB Interpretation Number (“FIN”) 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”).  FIN 48 establishes a recognition threshold and measurement for income taxpositions recognized in an enterprise’s financial statements in accordance with FASB Statement No. 109, “Accounting for Income Taxes.”  FIN 48 also prescribes a two-step evaluation process for tax positions.  The first step is recognitionand the second is measurement.  For recognition, an enterprise judgmentally determines whether it is more-likely-than-not that a tax position will be sustained upon examination, including resolution of related appeals or litigation processes, based on thetechnical merits of the position.  If the tax position meets the more-likely-than-not recognition threshold it is measured and recognized in the financial statements as the largest amount of tax benefit that is greater than 50% likely of being realized.  Ifa tax position does not meet the more-likely-than-not recognition threshold, the benefit of that position is not recognized in the financial statements.

Tax positions that meet the more-likely-than-not recognition threshold at the effective date of FIN 48 may be recognized or, continue to be recognized, upon adoption of FIN 48.  The cumulative effect of applying theprovisions of FIN 48 shall be reported as an adjustment to the opening balance of retained earnings for that fiscal year.  FIN 48 will apply to fiscal years beginning after December 15, 2006, with earlier adoption permitted.  The Company is currentlyevaluating the impact FIN 48 will have on its consolidated financial statements when it becomes effective for the Company in fiscal 2008 and is unable, at this time, to quantify the impact, if any, to retained earnings at the time of adoption.

In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standard (“SFAS”) No. 157, “Fair Value Measurements” (“SFAS No.157”) to clarify the definition of fair value, establish a framework for measuring fair value and expand the disclosures on fair value measurements. SFAS No. 157 defines fair value as the price that would be received to sell an asset or paid to transfer aliability in an orderly transaction between market participants at the measurement date (i.e., an exit price). SFAS No. 157 also stipulates that, as a market-based measurement, fair value measurement should be determined based on the assumptions that marketparticipants would use in pricing the asset or liability, and establishes a fair value hierarchy that distinguishes between (a) market participant assumptions developed based on market data obtained from sources independent of the reporting entity (i.e., observableinputs) and (b) the reporting entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (i.e., unobservable inputs). SFAS No. 157 becomes effective for the Company in its fiscal yearending June 30, 2009. The Company is currently evaluating the impact of the provisions of SFAS No. 157 on its consolidated financial statements.

In September 2006, FASB’s Emerging Issues Task Force (“EITF”) reached a consensus on EITF Issue No. 06-4, “Accounting for Deferred Compensation and Postretirement Benefits Aspects of EndorsementSplit-Dollar Life Insurance Arrangements”(“EITF 06-4”).  This addresses only endorsement split-dollar life insurance arrangements that provide a benefit to an employee that extends to postretirement periods. In an endorsement split-dollararrangement, the employer owns and controls the policy, and the employer and an employee split the insurance policy’s cash surrender value and/or death benefits.

The EITF consensus would require that the deferred-compensation or postretirement benefit aspects of an endorsement-type split-dollar life insurance arrangement be recognized as a liability by the employer and that theobligation is not effectively settled by the purchase of a life insurance policy. The liability for future benefits would be recognized based on the substantive agreement with the employee, which may be either to provide a future death benefit or to pay for thefuture cost of the life insurance.

If ratified, EITF 06-4 becomes effective for the Company in its fiscal year ending June 30, 2009.  The Company is currently evaluating the impact of the provisions of EITF 06-4 on its consolidated financialstatements.

In September 2006, FASB’s EITF reached a consensus on EITF Issue No. 06-05, “Accounting for Purchases of Life Insurance—Determining the Amount That Could Be Realized in Accordance with FASB Technical BulletinNo. 85-4, *Accounting for Purchases of Life Insurance”* (“EITF 06-5”).  This consensus explains how to determine “the amount that could be realized” from a life insurance contract, which is the measurement amount for the assetin accordance with Technical Bulletin 85-4. The consensus would require policyholders to determine the amount that could be realized under a life insurance contract assuming individual policies are surrendered.

If ratified, EITF 06-5 becomes effective for the Company in its fiscal year ending June 29, 2008. The Company is currently evaluating the impact of EITF 06-5 on its consolidated financials.
| **2.** | **  ** | **GROSS AND NET SALES** |
|--------|------------------|-------------------------|

Gross and net sales consist of the following:*(dollars in thousands)*
| **                                                               ** | ** ** | Three Months Ended |       | Six Months Ended |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------|------------|------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                |            |                    |            |                  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                |            | **December 31,**   |            | January 1,       | ** ** | **December 31,** |  | January 1, |
| **   **                                                                                                                                                                                                                                                                                                                                                                         |            | **2006**           |            | 2006             |  | **2006** |  | 2006 |
|                                                                                                                                                                                                                                                                                                                                                                                                |            |                    |            |                  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                |            |                    |            |                  |  |  |  |  |
| Gross sales                                                                                                                                                                                                                                                                                                                                                                                    |       | **$**              | **61,115** |        |   | $ | 48,407 |   | **$** | **111,161** |  |   | $ | 88,314 |  |
| Less sales discounts                                                                                                                                                                                                                                                                                                                                                                           |            |                    | **295**    |                  |  |  | 260 |  |  | **441** |  |  | 528 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                |            |                    |            |                  |  |  |  |  |
| Net sales                                                                                                                                                                                                                                                                                                                                                                                      |            | **$**              | **60,820** |                  |  | $ | 48,147 |  | **$** | **110,720** |  |  | $ | 87,786 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                |            |                    |            |                  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                |            |                    |            |                  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                |            |                    |            |                  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                |            |                    |            |                  |  |  |  |  |

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

For the three months ended December 31, 2006, the Company’s three largest customers were Schlumberger Ltd., 12.9%; Northrop Grumman Corp., 11.4%; and L-3 Communications Holdings,Inc., 9.9%.  For the six months ended December 31, 2006, the Company’s three largest customers were Schlumberger, Ltd., 13.4%; Northrop Grumman Corp., 10.4%; and L-3 Communications Holdings, Inc., 8.6%.
| **3.** | **  ** | **ACCOUNTS AND OTHER RECEIVABLES** |
|--------|------------------|------------------------------------|

Accounts and other receivables consist of the following:*(dollars in thousands)*
|                                                                                           | **December 31,** | ** ** | July 2,    |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------|------------|------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | **2006**         | 2006       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                  |            |
| Billed shipments, net of progress payments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |        | **$**      | **28,003** | **          ** | $ | 28,886 |   |
| Less allowance for doubtful accounts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                  | **198**    | ** ** |  | 174 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                  |            |
| Trade receivables, net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                  | **27,805** |            | 28,712 |   |
| Other current receivables                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                  | **135**    | ** ** | 1,047 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                  |            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | **$**            | **27,940** | ** ** | $ | 29,759 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                  |            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                  |            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                  |            |

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 December 31, 2006, the amounts due from the three largest accounts receivable debtors and the percentage of total accounts receivable represented by those amounts were $4.4 million, 16%; $2.6 million, 9%; and$2.6 million, 9%. This compares with $4.9 million, 17%; $2.4 million, 8%; and $2.1 million, 7% at July 2, 2006.
| **4.** | **  ** | **INVENTORIES** |
|--------|------------------|-----------------|

Inventories consist of the following:*(dollars in thousands)*
|    |                                                                                                                                                                                                                                                                                                                                                                                                                 |                    |           |     | **December 31,** |     |      |                                                | July 2, |     |
|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------|--------------------------------------------------------|--------------------|------------------|--------------------|--------------------------|--------------------------------------------------------------------|---------|--------------------|
|         |                                                                            | **2006**                                                                                                     |                                                        |                    |                  | 2006               |                          |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                              |                                                        |                    |
|         | Raw materials                                                                                                                                                                                                                                                                                                                                                                                                                                                | **$**                                                                                                        | **36,651**                                             |     |        | $                  | 35,889                   |             |
|              | Work in progress                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                    | **20,404**                                             |                    |                  |     | 17,930                   |                                                                    |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                              |                                                        |                    |
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                               | **$**                                                  | **57,055**         |                  |                    | $                        | 53,819                                                             |         |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                              |                                                        |                    |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                              |                                                        |                    |                  |                    |                          |                                                                    |         |                    |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                              |                                                        |                    |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                              |                                                        |                    |                  |                    |                          |                                                                    |         |                    |

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 December 31, 2006 and January 1, 2006, expense for obsolescence charged to income before taxes was $306,000 and $171,000, respectively.  For the six months ended December 31, 2006 and January 1,2006, expense for obsolescence charged to income before taxes was $528,000 and $287,000, respectively.
| **5.** | **  ** | **INTANGIBLE ASSETS, NET** |
|--------|------------------|----------------------------|

Intangible assets, net, is summarized as follows:*(dollars in thousands)*
|          |                                                                                                                                                                                                                                                                                                                                                                       |                    |           |     | **December 31,** |                       |      |                  | July 2, |      |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------|--------------------------------------------------------|--------------------|------------------|--------------------------------------|--------------------------|--------------------------------------|---------|--------------------------|
|               |                                                                     |                                                                                                              | **2006**                                               |                    |                  |                                      | 2006                     |                                      |
|                    |                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                              |                                                        |                    |
|                    | Software                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                          | **$**                                                  | **3,368**          |                  |                                      | $                        | 3,228                                |         |
|                    | Less accumulated amortization                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                     | **2,843**                                              |                    |             |        | 2,661                    |        |
|                    |                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                              |                                                        |                    |
|          | Net software                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                              |                                                        | **525**            |                  |                                      |                          | 567                                  |         |
|                    |                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                              |                                                        |                    |
|                    | Customer list                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                              | **3,400**                                              |                    |                  |                                      | 3,400                    |                                      |
|                    | Less accumulated amortization                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                              | **1,634**                                              |                    |                  |                                      | 1,351                    |                                      |
|                    |                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                              |                                                        |                    |
|          | Net customer list                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                              | **1,766**                                              |                    |                  |                                      | 2,049                    |                                      |
|                    |                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                              |                                                        |                    |
|               | Other, net                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                              |                                                        | **70**             |                  |                                      |                          | 127                                  |         |
|                    |                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                              |                                                        |                    |
|     | Total intangible assets, net                                                                                                                                                                                                                                                                                                                                                                                       | **$**                                                                                                        | **2,361**                                              |                    |                  | $                                    | 2,743                    |                                      |
|                    |                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                              |                                                        |                    |
|                    |                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                              |                                                        |                    |                  |                                      |                          |                                      |         |                          |
|                    |                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                              |                                                        |                    |
|                    |                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                              |                                                        |                    |                  |                                      |                          |                                      |         |                          |

Intangibles are amortized over a three- to six-year period.  Amortization expense was $608,000 and $349,000 for the three months ended December 31, 2006 and January 1, 2006, respectively.

The Company anticipates that amortization expense will approximate $1.2 million for fiscal year 2007, $1.2 million for fiscal year 2008, $1.1 million for fiscal year 2009 and $0.7 million for fiscal year 2010.
| **6.** | **  ** | **GOODWILL** |
|--------|------------------|--------------|

Goodwill is summarized as follows:*(dollars in thousands)*
|    |                                                                          | **December 31,**   |     |            |      | July 2,            |     |
|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------|--------------------|--------------------------------|--------------------------|--------------------|--------------------|
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                             |                    |                    |                                | **2006**                 |                    |                    |  | 2006 |  |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                    |                    |                                |
|         | 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 December 31, 2006 and July 2, 2006.
| **7.** | **  ** | **OTHER ASSETS** |
|--------|------------------|------------------|

Other assets is summarized as follows:*(dollars in thousands)*
|    |                                                                            | **December 31,**                                 |     |            |      | July 2,            |     |
|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------|--------------------|--------------------------------|--------------------------|--------------------|--------------------|
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                  |                    |                                | **2006**                 |                    |                    |  | 2006 |  |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                  |                    |                                |
|         | Cash value of life insurance                                                                                                                                                                                                                                                                                                                                                                                                                                 | **$**                                            | **4,545**          |       |                | $                  | 4,285              |             |
|              | Deposits, licenses and other, net                                                                                                                                                                                                                                                                                                                                                                                                                            |                                   | **536**            |                                |                          |     | 390                |  |
|              | Securities held for sale                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                  | **72**             |                                |                          |                    | 264                |  |
|              | Deferred financing costs, net                                                                                                                                                                                                                                                                                                                                                                                                                                |          |                    | **141**                        |                          |                    |                    | 173 |  |
|              | Long-term deferred tax asset                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                  |                    | **86**                         |                          |                    |                    | --- |  |
|              | Other                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                  |                    | **56**                         |                          |                    |                    | 87 |  |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                  |                    |                                |
|              |                                                                                                                              |                                                  | **$**              | **5,436**                      |                          |                    | $                  | 5,199 |  |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                  |                    |                                |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                  |                    |                                |                          |                    |                    |  |  |  |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                  |                    |                                |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                  |                    |                                |                          |                    |                    |  |  |  |

The Company’s investment in securities held for sale of $72,000 at December 31, 2006 consists of approximately 1.6 million shares of Norwood Abbey Ltd.  This investment is the result of shares andoptionsacquired as a partial settlement of a note receivable and is marked to market each quarter.

In the quarter ended December 31, 2006, the Company booked an $87,000 ($53,000 after-tax) as an other comprehensive loss. For the six months ended December 31, 2006, the Company recorded a $192,000 reduction of the investmentwith $87,000 treated as a temporary impairment and $105,000 treated as an other-than-temporary impairment.
| **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)*
|    |                                                                            | **December 31,**         |                                                                     |      |      | July 2, |                                                                                                           |
|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------|------------------------------------------------------------------------------------|--------------------------|--------------------------|---------|--------------------------------------------------------------------------------------------------------------------------|
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                          |                                                                                    |                          | **2006**                 |         |                                                                                                                          |  | 2006 |  |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                          |                                                                                    |                          |
|              | **Short-term borrowings:**                                                                                                                                                                                                                                                                                                                                                                                                                                   |                          | **             ** |                          |                          |         |                                                              |  |
|              |  Revolving credit agreement:                                                                                                                                                                                                                                                                                                                                                                                                                            |                          |                                                                                    |                          |                          |         |                                                                                                                          |  |
|              |   Balance at quarter-end                                                                                                                                                                                                                                                                                                                                                                                                                           | **$**                    | **12,350**                                                                         |                          |                          | $       | 19,475                                                                                                                   |  |
|              |   Interest rate at quarter-end                                                                                                                                                                                                                                                                                                                                                                                                                     |                          | **7.13**                                                                           | **%**                    |                          |         | 7.28                                                                                                                     | % |
|              |   Average amount of short-term borrowings                                                                                                                                                                                                                                                                                                                                                                                                          | **  **         |                                                                                    |                          |                          |         |                                                                                                                          |  |
|              |    outstanding during period                                                                                                                                                                                                                                                                                                                                                                                                                  | **$**                    | **13,753**                                                                         |                          |                          | $       | 8,729                                                                                                                    |  |
|              |   Average interest rate for period                                                                                                                                                                                                                                                                                                                                                                                                                 |                          | **7.38**                                                                           | **%**                    |                          |         | 6.85                                                                                                                     | % |
|              |   Maximum short-term borrowings at                                                                                                                                                                                                                                                                                                                                                                                                                 |                          |                                                                                    |                          |                          |         |                                                                                                                          |  |
|              |    any month-end                                                                                                                                                                                                                                                                                                                                                                                                                              | **$**                    | **13,200**                                                                         |                          |           | $       | 19,475                                                                                                                   |  |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                          |                                                                                    |                          |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                          |                                                                                    |                          |                          |         |                                                                                                                          |  |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                          |                                                                                    |                          |
|              | **Senior long-term debt:**                                                                                                                                                                                                                                                                                                                                                                                                                                   |                          |                                                                                    |                          |                          |         |                      |  |
|              |  Senior lender:                                                                                                                                                                                                                                                                                                                                                                                                                                         |                          |                                                                                    |                          |                          |         |                                                                                                                          |  |  |
|              |    Term loan                                                                                                                                                                                                                                                                                                                                                                                                                                  |                          | **$**                                                                              | **13,250**               |                          |         | $                                                                                                                        | 15,750 |  |
|              |    Mortgage loan                                                                                                                                                                                                                                                                                                                                                                                                                              |      | **5,355**                                                                          |                          |                          |    | 5,483                                                                                                                    |  |
|         |  Other                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                          | **1,077**                                                                          |                          |                          |         | 960                                                                                                                      |  |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                          |                                                                                    |                          |
|         | Total senior long-term debt                                                                                                                                                                                                                                                                                                                                                                                                                                  |                          | **19,682**                                                                         |                          |                          |         | 22,193                                                                                                                   |  |
|              | Less current maturities                                                                                                                                                                                                                                                                                                                                                                                                                                      |                          |                                                                                    | **6,301**                |                          |         |                                                                                                                          | 5,791 |  |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                          |                                                                                    |                          |
|              | Long-term debt, less current maturities                                                                                                                                                                                                                                                                                                                                                                                                                      | **$**                    | **13,381**                                                                         |                          |                          | $       | 16,402                                                                                                                   |  |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                          |                                                                                    |                          |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                          |                                                                                    |                          |                          |         |                                                                                                                          |  |  |  |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                          |                                                                                    |                          |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                          |                                                                                    |                          |                          |         |                                                                                                                          |  |  |  |

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.

The Company entered into a senior loan agreement on February 17, 2004, which was amended in February 2006.  The Company incurred $330,000 of financing costs that have been deferred and are being amortized over a periodbeginning May 2004 and ending February 2009.  At December 31, 2006, the unamortized amount was $141,000.

**Senior Lender:**

The Company entered into a senior secured loan agreement with a group of banks on February 17, 2004 that was amended on February 10, 2006, increasing the revolving credit facility by $10.0 million.  The following is asummary of the agreement:
|  •                   |   | A revolving credit facility, up to $30.0 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 December 31, 2006, outstanding loans under the revolving credit facility were $12.3 million.  Letters of credit outstanding were $1.5 million, and $16.2 million was available at December 31, 2006. This credit facility matures onFebruary 17, 2009.                                                                                                                                                                                                                                                                                                                                                                      |              |
|--------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------|
|       |   |                                                                                                                                                                                    |                                                                          |
|  •                   |   | A $25.0 million term loan amortized beginning May 2004, at a quarterly rate of $1.0 million, increased to $1.25 million in May 2006 and increasing to $1.5 million in May 2007.  Final maturity is February2009.  As of December 31, 2006, the amount outstanding was $13.3 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. As a result of this Cap Agreement, for the three and six months ended December 31, 2006, interest expense was reduced by $49,000and $99,000, respectively.                                                                                                                                                                                                                                                                                                                                                        |                                                                          |
|                                |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                          |
|  •                   |        | Interest on both loans is at a percentage of prime or a stated rate over LIBOR based on certain ratios.  For the quarter ended December 31, 2006, the average rate including the effect of the interest rate cap wasapproximately 6.34%. For the six months ended December 31, 2006, the average rate including the effect of the interest rate cap was approximately 6.44%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                          |
|       |   |                                                                                                                                                 |                                                                          |
|  •                   |   | 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. The Company isin compliance with its borrowing agreement covenants as of December 31, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                          |
|            |   |                                                                                                                                                           |                                                                     |

***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 December 31, 2006 was $5.4 million.  Interest is at a percentage of prime or a stated rate over LIBOR based on certain ratios.  For the six months ended December 31, 2006, the average rate was approximately 5.93%.

*****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 December 31, 2006 was $290,000.

*Capital Lease Obligations:*In fiscal year 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 6.18%. The obligation outstanding atDecember 31, 2006 was $534,000.

*City of Joplin Loan:*

In September 2006, the Company acquired a loan from the City of Joplin, Missouri, in the amount of $250,000. The debt is to be repaid at the end of a five-year loan period with annual interest payments at an interest rate of3%. This funding was used to expand the Joplin, Missouri, facility.

The aggregate maturities of long-term obligations are as follows:*(dollars in thousands)*
| **Fiscal Year**               |
|-------------------------------|
|                               |
| 2007                          | ...............................................................  | $ | 3,024 |   |
| 2008                          | ...............................................................  |      | 6,558 |   |
| 2009                          | ...............................................................  |       | 4,938 |   |
| 2010                          | ...............................................................  |       | 4,861 |   |
| 2011                          | ...............................................................  |       | 51 |   |
| Thereafter                    | ...............................................................  |       | 250 |   |
|                               |
|     Total | ...............................................................  |  $ | 19,682 |   |
|                               |
| **9.** | **  ** | **CASH FLOWS** |
|--------|------------------|----------------|

****

Total cash payments for interest for the three months ended December 31, 2006 and January 1, 2006 amounted to $0.6 million and $0.4 million, respectively.  Total cash payments for interest for the six monthsended December 31, 2006 and January 1, 2006 amounted to $1.2 million and $0.7 million, respectively.  Net cash payments for both federal and state income taxes were $3.0 million for the three and six months ended December 31, 2006, compared with $3.9 million and$4.6 million for the three and six months ended January 1, 2006, 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 |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------|------------------------------------------------------------------------------------------|------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                                                                  |                    |                                                                                          |                  |        |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                             | **December 31,**   |                                                                                          | January 1,       |   | **December 31,** |  | January 1, |   |
|                                                                                  | **2006**           |                                                                                          | 2006             |        | **2006** |  | 2006 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                  |                    |                                                                                          |                  |        |  |  |  |  |
| Net earnings                                                                                                                                                                                                                                                                                                                                                                                                     | **$**              | **3,197**                                                                                |                  |        | $ | 2,663 |     | **$** | **5,608** |  | $ | 4,693 |  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                  |                    |                                                                                          |                  |        |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                  |                    |                                                                                          |                  |        |  |  |  |  |  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                  |                    |                                                                                          |                  |        |  |  |  |  |
| **     **                                                                                                                                                                                                                                                                                                                                                                               |                    | **              ** |                  |        |  | **            ** | **        ** |  | **            ** |  |       | **            ** |  |   |
| **Basic net earnings per share**                                                                                                                                                                                                                                                                                                                                                                                 | **$**              | **0.21**                                                                                 | ** **       |        | $ | 0.18 |  | **$** | **0.37** |  | $ | 0.31 |  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                  |                    |                                                                                          |                  |        |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                  |                    |                                                                                          |                  |        |  |  |  |  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                  |                    |                                                                                          |                  |        |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                              |                    |                              |                  |        |  |  |  |  |  |  |                |  |   |
| **Diluted earnings per share**                                                                                                                                                                                                                                                                                                                                                                                   | **$**              | **0.20**                                                                                 |                  |        | $ | 0.17 |  | **$** | **0.35** |  | $ | 0.29 |  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                  |                    |                                                                                          |                  |        |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                  |                    |                                                                                          |                  |        |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                  |                    |                                                                                          |                  |        |  |  |  |  |

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 |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------|--------------------------------------|------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                              |                    |                                      |                  |
|                                                                                                                                                                                                                                                                                                                                                                                                                              | **December 31,**   | ** **                           | January 1,       |  | **December 31,** |  | January 1, |
| **                                                                    ** | **2006**           |                                      | 2006             |  | **2006** |  | 2006 |
|                                                                                                                                                                                                                                                                                                                                                                                                                              |                    |                                      |                  |  |  |  |  |  |  |  |  |
| Average common shares outstanding -- basic                                                                                                                                                                                                                                                                                                                                                                                   | **15,112**         |                                 |        | 15,149 |   |     |   | **15,116** |  |   | 15,116 |  |
| Dilutive options and nonvested  restricted shares                                                                                                                                                                                                                                                                                                                                                                       | **896**            |        | 907              |  |    | **924** |  |  | 949 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                              |                    |                                      |                  |  |  |  |  |  |  |  |  |
| Adjusted average common shares   outstanding -- diluted                                                                                                                                                                                                                                                                                                                                                       | **16,008**         |             |                  | 16,056 |  |  | **16,040** | **  ** |  | 16,065 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                              |                    |                                      |                  |  |  |  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                              |                    |                                      |                  |  |  |  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                              |                    |                                      |                  |  |  |  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                         |                    |                                      |                  |  |  |  |  |  |  |  |  |

All stock options outstanding and nonvested restricted shares at December 31, 2006 were dilutive for the three and six months ended on that date. These options expire in various periods through 2014. The restricted shares vestover the next two fiscal years. The Company has awarded certain key executives performance units tied to the Company’s fiscal year 2007 financial performance. The compensation expense related to these awards is recognized quarterly, but no shares are includedin the dilutive shares as the performance condition had not been met at December 31, 2006.
| **11.** | **  ** | **SHARE-BASED COMPENSATION** |
|---------|------------------|------------------------------|

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 issuanceof up 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 of up to 850,000 shares to be granted inthe form of stock-based awards to certain key employees and nonemployee directors. The Company may satisfy the awards upon exercise with either new or treasury shares. The Company’s stock compensation awards outstanding at December 31, 2006 include stockoptions, restricted stock and performance units.

Also, the Company has an Employee Stock Purchase Plan 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 the quarter, whichever islower. 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.

For the three months ended December 31, 2006, stock-based compensation attributable to the adoption of Share-Based Payment No. 123R, (“SFAS No. 123R”) was $0.00 ($0.00 after tax), equivalent to $0.00 per basic anddiluted share. For the three months ended January 1, 2006 stock-based compensation attributable to the adoption of SFAS No. 123R was $371,000 ($232,000 after tax), or $0.02 for basic and $0.01 for diluted earnings per share.

For the six months ended December 31, 2006, stock-based compensation attributable to the adoption of SFAS No. 123R was $62,000, ($38,000 aftertax) equivalent to $0.00 per basic and diluted shares.

As of December 31, 2006, the total unrecognized compensation expense related to nonvested awards was $0.7 million pretax, and the period over which it is expected to be recognized is approximately 1.2 years. As of January1, 2006, the total unrecognized compensation expense related to nonvested awards, including stock options, restricted shares and performance units, was $0.9 million pretax, and the period over which it was expected to be recognized was approximately 1.2years.

A summary of the Company’s Stock Option Plans as of December 31, 2006 is presented below:

|                                                                                                                                                                                                                                                                                                                                                                               | **                                                           ** | **Number of Shares** | ** **                         | **Weighted Average Exercise Price** | ** **                                                                         | **Number of Shares Exercisable** | ** **       | **Weighted Average Exercise Price**                                                            | ** **                     |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------|------------------------------------|-------------------------------------|------------------------------------------------------------------------------------|----------------------------------|------------------|------------------------------------------------------------------------------------------------|--------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                        |                      |                                    |                                     |                                                                                    |                                  |                  |                                                                                                |                                |  |  |  |
| Outstanding at July 2, 2006                                                                                                                                                                                                                                                                                                                                                        | 1,771,151                                                                                                                                                                                                                                                                                                                                                              |                      |                     | $                                   | 3.94                                                                               |                                  |                  | 1,573,119                                                                                      |       | $ | 3.52 |  |
| **Canceled**                                                                                                                                                                                                                                                                                                                                                                       | **(2,000**                                                                                                                                                                                                                                                                                                                                                             | **)**                |                                    | **8.54**                            | **             ** |                                  | **---**          | **               ** | **---**                        |  |
| **Exercised**                                                                                                                                                                                                                                                                                                                                                                      | **(51,275**                                                                                                                                                                                                                                                                                                                                                            | **)**                |                                    | **3.10**                            |                                                                                    |                                  | **---**          |                                                                                                | **---**                        |  |
|                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                        |                      |                                    |                                     |                                                                                    |                                  |                  |                                                                                                |                                |  |
| **Outstanding at October 1, 2006**                                                                                                                                                                                                                                                                                                                                                 | **1,717,876**                                                                                                                                                                                                                                                                                                                                                          |                      | **     ** | **$**                               | **3.88**                                                                           |                                  | **  ** | **1,717,876**                                                                                  |                                | **$** | **3.88** | **        ** |
|                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                        |                      |                                    |                                     |                                                                                    |                                  |                  |                                                                                                |                                |  |
|                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                        |                      |                                    |                                     |                                                                                    |                                  |                  |                                                                                                |                                |  |
|                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                        |                      |                                    |                                     |                                                                                    |                                  |                  |                                                                                                |                                |  |
| **  **                                                            |                                                                                                                                                                                                                                                                                                                                                                        |                      |                                    |                                     |                                                                                    |                                  |                  |                                                                                                |                                |  |
| **Canceled**                                                                                                                                                                                                                                                                                                                                                                       | **---**                                                                                                                                                                                                                                                                                                                                                                |                      |                                    | **---**                             |                                                                                    |                                  | **---**          | **$**                                                                                          | **---**                        |  |
| **Exercised**                                                                                                                                                                                                                                                                                                                                                                      | **(2,000**                                                                                                                                                                                                                                                                                                                                                             | **)**                |                                    | **3.43**                            |                                                                                    |                                  | **---**          |                                                                                                | **---**                        |  |
|                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                        |                      |                                    |                                     |                                                                                    |                                  |                  |                                                                                                |                                |  |
| **Outstanding at December 31, 2006**                                                                                                                                                                                                                                                                                                                                               | **1,715,876**                                                                                                                                                                                                                                                                                                                                                          |                      |                                    | **$**                               | **3.88**                                                                           |                                  | **  ** | **1,715,876**                                                                                  |                                | **$** | **3.88** | **        ** |
|                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                        |                      |                                    |                                     |                                                                                    |                                  |                  |                                                                                                |                                |  |
|                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                        |                      |                                    |                                     |                                                                                    |                                  |                  |                                                                                                |                                |  |
|                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                        |                      |                                    |                                     |                                                                                    |                                  |                  |                                                                                                |                                |  |
| **  **                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                        |                      |                                    |                                     |                                                                                    |                                  |                  |                                                                                                |                                |  |

The following table summarizes information about stock options outstanding:

|                           | **                                               ** | ***Outstanding and Exercisable Options***   |                                                   |
|--------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------|--------------------------------------------------------|
|                                |                                                                                                                                                                                                                                                                                                |                                             |                                                        |  |  |  |  |  |
|                           | **Range of Exercise Prices**                                                                                                                                                                                                                                                                   | **Number Outstanding at December 31, 2006** | **  **                                       | **Weighted Average Remaining Contractual Life (In Years)** | ** ** | **Weighted Average Exercise Price** | **  ** | **Aggregate Intrinsic Value****(1)********(In Millions)** |   |
|                                |                                                                                                                                                                                                                                                                                                |                                             |                                                        |  |  |  |  |  |
|    $2.50 - 3.56 |                                                                                                                                                                                                                                                                                           | 1,384,086                                   |           |     | 4.1 |        |   | $ | 2.81 |  |         | --- |  |   |
|    $3.57 - 5.96 |                                                                                                                                                                                                                                                                                                | 27,513                                      |                                                        |  | 0.6 |  |  | 5.86 |    |        | --- |  |   |
|    $5.97 - 8.54 |                                                                                                                                                                                                                                                                                                | 304,277                                     |                                                        |  | 7.7 |  |  | 8.54 |  |  | --- |  |   |
|                                |                                                                                                                                                                                                                                                                                                |                                             |                                                        |  |  |  |  |  |
|                                |                                                                                                                                                                                                                                                                                                | 1,715,876                                   |                                                        |  | 4.7 |  |   | $ | 3.88 |  | $ | 6.7 |  |   |
|                                |                                                                                                                                                                                                                                                                                                |                                             |                                                        |  |  |  |  |  |
|                                |                                                                                                                                                                                                                                                                                                |                                             |                                                        |  |  |  |  |  |
|                                |                                                                                                                                                                                                                                                                                                |                                             |                                                        |  |  |  |  |  |
|                           |                                                                                                                                                                                                                                                                                                |                                             |                                                        |  |  |  |  |  |  |  |  |  |  |   |

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 and six months ended December 31, 2006 was $15,000 and $265,000, respectively. The exercise period for all stock options generally may not exceed 10 yearsfrom 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 and six months ended December 31, 2006 or 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. Unless otherwise specifically determined by the Human ResourcesCommittee of the Board of Directors, 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 treatedas a liability award during the performance period and as an equity award once the performance targets are settled.

During the six months ended December 31, 2006, the Company issued 79,693 shares of restricted stock, subject to the two-year vesting condition, associated with the fiscal 2006 award. In addition, the Company recordedcompensation expense for the awards granted for fiscal 2007. During the 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 2005 award.

Compensation expense of $309,000 ($190,000 after tax) related to the LTIP was recorded in the three-month period ended December 31, 2006, compared with $218,000 ($136,000 after tax) in the three-month period ended January 1,2006.

The weighted-average grant date fair value of the restricted stock issued during the six months ended December 31, 2006 was $13.27 per share. The weighted-average grant date fair value of the restricted stock issuedduring the three months ended January 1, 2006 was $18.00 per share.

----

Table of Contents
|                              | **LaBARGE, INC.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                             |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Item 2.                                                                                                                                                                  | **FORM 10-Q**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                    |
|                                                                                                                                                                          | **                                                                                                            ** |                                                                                                                                                                    |
|                                                                                                                                                                          | **MANAGEMENT’S DISCUSSION AND ANALYSIS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                    |
|                                                                                                                                                                          | **OF FINANCIAL CONDITION AND**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                    |
|                                                                                                                                                                          | **RESULTS OF OPERATIONS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                                    |

**Forward-Looking Statements**

*       Certain sections of this report contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, that relate to future eventsor 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 the negative of these terms or other comparable terminology.  These statements include statements about our marketopportunity, our growth strategy, competition, expected activities, and the adequacy of our available cash resources.  These statements may be found in the sections of this report entitled “Management’s Discussion and Analysis of Financial Conditionand Results of Operations,” “Business” and “Legal Proceedings.”  Although we believe that, in making any such statement, our expectations are based on reasonable assumptions, readers are cautioned that matters subject toforward-looking statements involve known and unknown risks and uncertainties, including economic, regulatory, competitive and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materiallydifferent from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.  These statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions asdiscussed in Item 1A, “Risk Factors” of our Annual Report on Form 10-K for our fiscal year ended July 2, 2006.       Given these uncertainties, undue reliance should not be placed on such forward-looking statements.  Unless otherwise required by law, the Company disclaims an obligation to update any such factors or to publicly announcethe results of any revisions to any forward-looking statements contained herein to reflect future events or developments.*

**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 a manufacturing and engineering 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 manufacturing and engineering facilities are located in Arkansas, Missouri, Oklahoma, Pennsylvania and Texas.  The Company employs approximately 1,255 people, including approximately 1,065 people, (of which 48 are engineers)who provide support for production activities and approximately 190 people provide administrative support.

**Results of Operations - Three and Six Months Ended December 31, 2006*****Net Sales******(dollars in thousands)*
| ** **                                                                                                                   | Three Months Ended     |       | Six Months Ended |
|------------------------------------------------------------------------------------------------------------------------------|------------------------|------------|------------------|
|                                                                                                                              |                        |            |                  |  |  |  |  |  |
| **  **                                                                                                             | **December 31, ** | January 1, | ** **       | **December 31,** | ** ** | January 1, |
| **                    ** | **2006 **         | 2006       | ** **       | **2006** | ** ** | 2006 |
|                                                                                                                              |                        |            |                  |  |  |  |  |  |
|                                                                                                                              |                        |            |                  |  |  |  |  |  |
| Net sales                                                                                                                    | **  **       | **$**      | **60,820**       |   |    |     | $ | 48,147 |  |     | **$** | **110,720** |  |   | $ | 87,786 |  |
|                                                                                                                              |                        |            |                  |  |  |  |  |  |
|                                                                                                                              |                        |            |                  |  |  |  |  |  |
|                                                                                                                              |                        |            |                  |  |  |  |  |  |
|                                                                                                                              |                        |            |                  |  |  |  |  |  |

The largest contributor to fiscal 2007 second-quarter revenues was shipments to defense customers that generated $18.9 million of sales, versus $19.5 million in the second quarter of fiscal 2006. During the current fiscalyear’s second quarter, LaBarge provided cables and electronic assemblies for a variety of defense applications, including military aircraft, radar systems, missile systems and shipboard programs.  In addition, shipments of capital equipment to naturalresources customers, including downhole tools and mining systems, represented $14.5 million of fiscal 2007 second-quarter revenues, compared with $11.9 million in the year-ago period.  Sales to industrial customers represented $8.7 million of fiscal 2007second-quarter revenues, compared with $7.2 million in the year-ago period. Sales to government systems customers represented $8.3 million of fiscal 2007 second-quarter revenue, compared with $4.2 million in the year-ago period, largely due to the shipments ofpostal automation equipment. Sales to commercial aerospace customers represented $6.7 million of fiscal year 2007 second-quarter revenues compared with $2.4 million in the year-ago period.

For the six months ended December 31, 2006, shipments to defense customers generated $37.4 million of sales, versus $23.6 million in 2006. During the current fiscal year’s first six months LaBarge provided cables andelectronic assemblies for a variety of defense applications, including military aircraft, radar systems, missile systems and shipboard programs. In addition, shipments of capital equipment to natural resources customers, including downhole tools and mining systems,represented $25.6 million of fiscal 2007 year-to-date revenues, compared with $20.2 million in the year-ago period. Sales to industrial customers represented $16.3 million of fiscal 2007 revenues, compared with $14.4 million in the year-ago period. Sales togovernment systems customers represented $14.3 million of fiscal 2007 revenues, compared with $5.9 million in the year-ago period, largely due to the shipments of postal automation equipment. Sales to commercial aerospace customers generated $11.1 million of fiscal2007 revenues, compared with $5.2 million in the year-ago period.

Sales to the Company’s 10 largest customers represented 72.4% of total revenue in the second quarter of fiscal 2007, compared with 71.3% for the same period of fiscal 2006.  The Company’s topthree customers and the portion of total second-quarter sales they represented were as follows:  Schlumberger, Ltd., 12.9%; Northrop Grumman Corp., 11.4%; L-3 Communications Holdings, Inc.; 9.9%.

The backlog of unshipped orders at December 31, 2006 was $209.4 million, compared with  $183.9 million at July 2, 2006, and $179.0 million at January 1, 2006.  The growth in backlog is the result of a sales andmarketing effort that focuses on the needs of targeted large customers in a variety of industries. Approximately $50.7 million of the backlog at December 31, 2006 is scheduled to ship beyond the next 12 months pursuant to the shipment schedules contained inthose contracts. This compares with $38.9 million at fiscal year end 2006.

***Gross Profit****(dollars in thousands)*
| ** **                                                                                                                                                                                                                                                                                                                   | Three Months Ended |            | Six Months Ended |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------|------------|------------------|
|                                                                                                                                                                                                                                                                                                                              |                    |            |                  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                              | **December 31,**   | ** ** | January 1,       | ** ** | **December 31,** | ** ** | January 1, |
| **                                                    ** | **2006**           |            | 2006             | ** ** | **2006** |  | 2006 |
|                                                                                                                                                                                                                                                                                                                              |                    |            |                  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                              |                    |            |                  |  |  |  |  |  |
| Gross profit                                                                                                                                                                                                                                                                                                                 |          | **$**      | **12,506**       |   | $ | 10,467 |   | **$** | **23,163** | ** ** | $ | 19,965 |  |
| Gross margin                                                                                                                                                                                                                                                                                                                 | **  **   | **20.6**   | **%**            |   | 21.7 | % |  | **20.9** | **%** |  | 22.7 | % |
|                                                                                                                                                                                                                                                                                                                              |                    |            |                  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                              |                    |            |                  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                              |                    |            |                  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                              |                    |            |                  |  |  |  |  |  |

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 December 31, 2006 were in this range. 

***Selling and Administrative Expenses****(dollars in thousands)*
| ** **                                                                                                                                                                                                                                                                                                                                                             | Three Months Ended           |       | Six Months Ended |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------|------------|------------------|
|                                                                                                                                                                                                                                                                                                                                                                        |                              |            |                  |  |  |  |  |  |
| **      **                                                                                                                                                                                                                                                                                                                               | **December 31,  ** | January 1, | **December 31,** | ** ** | January 1, |
| **                                                           ** | **2006  **         | 2006       | **2006**         |  | 2006 |
|                                                                                                                                                                                                                                                                                                                                                                        |                              |            |                  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                        |                              |            |                  |  |  |  |  |  |
| Selling and administrative expenses                                                                                                                                                                                                                                                                                                                                    | **   **       | **$**      | **6,800**        |   | $ | 5,835 |   | **$** | **12,791** |   | $ | 11,460 |  |
| Percent of sales                                                                                                                                                                                                                                                                                                                                                       |                              | **11.2**   | **%**            |   | 12.1 | % |  | **11.6** | **%** |  | 13.1 | % |
|                                                                                                                                                                                                                                                                                                                                                                        |                              |            |                  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                        |                              |            |                  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                        |                              |            |                  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                        |                              |            |                  |  |  |  |  |  |

Total selling and administrative expenses increased in the three months ended December 31, 2006 from the year-ago period due to:  higher salaries and wages ($0.4 million) as a result of increased head count and wage inflation; higher accrued incentivecompensation expense ($0.3 million); and, a $0.1 million increase in sales commissions due to higher sales levels.

For the six months ended December 31, 2006, selling and administrative expenses increased versus the year-ago period primarily due to:  higher salaries and wages ($0.7 million) on increased headcount and wage inflation;higher accrued incentive compensation expense ($0.3 million); and, a $0.2 million increase in commissions due to higher sales levels.

For both the three- and six-month periods ended December 31, 2006, included in selling and administrative expenses was $61,000, attributable to the adoption of SFAS 123R, “Share-Based Payment.”

***Interest Expense****(dollars in thousands)*
| ** **                                                                                                                                                                                                                                                                                                                         | Three Months Ended |    | Six Months Ended |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------|---------|------------------|
|                                                                                                                                                                                                                                                                                                                                    |                    |         |                  |  |  |  |  |  |
| ** **                                                                                                                                                                                                                                                                                                                         | **December 31,**   |         | January 1,       |  | **December 31,** |  | January 1, |
| **                                                     ** | **2006**           |         | 2006             |  | **2006** |  | 2006 |
|                                                                                                                                                                                                                                                                                                                                    |                    |         |                  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                    |                    |         |                  |  |  |  |  |  |
| Interest expense                                                                                                                                                                                                                                                                                                              | **$**              | **564** |                  |      | $ | 449 |      |       | **$** | **1,215** |   |     | $ | 853 |  |
|                                                                                                                                                                                                                                                                                                                                    |                    |         |                  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                    |                    |         |                  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                    |                    |         |                  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                    |                    |         |                  |  |  |  |  |  |

Interest expense increased in the three and six months ended December 31, 2006, compared with the year-ago period due to higher average interest rates on higher average levels of short-term borrowings.

Average debt levels for the three- and six-month periods ended December 31, 2006 were $32.3 million and $34.9 million, respectively.

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

Average interest rates in the quarter ended December 31, 2006 were 6.34%, compared with 5.24% in the year-ago period. For the six months ended December 31, 2006, average interest rates were 6.44%, compared with 5.18% in theyear-ago period.

***Tax Expense****(dollars in thousands)*
| ** **                                                                                                                                                                                                                                                                                                                                                 | Three Months Ended |           | Six Months Ended |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------|-----------|------------------|
|                                                                                                                                                                                                                                                                                                                                                            |                    |           |                  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                            | **December 31,**   |           | January 1,       |  | **December 31,** |  | January 1, |
| **                                                         ** | **2006**           |           | 2006             |  | **2006** |  | 2006 |
|                                                                                                                                                                                                                                                                                                                                                            |                    |           |                  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                            |                    |           |                  |  |  |  |  |  |
| Tax expense                                                                                                                                                                                                                                                                                                                                                | **$**              | **2,009** |                  |      | $ | 1,634 |  |      | **$** | **3,569** |  |     | $ | 3,105 |  |
|                                                                                                                                                                                                                                                                                                                                                            |                    |           |                  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                            |                    |           |                  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                            |                    |           |                  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                            |                    |           |                  |  |  |  |  |  |

The effective income tax rate for the three- and six-month periods ended December 31, 2006 was 38.3%.  For the three- and six-month periods ended January 1, 2006, the effective income tax rate was 37.5%.

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

***Stockholders’ Equity and Debt****(dollars in thousands)*
|                                                                               | **December 31,**                                                                                                                                                                                                                                     | July 2,                                                                                                                                                                                                                              |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                | **2006**                                                                                                                                                                                                                                             | 2006                                                                                                                                                                                                                                 |
|                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                      |
|                                                                               | **                                        ** |                                        |
| Stockholders’ equity                                                                                                                                                                                                                                                                                                                                                           | **    **                                                                                                                                                                                                                         | **$**                                                                                                                                                                                                                                | **70,920** |             |       | $ | 64,834 |          |
| Debt                                                                                                                                                                                                                                                                                                                                                                                 | **             **                                                                                                                                                                   | **32,032**                                                                                                                                                                                                                           | **     ** |     | 41,668 |  |
|                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                      |

The Company’s operations provided $13.3 million of net cash for the six months ended December 31, 2006.

***Senior Lender:***The Company entered into a senior secured loan agreement with a group of banks on February 17, 2004 that was amended on February 10, 2006, increasing the revolving credit facility by $10.0 million.  The following is a summary of theagreement:
|  •                   |   | A revolving credit facility, up to $30.0 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 December 31, 2006, outstanding loans under the revolving credit facility were $12.3 million.  Letters of credit outstanding were $1.5 million, and $16.2 million was available at December 31, 2006. This credit facility matures onFebruary 17, 2009.                                                                                                                                                                                                                                                                                                                                                                      |              |
|--------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------|
|       |   |                                                                                                                                                                                    |                                                                          |
|  •                   |   | A $25.0 million term loan amortized beginning May 2004, at a quarterly rate of $1.0 million, increased to $1.25 million in May 2006 and increasing to $1.5 million in May 2007.  Final maturity is February2009.  As of December 31, 2006, the amount outstanding was $13.3 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. As a result of this Cap Agreement, for the three and six months ended December 31, 2006, interest expense was reduced by $49,000and $99,000, respectively.                                                                                                                                                                                                                                                                                                                                                        |                                                                          |
|                                |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                          |
|  •                   |        | Interest on both loans is at a percentage of prime or a stated rate over LIBOR based on certain ratios.  For the quarter ended December 31, 2006, the average rate including the effect of the interest rate cap wasapproximately 6.34%. For the six months ended December 31, 2006, the average rate including the effect of the interest rate cap was approximately 6.44%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                          |
|       |   |                                                                                                                                                 |                                                                          |
|  •                   |   | 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. The Company isin compliance with its borrowing agreement covenants as of December 31, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                          |
|            |   |                                                                                                                                                           |                                                                     |

***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 December 31, 2006 was $5.4 million.  Interest is at a percentage of prime or a stated rate over LIBOR based on certain ratios.  For the six months ended December 31, 2006, the average rate was approximately 5.93%.

*****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 December 31, 2006 was $290,000.

*Capital Lease Obligations:*In fiscal year 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 6.18%. The obligation outstanding atDecember 31, 2006 was $534,000.

*City of Joplin Loan:*

In September 2006, the Company acquired a loan from the City of Joplin, Missouri, in the amount of $250,000. The debt is to be repaid at the end of a five-year loan period with annual interest payments at an interest rate of3%. This funding was used to expand the Joplin, Missouri, facility.

The aggregate maturities of long-term obligations are as follows:*(dollars in thousands)*
| **Fiscal Year**               |
|-------------------------------|
|                               |
| 2007                          | ...............................................................  | $ | 3,024 |   |
| 2008                          | ...............................................................  |      | 6,558 |   |
| 2009                          | ...............................................................  |       | 4,938 |   |
| 2010                          | ...............................................................  |       | 4,861 |   |
| 2011                          | ...............................................................  |       | 51 |   |
| Thereafter                    | ...............................................................  |       | 250 |   |
|                               |
|     Total | ...............................................................  |  $ | 19,682 |   |
|                               |

***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 statements and 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 the Notes to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended July2, 2006.

***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 customer’s request, the Company will recognize revenue when ownership passes. As of December 31, 2006 and January 1, 2006, the Company has recognized revenue under these arrangements of $4.3 million and $4.1 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 work have the effect of adjusting currentperiod 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 the quarters ended December 31, 2006 and January 1, 2006, expense for obsolete orslow-moving inventory charged to income before income taxes was $0.3 million and $0.2 million, respectively.

***Goodwill and Other Intangibles***The Company has adopted SFAS No. 142. Under the provisions of this standard, intangible assets deemed to have indefinite lives and goodwill are not subject to amortization.  All other intangible assets are amortized over theirestimated useful lives.  Goodwill and other intangible assets not subject to amortization are tested for impairment annually or more frequently if events or changes in circumstances indicate that the asset might be impaired.  This testing requirescomparison of carrying values to fair values, and when appropriate, the carrying value of impaired assets is reduced to fair value.  During the fourth quarter of 2006, the Company completed its annual impairment test and determined that estimates of fair valueare reasonable. Different assumptions regarding such factors as sales levels and price changes, labor and material cost changes, interest rates and productivity could affect such valuations.

***Recently Issued Accounting Standards***In June 2006, the FASB issued FASB Interpretation Number (“FIN”) 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”).  FIN 48 establishes a recognition threshold and measurement for incometax positions recognized in an enterprise’s financial statements in accordance with FASB Statement No. 109, “Accounting for Income Taxes.”  FIN 48 also prescribes a two-step evaluation process for tax positions.  The first step isrecognition and the second is measurement.  For recognition, an enterprise judgmentally determines whether it is more-likely-than-not that a tax position will be sustained upon examination, including resolution of related appeals or litigation processes, basedon the technical merits of the position.  If the tax position meets the more-likely-than-not recognition threshold it is measured and recognized in the financial statements as the largest amount of tax benefit that is greater than 50% likely of beingrealized.  If a tax position does not meet the more-likely-than-not recognition threshold, the benefit of that position is not recognized in the financial statements.

Tax positions that meet the more-likely-than-not recognition threshold at the effective date of FIN 48 may be recognized or, continue to be recognized, upon adoption of FIN 48.  The cumulative effect of applying theprovisions of FIN 48 shall be reported as an adjustment to the opening balance of retained earnings for that fiscal year.  FIN 48 will apply to fiscal years beginning after December 15, 2006, with earlier adoption permitted.  The Company is currentlyevaluating the impact FIN 48 will have on its consolidated financial statements when it becomes effective for the Company in fiscal 2008 and is unable, at this time, to quantify the impact, if any, to retained earnings at the time of adoption.

******

In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standard (“SFAS”) No. 157, “Fair Value Measurements” (“SFAS No.157”), to clarify the definition of fair value, establish a framework for measuring fair value and expand the disclosures on fair value measurements. SFAS No. 157 defines fair value as the price that would be received to sell an asset or paid to transfer aliability in an orderly transaction between market participants at the measurement date (i.e., an exit price). SFAS No. 157 also stipulates that, as a market-based measurement, fair value measurement should be determined based on the assumptions that marketparticipants would use in pricing the asset or liability, and establishes a fair value hierarchy that distinguishes between (a) market participant assumptions developed based on market data obtained from sources independent of the reporting entity (i.e., observableinputs) and (b) the reporting entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (i.e., unobservable inputs). SFAS No. 157 becomes effective for the Company in its fiscal yearending June 30, 2009. The Company is currently evaluating the impact of the provisions of SFAS No. 157 on its consolidated financial statements.

In September 2006, FASB’s Emerging Issues Task Force (“EITF”) reached a consensus on EITF Issue No. 06-4, “Accounting for Deferred Compensation and Postretirement Benefits Aspects of EndorsementSplit-Dollar Life Insurance Arrangements”(“EITF 06-4”).  This addresses only endorsement split-dollar life insurance arrangements that provide a benefit to an employee that extends to postretirement periods. In an endorsement split-dollararrangement, the employer owns and controls the policy, and the employer and an employee split the insurance policy’s cash surrender value and/or death benefits.

The EITF consensus would require that the deferred-compensation or postretirement benefit aspects of an endorsement-type split-dollar life insurance arrangement be recognized as a liability by the employer and that theobligation is not effectively settled by the purchase of a life insurance policy. The liability for future benefits would be recognized based on the substantive agreement with the employee, which may be either to provide a future death benefit or to pay for thefuture cost of the life insurance.

If ratified, EITF 06-4 becomes effective for the Company in its fiscal year ending June 30, 2009.  The Company is currently evaluating the impact of the provisions of EITF 06-04 on its consolidated financialstatements.

In September 2006, FASB’s EITF reached a consensus on EITF Issue No. 06-05, “Accounting for Purchases of Life Insurance—Determining the Amount That Could Be Realized in Accordance with FASB Technical BulletinNo. 85-4, *Accounting for Purchases of Life Insurance,”* (“EITF 06-5”).  This consensus explains how to determine “the amount that could be realized” from a life insurance contract, which is the measurement amount for the assetin accordance with Technical Bulletin 85-4. The consensus would require policyholders to determine the amount that could be realized under a life insurance contract assuming individual policies are surrendered.

If ratified, EITF 06-5 becomes effective for the Company in its fiscal year ending June 29, 2008. The Company is currently evaluating the impact of EITF 06-5 on its consolidated financials.

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| **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 December 31, 2006 and January 1, 2006 were less than 10% of total Company revenue.  All foreign contractsare paid 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 riskmanagement instruments to mitigate any exposures.*Interest Rate Risk* As of December 31, 2006, the Company had $32.0 million in total debt.  Industrial revenue bonds totaling $291,000 and the City of Joplin Loan for $250,000 have a fixed rate and are not subject to interest rate risk.   The interest rate on the remaining$31.5 million is subject to fluctuation. On April 15, 2004, the Company entered into an Interest Rate Cap Agreement with a bank.  This Agreement caps the Company's exposure to 90-day LIBOR at 4% for a period of three years on a notional amount beginning at $24.0million and amortizing on a schedule that 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 $227,000 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 and procedures are functioning effectively at the reasonable assurance level.  The Company’sdisclosure controls are based upon a chain of financial and general business reporting lines that converge in the headquarters of the Company in St. Louis, Missouri.  The disclosure controls and procedures are designed to ensure that information required to bedisclosed 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 rules and 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. |

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**PART II**

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Table of Contents

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|  | **ITEM 2.**                                                                                                                              | **Unregistered Sales of Equity Securities and Use of Proceeds**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|--|------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | **                      ** |                                                                                                                                                 |
|                                                                                                                                                                                                                                                              | **Repurchases:**          |                                                                                                              | **                         ** |                                            | **                        ** |                                                                                                        | **                         ** |                                                                                                                                                              | **                                ** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------|--------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **Period**                                                                                                                                                                                                                                                   |                           | **Total Number of Shares (or Units) Purchased**                                                              |                                                                                                                                                            | **Average Price Paid per Share (or Unit)** |                                                                                                                                                      | **Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs****(1)** |                                                                                                                                                            | **Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs**                                  |
|                                                                                                                                                                                                                                                              |                           |                                                                                                              |                                                                                                                                                            |                                            |                                                                                                                                                      |                                                                                                        |                                                                                                                                                            |                                                                                                                                                              |
|                                            |                           |                    |                                                                                                                                             |                                            |                                                                                                                        |                   |                                                                                                                                                            |                            |                                                                                                                                                                                                      |                                    |
|                                                                                                                                                                                                                                               | October 2 - October 29    |                                                                                                              | ---                                                                                                                                                        |                             |                                                                                                                                                      |                                                                                                        | ---                                                                                                                                                        |                                                                                                                                                              |                                                                                                                                                                                                      | --- |  |  |          | --- |  |
|                                                                                                                                                                                                                                                              |                           |                                                                                                              |                                                                                                                                                            |                                            |                                                                                                                                                      |                                                                                                        |                                                                                                                                                  |                                                                                                                                                              |                                                                                                                                                                                            |  |                                  |
|                                                                                                                                                                                                                                                              | October 30 - November 26  |                                                                                                              | ---                                                                                                                                                        |                                            |                                                                                                                                                      |                                                                                                        | ---                                                                                                                                                        |                                                                                                                                                              |                                                                                                                                                                                                      | --- |  |  |  | --- |  |
|                                                                                                                                                                                                                                               |                           |                                                                                                              |                                                                                                                                                            |                                            |                                                                                                                                                      |                                                                                                        |                                                                                                                                                            |                                                                                                                                                              |                                                                                                                                                                                                      |  |  |  |  |
|                                                                                                                                                                                                                                                              | November 27 - December 31 |                                                                                                              | 21,300                                                                                                                                                     |                                            |                                                                                                                                                      | $                                                                                                      | 13.52                                                                                                                                                      |                                                                                                                                                              |                                                                                                                                                                                                      | 21,300 |  |  |  | 867,300 |  |
|                                                                                                                                                                                                                                                              |                           |                                                                                                              |                                                                                                                                                            |                                            |                                                                                                                                                      |                                                                                                        |                                                                                                                                                            |                                                                                                                                                              |
|                                                                                                                                                                                                                                                              |                           |                                                                                                              |                                                                                                                                                            |                                            |                                                                                                                                                      |                                                                                                        |                                                                                                                                                            |                                                                                                                                                              |                                                                                                                                                                                                      |  |  |  |  |  |  |
|                                                                                                                                                                                                                                                              |   Total         |                                                                                                              | 21,300                                                                                                                                                     |                                            |                                                                                                                                                      | $                                                                                                      | 13.52                                                                                                                                                      |                                                                                                                                                              |                                                                                                                                                                                                      | 21,300 |  |  |  | 867,300 |  |
|                                                                                                                                                                                                                                                              |                           |                                                                                                              |                                                                                                                                                            |                                            |                                                                                                                                                      |                                                                                                        |                                                                                                                                                            |                                                                                                                                                              |
|                                                                                                                                                                                                                                                              |                           |                                                                                                              |                                                                                                                                                            |                                            |                                                                                                                                                      |                                                                                                        |                                                                                                                                                            |                                                                                                                                                              |                                                                                                                                                                                                      |  |  |  |
|                                                                                                                                                                                                                                                              |                           |                                                                                                              |                                                                                                                                                            |                                            |                                                                                                                                                      |                                                                                                        |                                                                                                                                                            |                                                                                                                                                              |
|                                                                                                                                                                                                                                                    |                           |                                                                                                              |                                                                                                                                                            |                                            |                                                                                                                                                      |                                                                                                        |                                                                                                                                                            |                                                                                                                                                              |                                                                                                                                                                                                      |  |  |  |

(1)  Shares repurchased under resolution of the Board of Directors dated August 23, 2006, authorizing repurchase of up to 1,000,000 shares. Authorization expires on August 23, 2007.

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

****

The Company held its Annual Meeting of Stockholders on November 15, 2006.

At the meeting, Messrs. Helmkamp and LeGrand were elected as Class B Directors with terms expiring in 2009.  The votes with respect to each nominee and with respect to the other matter voted on by shareholders at themeeting are set forth below:
| **Proposal No. 1**                                                                                                                                                                                                                                                                                                                                                                   | **Number of Votes FOR**                                                                                                                                                                                                                                                                                            | **Withheld Authority to Vote**                                                                                                                                                                                                                                                                               |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                              |
|                                                                     |                                                               |                                                    |
|   John G. Helmkamp, Jr.                                                                                                                                                                                                                                                                                                                                                         | 14,065,693                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                              | 82,126 |
|   Lawrence J. LeGrand                                                                                                                                                                                                                                                                                                                                                           | 14,065,472                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                              | 82,347 |
|                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                              |
|                                                                |                                                     |                                                                                                                                                                                                                                                                                               |                                               |
| **Proposal No. 2**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | **FOR**                                                                                                                                                | **AGAINST**                                                                                                                          | **ABSTAIN**                                                                                                                                      |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                        |                                                                                                                                      |
| Ratification of KPMG LLP as Independent Registered Public Accounting Firm                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | 14,054,358                                                                                                                                             | 79,790                                                                                                                               | 13,671                                                                                                                                           |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                        |                                                                                                                                      |
|                                                                                          |                           |                        |                          |

----

| ** **                                                                                                                                 | **           **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|--------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                            | **ITEM 6.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | **Exhibits**                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                         |                                                                                                                                                      |
|                                                                                                                                            | 31.1                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                             | Certification by Chief Executive Officer pursuant to Exchange Act Rule 13a-14 and 15d-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                                                                                                                                            | 31.2                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | Certification by Chief Financial Officer pursuant to Exchange Act Rule 13a-14 and 15d-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                     |
|                                                                                                                                            | 32.1                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | Certification by 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 by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|                                                                                                                                            | 10.2(f)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | Fourth Amendment to the Loan Agreement dated December 1, 2006 by and among the Company, LaBarge, Electronics, Inc., as borrowers, U.S. Bank Nation Association and National City Bank of Pennsylvania, aslenders; and U.S. Bank National Association, as agent for lenders.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |

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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 5, 2007                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | By:  /S/DONALD H. NONNENKAMP                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | Name:  Donald H. Nonnenkamp                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | Title:    Vice President and Chief Financial Officer                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |