| **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 30, 2007** |
| **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 6, 2008: 15,404,598 shares of common stock.

****

| **LaBarge, Inc.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| **FORM 10-Q**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| **For the Quarterly Period Ended December 30, 2007**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| **Table of Contents**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                                                                                                                                                                              |

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|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **Part I**                                                                                                                                                                                                   | **                ** | **Financial Information (Unaudited)** | ** ** |
|                                                                                                                                                                                               |
| **                **                                                                                                         | Item 1. | Financial Statements |   |
|                                                                                                                                                                                                         |
|                                         | Consolidated Statements of Income |  |
|                                    | Consolidated Balance Sheets |  |
|                                                                                                                                                                                                         | Consolidated Statements of Cash Flows |  |
|                                                                                                                                                                                                         | Notes to Consolidated 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 4. | Submission of Matters to a Vote of Security Holders |
|                                                                                                                                                                                                         |  |  |
|                                                                                                                                                                                                              | Item 6. | Exhibits |  |
|                                                             |
| Signature                                                                                                                                                                                                    |
|                                                                                                                                                                                                         |
|                                                                                                                                                                                                              |

Table of Contents

PART I

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

***(amounts in thousands - except per-share amounts)***
|                                                                  |                                                                                                                                                                                                                                                                                                                                                                         |                                                            | Three Months Ended                                                                                                                             |                                                                                     | Six Months Ended                                                                           |
|--------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------|
|                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                    |                                                                                                                                                |                                                                                          |                                                                                            |
|                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                               | **December 30,**                                                                                                                               |                                                                                          | December 31,                                                                               |   | **December 30,** |  | December 31, |
|                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                               | **2007**                                                                                                                                       |                                                                                          | 2006                                                                                       |   | **2007** |  | 2006 |
|                                                                                                                                                  |
| ** **                                                                                                                                       | **Net sales**                                                                                                                                                                                                                                                                                                                                                                                                                            | **    **                                                                                                                                                       | **$**                                                                                                                                          | **67,052**                                                                               |                                                                                            |      | $ | 60,820 |  | **   ** | **$** | **126,242** |  |     | $ | 110,720 |  |
|                          |
|                                                                                                                                             | **Costs and expenses:**                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                               |                                                                                                                                           |                                                                                     | **              **   | **      ** |   |  |  |  |  |  |  |  |  |
|                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                     | Cost of sales                                                                                                                                                                      | **                       ** | **53,676**                                                                               |                                                                                            |  | 48,314 |  |  | **101,494** |  |  | 87,557 |  |   |
|                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                     | Selling and administrative expense                                                                                                                                                 | **     **                                                                                                             | **7,465**                                                                                |                                                                                            |  | 6,800 |  | **    ** | **14,412** |  |    | 12,791 |  |   |
|                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                     | Interest expense                                                                                                                                                                   | **387**                                                                                                                                        |                                                                                          |                                                                                            | 564 |  |  | **814** |  |  | 1,215 |  |   |
|                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                     | Other expense and (income), net                                                                                                                                                    | **22**                                                                                                                                         |                                                                                          |                                                                                  | (64 | ) | **    ** | **32** |  |  | (20 | ) |   |
|                                                                                                                                                  |
|                                                                                                                                             | Earnings before income taxes                                                                                                                                                                                                                                                                                                                                                                                                             | **      **                                                                                                                                           | **5,502**                                                                                                                                      |                                                                                          |                                                                                            | 5,206 |  |  | **9,490** |  |  | 9,177 |  |
|                                                                                                                                             | Income tax expense                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                                                    | **2,105**                                                                                                                                      |                                                                                          |                                                                                            | 2,009 |  |  | **3,573** |  |  | 3,569 |  |
|                                                                                                                                                  |
|                                                                                                                                        |
|                                                                                                                                             | **Net earnings**                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                           |                                                                                                                                 |                                                                                          | **$**                                                                                      | **3,397** |  | $ | 3,197 |  | **$** | **5,917** |  | $ | 5,608 |  |
|                                                                                                                                                  |
|                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                    |                                                                                                                                                |                                                                                          |                                                                                            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                                                                                                                  |
|                                                   |
|                                                                                                                                             | **Basic net earnings per common share:**                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                                                                    |                                                                                                                                                | **              ** |                                                                                            |  |  |  |  | **                   ** |  |  |  |  |
|                                                                                                                                                  | **Basic net earnings**                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                    |                                                                                                                                                | **$**                                                                                    | **0.22**                                                                                   |  | $ | 0.21 |  | **$** | **0.39** |  | $ | 0.37 |  |
|                                                                                                                                                  |
|                                                                                                                                                  | **                                                                      ** |                                                                                                                                                                                    |                                                                                                                                                |                                                                                          |                                                                                            |  |  |  |  |  |  |  |
| ** **                                                                                                                                       | **Average common shares outstanding**                                                                                                                                                                                                                                                                                                                                                                                                    | **15,216**                                                                                                                                                                         |                                                                                                                                                |                                                                                          | 15,112                                                                                     |  |  | **15,208** |  |  | 15,116 |  |
|                                                                                                                                                  |
|                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                    |                                                                                                                                                |                                                                                          |                                                                                            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                                                                                                                  |
|                                                                                                                                                  | **                                                                    **             | **                             ** | ** **                                                                                                                                     |                                                                                     |                 |   | **  ** | **                   ** | **   ** |    |                   |  |
|                                                                                                                                             | **Diluted net earnings per share:**                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                    |                                                                                                                                                |                                                                                          |                                                                                            |  |  |  |  |  |  |  |  |
|                                                                                                                                             | **Diluted net earnings**                                                                                                                                                                                                                                                                                                                                                                                                                 | **$**                                                                                                                                                                              | **0.21**                                                                                                                                       |                                                                                          | $                                                                                          | 0.20 |  | **$** | **0.37** |  | $ | 0.35 |  |
|                                                                                                                                                  |
|                                                                                                                                                  | **                                                                     **       |                                                                                                                                                                                    |                                                                                                                                                |                                                                                          |                                                                                            |  |  |  |  |  |  |  |
|                                                                                                                                        | **Average diluted common   shares outstanding**                                                                                                                                                                                                                                                                                                                                                                                | **16,092**                                                                                                                                                                         |                                                                                                                                                |                                                                                          | 16,008                                                                                     |  |  | **16,059** |  |  | 16,040 |  |
|                                                                                                                                                  |
|                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                    |                                                                                                                                                |                                                                                          |                                                                                            |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                                                                                                                  |
|                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                    |                                                                                                                                                |                                                                                          |                                                                                            |  |  |  |  |  |  |  |  |

See accompanying notes to consolidated financial statements.

Table of Contents

LaBARGE, INC.CONSOLIDATED BALANCE SHEETS***(amounts in thousands -- except share amounts)***
| **   **                                                                                                                                                                                                                                                                               | ** **                                                                                                                                              | **December 30, 2007**                                        |                                                                                                                |                                                  | **July 1, 2007**                                                                                                     |                                                                                                                                                  |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------|--------------------------------------------------|----------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                      |                                                                                                                                                         |                                                              |                                                                                                                |                                                  |                                                                                                                      |
|                                                                                                                                                                                                                                                                                                      |                                                                                                                                                         | *(Unaudited)*                                                |                                                                                                                |                                                  |                                                                                                                      |
| **                                                ** |                                                                                                                                                         |                                                              | *                  * |          | *                   * |                                                                                                                                                  |
| **ASSETS**                                                                                                                                                                                                                                                                                           |                                                                                                                                                    |                                                              |                                                                                                                |                                             |                                                                                                                      |                                                                                                                                             |
| **Current assets:**                                                                                                                                                                                                                                                                                  |                                                                                                                                                    |                                                              |                                          |                                                  |                                                                                                                 |                          |   |
|                                                                                                                                                                                                                                                                                                 | Cash and cash equivalents                                                                                                                               |                                                         | **$**                                                                                                          | **451**                                          |                                                                                                                 | $                                                                                                                                                | 392 |   |
|                                                                                                                                                                                                                                                                                                 | Accounts and other receivables, net                                                                                                                     |                                                         |                                                                                                                | **36,983**                                       |                                                                                                                      |                                                                                                                                             | 30,204 |   |
|                                                                                                                                                                                                                                                                                                 | Inventories                                                                                                                                             |                                                         |                                                                                                                | **66,011**                                       |                                                                                                                      |                                                                                                                                                  | 59,717 |   |
|                                                                                                                                                                                                                                                                                                 | Prepaid expenses                                                                                                                                        |                                                         |                                                                                                                | **1,889**                                        |                                                                                                                      |                                                                                                                                             | 2,333 |   |
|                                                                                                                                                                                                                                                                                                 | Deferred tax assets, net                                                                                                                                |                                                         |                                                                                                                | **1,834**                                        |                                                                                                                      |                                                                                                                                                  | 1,822 |   |
|                                                                                                                                                                                                                                                                                                      |                                                                                                                                                         |                                                              |                                                                                                                |                                                  |                                                                                                                      |
|                                                                                                                                                                                                                                                                                            | **Total current assets**                                                                                                                                |                                                         |                                                                                                                | **107,168**                                      |                                                                                                                      |                                                                                                                                                  | 94,468 |   |
|                                                                                                                                                                                                                                                                                                      |                                                                                                                                                         |                                                              |                                                                                                                |                                                  |                                                                                                                      |
|                                                                                                                                                                                                                                                                                            |                                                                                                                                                    |                                                              |                                                                                                                |                                                  |                                                                                                                 |
| Property, plant and equipment, net                                                                                                                                                                                                                                                                   |                                                                                                                                                    |                                                              | **17,269**                                                                                                     |                                                  |                                                                                                                      | 16,269                                                                                                                                           |   |
| Intangible assets, net                                                                                                                                                                                                                                                                               |                                                                                                                                                    |                                                              | **1,851**                                                                                                      |                                                  |                                                                                                                 | 2,282                                                                                                                                            |   |
| Goodwill, net                                                                                                                                                                                                                                                                                        |                                                                                                                                                         |                                                              | **24,292**                                                                                                     |                                                  |                                                                                                                 | 24,292                                                                                                                                           |  |
| Deferred tax asset, net                                                                                                                                                                                                                                                                              |                                                                                                                                                         |                                                              | **743**                                                                                                        |                                                  |                                                                                                                      | 499                                                                                                                                              |  |
| Other assets, net                                                                                                                                                                                                                                                                                    |                                                                                                                                                    |                                                              | **4,959**                                                                                                      |                                                  |                                                                                                                 | 4,772                                                                                                                                            |   |
|                                                                                                                                                                                                                                                                                                      |                                                                                                                                                         |                                                              |                                                                                                                |                                                  |                                                                                                                      |
|                                                                                                                                                                                                                                                                                            | **Total assets**                                                                                                                                        |                                                         | **$**                                                                                                          | **156,282**                                      |                                                                                                                      | $                                                                                                                                                | 142,582 |   |
|                                                                                                                                                                                                                                                                                                      |                                                                                                                                                         |                                                              |                                                                                                                |                                                  |                                                                                                                      |
|                                                                                                                                                                                                                                                                                                      |                                                                                                                                                         |                                                              |                                                                                                                |                                                  |                                                                                                                      |
|                                                                                                                                                                                                                                                                                                      |                                                                                                                                                         |                                                              |                                                                                                                |                                                  |                                                                                                                      |
|                                                                                                                                                                                                                                                                                                 |
| **LIABILITIES AND STOCKHOLDERS’ EQUITY**                                                                                                                                                                                                                                                       |                                                                                                                                                    |                                          |
| **Current liabilities:**                                                                                                                                                                                                                                                                             |                                                                                                                                                    |                                                              | **              **                       |                                                  |                                                                                                                      |                                                                                                |   |
|                                                                                                                                                                                                                                                                                                      | Short-term borrowings                                                                                                                                   |                                                              | **$**                                                                                                          | **15,775**                                       |                                                                                                                      | $                                                                                                                                                | 14,825 |  |
|                                                                                                                                                                                                                                                                                                 | Current maturities of long-term debt                                                                                                                    |                                                         |                                                                                                                | **6,265**                                        |                                                                                                                      |                                                                                                                                                  | 6,300 |   |
|                                                                                                                                                                                                                                                                                                 | Trade accounts payable                                                                                                                                  |                                                         |                                                                                                                | **24,016**                                       |                                                                                                                      |                                                                                                                                             | 18,643 |   |
|                                                                                                                                                                                                                                                                                                 | Accrued employee compensation                                                                                                                           |                                                         |                                                                                                                | **10,643**                                       |                                                                                                                      |                                                                                                                                             | 10,837 |   |
|                                                                                                                                                                                                                                                                                                 | Other accrued liabilities                                                                                                                               |                                                         |                                                                                                                | **2,465**                                        |                                                                                                                      |                                                                                                                                             | 2,321 |   |
|                                                                                                                                                                                                                                                                                                      | Cash advances                                                                                                                                           |                                                              |                                                                                                                | **8,281**                                        |                                                                                                                      |                                                                                                                                             | 3,613 |  |
|                                                                                                                                                                                                                                                                                                      |                                                                                                                                                         |                                                              |                                                                                                                |                                                  |                                                                                                                      |
|                                                                                                                                                                                                                                                                                                 | **Total current liabilities**                                                                                                                           |                                                         |                                                                                                                | **67,445**                                       |                                                                                                                      |                                                                                                                                                  | 56,539 |   |
|                                                                                                                                                                                                                                                                                                      |                                                                                                                                                         |                                                              |                                                                                                                |                                                  |                                                                                                                      |
| Long-term advances from customers for purchase of materials                                                                                                                                                                                                                                          |                                                                                                                                                    |                                                              | **1,009**                                                                                                      |                                                  |                                                                                                                      | 1,590                                                                                                                                            |   |
| Deferred gain on sale of real estate and other liabilities                                                                                                                                                                                                                                           |                                                                                                                                                         |                                                              | **2,445**                                                                                                      |                                                  |                                                                                                                      | 2,912                                                                                                                                            |  |
| Long-term debt                                                                                                                                                                                                                                                                                       |                                                                                                                                                    |                                                              | **2,017**                                                                                                      |                                                  |                                                                                                                      | 5,131                                                                                                                                            |   |
|                                                                                                                                                                                                                                                                                                      |                                                                                                                                                         |                                                              |                                                                                                                |                                                  |                                                                                                                      |
|                                                                                                                                                                                                                                                                                  |
| **Stockholders’ equity:**                                                                                                                                                                                                                                                                      |                                                                                                                                                    |            |
|                                                                                                                                                                                                                                                                                                 | Common stock, $.01 par value.  Authorized 40,000,000 shares; 15,773,253 issued at December 30, 2007 and July 1, 2007, including shares in treasury |                                                         |                                                                                                                | **158**                                          |                                                                                                                      |                                                                                                                                             | 158 |   |
|                                                                                                                                                                                                                                                                                                 | Additional paid-in capital                                                                                                                              |                                                         |                                                                                                                | **16,286**                                       |                                                                                                                      |                                                                                                                                             | 16,174 |   |
|                                                                                                                                                                                                                                                                                                 | Retained earnings                                                                                                                                       |                                                         |                                                                                                                | **69,691**                                       |                                                                                                                      |                                                                                                                                                  | 63,774 |   |
|                                                                                                                                                                                                                                                                                                      | Less cost of common stock in treasury, shares of 368,655 at December 30, 2007 and 506,704 at July 1, 2007                                               |                                                              | **(2,769**                                                                                                     | **)**                                            | (3,696                                                                                                               | )                                                                                                                                                |
|                                                                                                                                                                                                                                                                                                      |                                                                                                                                                         |                                                              |                                                                                                                |                                                  |                                                                                                                      |
|                                                                                                                                                                                                                                                                                       |
|                                                                                                                                                                                                                                                                                                      | **Total stockholders’ equity**                                                                                                                    |                                                         |                                                                                                                | **83,366**                                       |                                                                                                                      |                                                                                                                                             | 76,410 |   |
|                                                                                                                                                                                                                                                                                                      |                                                                                                                                                         |                                                              |                                                                                                                |                                                  |                                                                                                                      |
|                                                                                                                                                                                                                                                                                  |
|                                                                                                                                                                                                                                                                                                 |                                                                                                                                                         | **Total liabilities and stockholders’ equity**         |                                                                                                           | **$**                                            | **156,282**                                                                                                          |                                                                                                                                                  | $ | 142,582 |  |
|                                                                                                                                                                                                                                                                                                      |                                                                                                                                                         |                                                              |                                                                                                                |                                                  |                                                                                                                      |
|                                                                                                                                                                                                                                                                                                      |                                                                                                                                                         |                                                              |                                                                                                                |                                                  |                                                                                                                      |
|                                                                                                                                                                                                                                                                                                      |                                                                                                                                                         |                                                              |                                                                                                                |                                                  |                                                                                                                      |

See accompanying notes to consolidated financial statements.

Table of Contents

LaBARGE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

***(amounts in thousands)***
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                     | Six Months Ended                    |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------|-------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                     |                                     |  |  |
| **                                                                                          ** | ** **                                                          | **December 30, 2007**               | **  ** | December 31, 2006 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                     |                                     |  |  |  |
| **Cash flows from operating activities:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                |                                     |  |  |     |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Net earnings                                                        |                                | **$** | **5,917** | ** ** | $ | 5,608 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Adjustments to reconcile net cash provided by operating activities: |                                | ** ** |  | ** ** |   |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Depreciation and amortization                                       |                                |   | **2,535** |  |   | 2,485 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Amortization of deferred gain on sale of real estate                |                                     |  | **(240** | **)** |  | --- |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Stock-based compensation                                            |                                     |  | **718** |  |  | 672 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Other than temporary impairment of investment                       |                                     |  | **34** | **          ** |  | 105 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Deferred taxes                                                      |                                |            | **(256** | **)** |   | (170 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Other                                                               |                                |   | **8** |  |   | (1 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Changes in assets and liabilities, net of acquisitions:             |                                |   | **              ** |  |   |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                | Accounts and other receivables, net |   |   | **(6,779** | **)** |   | 1,799 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                | Inventories                         |   |   | **(6,294** | **)** |   | (3,236 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                | Prepaid expenses                    |   |   | **444** |  |   | 614 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                     | Trade accounts payable              |  |  | **5,181** |  |  | 3,256 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                | Accrued liabilities                 |   |   | **(172** | **)** |   | 1,519 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                     | Advance payments from customers     |  |  | **4,087** |  |  | 635 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                     |                                     |  |  |  |
| **Net cash provided by operating activities**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                     |                                     | **5,183** |  |  | 13,286 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                     |                                     |  |  |  |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                     |                                     |  |  |  |
| **Cash flows from investing activities:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                |                                |   |   |   |  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Additions to property, plant and equipment                          |                                |   | **(2,818** | **)** |  | (2,284 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Proceeds from disposal of property and equipment                    |                                     |  | **18** |  |  | 25 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Additions to other assets and intangibles                           |                                |   | **(340** | **)** |  | (569 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                     |                                     |  |  |  |
| **Net cash used by investing activities**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                |                                | **(3,140** | **)** |  | (2,828 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                     |                                     |  |  |  |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                     |                                     |  |  |  |
| **Cash flows from financing activities:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                |                                |        |  |  |     |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Borrowings on revolving credit facility                             |                                |   | **41,925** |  |  | 27,000 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Payments of revolving credit facility                               |                                     |  | **(40,975** | **)** |  | (34,125 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Borrowings of long-term debt                                        |                                     |  | **---** |  |  | 258 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Repayments of long-term senior debt                                 |                                |   | **(3,149** | **)** |  | (2,769 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Excess tax benefits from stock option                               |                                     |  | **77** |  |  | 194 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Issuance of treasury stock                                          |                                |   | **403** |  |  | 461 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Purchase of treasury stock                                          |                                |   | **(265** | **)** |  | (889 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                     |                                     |  |  |  |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                     |                                     |  |  |  |
| **Net cash used by financing activities**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                |                                | **(1,984** | **)** |  | (9,870 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                     |                                     |  |  |  |
| **Net increase in cash and cash equivalents**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                |                                | **59** |  |  | 588 |  |
| **Cash and cash equivalents at beginning of period**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                | ** **                          | **392** |  |  | 947 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                     |                                     |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                     |                                     |  |  |  |
| **Cash and cash equivalents at end of period**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                     | **$**                               | **451** |  | $ | 1,535 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                     |                                     |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                     |                                     |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                     |                                     |  |  |  |
| **                                                                                          ** |                                       | **             ** |                                                                                    |         |                                                            |                                  |                                                                          |   |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------|------------------------------------------------------------------------------------|------------------------------------------------------------------------------------|---------|------------------------------------------------------------|--------------------------------------------|--------------------------------------------------------------------------|---|
| **Non-cash transactions:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                       |                                                                                    | **             ** |         |                                                            |                                            |              |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Increase in capital lease obligations |                                                                               | **$**                                                                              | **---** | **         ** |         | $                                                                        | 8 |          |

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 30, 2007, the related consolidated statements of income for the three and six months ended December 30, 2007 and December 31, 2006, and the consolidated statements of cash flows forthe three and six months ended December 30, 2007 and December 31, 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 fairlythe financial 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 1, 2007.

**Stock-Based Compensation**For the three months ended December 30, 2007, total stock-based compensation was $436,000 ($272,000 after tax), equivalent to earnings per basic and diluted shares of $0.02. For the three months ended December 31,2006, total stock-based compensation was $339,000 ($210,000 after tax) equivalent to earnings per basic and dilutive shares of $0.01.  For the six months ended December 30, 2007, total stock-based compensation was $718,000 ($449,000 after tax), equivalent toearnings per basic and diluted share of $0.03. For the six months ended December 31, 2006, total stock-based compensation was $672,000 ($415,000 after tax), equivalent to earnings per basic and dilutive share of $0.03.

As of December 30, 2007, the total unrecognized compensation expense related to nonvested awards was $826,000 pretax, and the period over which it is expected to be recognized is approximately 1.3 years. At December 31,2006, the total unrecognized compensation expense, including stock options and performance units, was $739,000 pretax, and the period over which it was expected to be recognized was 1.2 years.

****

No stock options were issued in the fiscal quarters ended December 30, 2007 and December 31, 2006, respectively. On August 24, 2005 and January 11, 2005, the Company entered into long-term incentive plan agreements withcertain key executives tied to fiscal years 2008 and 2007 financial performance. Compensation expense related to these awards was recognized in the 2008 and 2007 second fiscal quarters, but no shares are included in the dilutive shares, as the performance conditionshad not been met at December 30, 2007 and December 31, 2006.

All stock options outstanding at December 30, 2007 and December 31, 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 September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 157, “Fair Value Measurements” (“SFAS No. 157”), toclarify the definition of fair value, establish a framework for measuring fair value and expand the disclosures on fair value measurements. SFAS No. 157 becomes effective for the Company in its fiscal year ending June 28, 2009. The Company does not believe thatadopting the provisions of SFAS No. 157 will have a material impact on its consolidated financial statements.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS No. 159”), to permit all entities to choose to elect, at specified electiondates, to measure eligible financial instruments at fair value. An entity shall report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date, and recognize upfront costs and fees related tothose items in earnings as incurred and not deferred. SFAS No. 159 applies to fiscal years beginning after November 15, 2007, with early adoption permitted for an entity that has also elected to apply the provisions of SFAS No. 157. An entity is prohibited fromretrospectively applying SFAS No. 159, unless it chooses early adoption. The Company does not believe that the adoption of the provisions of SFAS No. 159 will have a material impact on its consolidated financial statements when it becomes effective for the fiscalyear ending June 28, 2009.

In September 2006, the 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. EITF 06-04 becomes effective forthe Company in its fiscal year ending June 28, 2009. The Company does not believe that adopting the provisions of EITF 06-4 will have a material impact on its consolidated financial statements.

***Recently Adopted Accounting Standards***The Company adopted the provisions of FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes as Interpretation of FASB Statement No. 109” (“FIN 48”) on July 2, 2007. The implementation of FIN 48did not result in an adjustment to the liability for unrecognized income tax benefits. At the adoption date of July 2, 2007, there was approximately $630,000 of unrecognized tax benefits, all of which would affect the Company’s effective tax rate ifrecognized. At December 30, 2007, there was approximately $630,000 of unrecognized tax benefits.

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. As of December 30, 2007, there was approximately $121,000 of accrued interest related to uncertain tax positions, $19,000and $39,000 of which was recognized in the three and six months ended December 30, 2007, respectively.

The Company’s federal income tax returns for fiscal years 2004 through 2006 are open tax years. We file in numerous state jurisdictions with varying statutes of limitation open from 2003 through 2006, depending on eachjurisdiction’s unique tax laws. The Company’s federal returns for fiscal year 2005 and fiscal year 2006 are currently being examined by the Internal Revenue Service (“IRS”). The IRS has proposed adjustments related to the Company’sclaimed research and experimentation credits and other issues. The Company is currently evaluating the proposed adjustments and believes it is reasonably possible that a decrease of $250,000 to $350,000 of the unrecognized tax benefits may occur when the audit iscompleted. The impact of the proposed adjustment on the statement of income is not expected to be material.

In September 2006, the FASB’s EITF reached a consensus on EITF Issue No. 06-5, “Accounting for Purchases of Life Insurance—Determining the Amount That Could Be Realized in Accordance with FASB TechnicalBulletin No. 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 asset inaccordance with Technical Bulletin 85-4. EITF 06-5 became effective for the Company in the current fiscal year. Adopting the provisions of EITF 06-5 did not have a material impact on the Company’s consolidated financial statements.
| **2.** | **  ** | **GROSS AND NET SALES** |
|--------|------------------|-------------------------|

Gross and net sales consist of the following:*(in thousands)*
| **                                                           ** | ** ** | Three Months Ended |       | Six Months Ended |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------|------------|------------------|
|                                                                                                                                                                                                                                                                                                                                                                        |            |                    |            |                  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                        |            | **December 30,**   |            | December 31,     | ** ** | **December 30,** |  | December 31, |
| **   **                                                                                                                                                                                                                                                                                                                                                 |            | **2007**           |            | 2006             |  | **2007** |  | 2006 |
|                                                                                                                                                                                                                                                                                                                                                                        |            |                    |            |                  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                        |            |                    |            |                  |  |  |  |  |
| Gross sales                                                                                                                                                                                                                                                                                                                                                            |       | **$**              | **67,349** |        |   | $ | 61,115 |   | **$** | **126,693** |  |   | $ | 111,161 |  |
| Less sales discounts                                                                                                                                                                                                                                                                                                                                                   |            |                    | **297**    |                  |  |  | 295 |  |  | **451** |  |  | 441 |  |
|                                                                                                                                                                                                                                                                                                                                                                        |            |                    |            |                  |  |  |  |  |
| Net sales                                                                                                                                                                                                                                                                                                                                                              |            | **$**              | **67,052** |                  |  | $ | 60,820 |  | **$** | **126,242** |  |  | $ | 110,720 |  |
|                                                                                                                                                                                                                                                                                                                                                                        |            |                    |            |                  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                        |            |                    |            |                  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                        |            |                    |            |                  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                        |            |                    |            |                  |  |  |  |  |

**Geographic Information**The Company has no sales offices or facilities outside of the United States.  Sales for exports did not exceed 10% of total sales in any fiscal year.
| **3.** | **  ** | **ACCOUNTS AND OTHER RECEIVABLES** |
|--------|------------------|------------------------------------|

Accounts and other receivables consist of the following:*(in thousands)*
| ** **                                 | **December 30,** |                            | July 1,    |
|--------------------------------------------|------------------|--------------------------------------------------------------------|------------|
| ** **                                 | **2007**         |             | 2007       |
|                                            |
| Billed shipments, net of progress payments | ** **       | **$**                                                              | **37,131** |          |                 | $ | 30,042 |  |
| Less allowance for doubtful accounts       |                  | **294**                                                            |            | **     ** |  | 214 |  |
|                                            |
| Trade receivables, net                     |                  | **36,837**                                                         |            | **     ** |  | 29,828 |  |
| Other current receivables                  |                  | **146**                                                            |            |  |  | 376 |  |
|                                            |
|   Total                          | ** **       | **$**                                                              | **36,983** |  |  | $ | 30,204 |  |
|                                            |
|                                            |                  |                                                                    |
|                                            |

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 30, 2007, the amounts due from the three largest accounts receivable debtors and the percentage of total accounts receivable represented by those amounts were $8.0 million (22%), $3.6 million (9%), and$3.4 million (9%). This compares with $4.4 million (15%), $2.5 million (8%), and $2.3 million (8%) at July 1, 2007.
| **4.** | **  ** | **INVENTORIES** |
|--------|------------------|-----------------|

Inventories consist of the following:*(in thousands)*
|   |                                                                           |                                            | **December 30,** |                     | July 1, |                            |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------|------------------|--------------------------------------------------------------------------------------|---------|--------------------------------------------------------------------|
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                      | **2007**         |                                                                                      | 2007    |                                                                    |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                      |                  |                                                                                      |         |                                                                    |
|        | Raw materials                                                                                                                                                                                                                                                                                                                                                                                                                                          | **        ** | **$**            | **45,119**                                                                           |         |             | $ | 39,369 |  |
|        | Work in progress                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                      | **20,892**       |                | 20,348  |                                                                    |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                      |                  |                                                                                      |         |                                                                    |
|   |   Total                                                                                                                                                                                                                                                                                                                                                                                                                                      | **       **       | **$**            | **66,011**                                                                           |         |                  | $ | 59,717 |  |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                      |                  |                                                                                      |         |                                                                    |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                      |                  |                                                                                      |         |                                                                    |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                      |                  |                                                                                      |         |                                                                    |

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 30, 2007 and December 31, 2006, expense for obsolescence charged to income before taxes was $502,000 and $306,000, respectively.   For the six months ended December 30, 2007 andDecember 31, 2006, expense for obsolescence charged to income before taxes was $819,000 and $528,000, respectively.
| **5.** | **  ** | **INTANGIBLE ASSETS, NET** |
|--------|------------------|----------------------------|

Intangible assets, net, is summarized as follows:*(in thousands)*
|          |                                                                                                                                                                                                                                                                                                                                                                       |                    |           |     | **December 30,** |                       |      |                  | July 1, |      |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------|-----------|--------------------|------------------|--------------------------------------|--------------------------|--------------------------------------|---------|--------------------------|
|               |                                                                     |                                                                                                              | **2007**  |                    |                  |                                      | 2007                     |                                      |
|                    |                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                              |           |                    |
|                    | Software                                                                                                                                                                                                                                                                                                                                                                                                           |                                        | **$**     | **3,865**          |                  |                                      | $                        | 3,830                                |         |
|                    | Less accumulated amortization                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                     | **3,213** |                    |             |        | 3,043                    |        |
|                    |                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                              |           |                    |
|          | Net software                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                              |           | **652**            |                  |                                      |                          | 787                                  |         |
|                    |                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                              |           |                    |
|                    | Customer list                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                              | **3,400** |                    |                  |                                      | 3,400                    |                                      |
|                    | Less accumulated amortization                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                              | **2,201** |                    |                  |                                      | 1,918                    |                                      |
|                    |                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                              |           |                    |
|          | Net customer list                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                              | **1,199** |                    |                  |                                      | 1,482                    |                                      |
|                    |                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                              |           |                    |
|               | Other, net                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                              |           | **---**            |                  |                                      |                          | 13                                   |         |
|                    |                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                              |           |                    |
|     | Total intangible assets, net                                                                                                                                                                                                                                                                                                                                                                                       | **$**                                                                                                        | **1,851** |                    |                  | $                                    | 2,282                    |                                      |
|                    |                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                              |           |                    |
|                    |                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                              |           |                    |                  |                                      |                          |                                      |         |                          |
|                    |                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                              |           |                    |
|                    |                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                              |           |                    |                  |                                      |                          |                                      |         |                          |

Intangibles are amortized over a three- to six-year period.  Amortization expense for the three months ended December 30, 2007 and December 31, 2006 was $253,000 and $264,000, respectively. Amortization expense was$519,000 and $544,000 for the six months ended December 30, 2007 and December 31, 2006, respectively.

The Company anticipates that amortization expense will approximate $1.1 million for fiscal year 2008, $1.1 million for fiscal year 2009, $899,000 for fiscal year 2010 and $423,000 for fiscal year 2011.
| **6.** | **  ** | **GOODWILL** |
|--------|------------------|--------------|

Goodwill is summarized as follows:*(in thousands)*
|    |                                                                          | **December 30,**   |     |            |      | July 1,            |     |
|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------|--------------------|--------------------------------|--------------------------|--------------------|--------------------|
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                             |                    |                    |                                | **2007**                 |                    |                    |  | 2007 |  |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                    |                    |                                |
|         | 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 were no changes in the carrying amount of goodwill at December 30, 2007 andJuly 1, 2007.
| **7.** | **  ** | **OTHER ASSETS** |
|--------|------------------|------------------|

Other assets is summarized as follows:*(in thousands)*
|    |                                                                            | **December 30,**                                 |     |            |      | July 1,            |     |
|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------|--------------------|--------------------------------|--------------------------|--------------------|--------------------|
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                  |                    |                                | **2007**                 |                    |                    |  | 2007 |  |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                  |                    |                                |
|         | Cash value of life insurance                                                                                                                                                                                                                                                                                                                                                                                                                                 | **$**                                            | **4,611**          |       |                | $                  | 4,390              |             |
|              | Deposits, licenses and other, net                                                                                                                                                                                                                                                                                                                                                                                                                            |                                   | **185**            |                                |                          |     | 154                |  |
|              | Securities held for sale                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                  | **51**             |                                |                          |                    | 85                 |  |
|              | Deferred financing costs, net                                                                                                                                                                                                                                                                                                                                                                                                                                |          |                    | **75**                         |                          |                    |                    | 108 |  |
|              | Other                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                  |                    | **37**                         |                          |                    |                    | 35 |  |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                  |                    |                                |
|              |   Total                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                  | **$**              | **4,959**                      |                          |                    | $                  | 4,772 |  |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                  |                    |                                |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                  |                    |                                |                          |                    |                    |  |  |  |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                  |                    |                                |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                  |                    |                                |                          |                    |                    |  |  |  |
| **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 30,** |                                                                     |      |      | July 1, |                                                                                                           |
|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------|------------------------------------------------------------------------------------|--------------------------|--------------------------|---------|--------------------------------------------------------------------------------------------------------------------------|
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                  |                                                                                    |                          | **2007**                 |         |                                                                                                                          |  | 2007 |  |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                  |                                                                                    |                          |
|              | **Short-term borrowings:**                                                                                                                                                                                                                                                                                                                                                                                                                                   |                  | **             ** |                          |                          |         |                                                              |  |
|              |  Revolving credit agreement:                                                                                                                                                                                                                                                                                                                                                                                                                            |                  |                                                                                    |                          |                          |         |                                                                                                                          |  |
|              |   Balance at period-end                                                                                                                                                                                                                                                                                                                                                                                                                            | **$**            | **15,775**                                                                         |                          |                          | $       | 14,825                                                                                                                   |  |
|              |   Interest rate at period-end                                                                                                                                                                                                                                                                                                                                                                                                                      |                  | **6.53**                                                                           | **%**                    |                          |         | 6.91                                                                                                                     | % |
|              |   Average amount of short-term borrowings                                                                                                                                                                                                                                                                                                                                                                                                          | **  ** |                                                                                    |                          |                          |         |                                                                                                                          |  |
|              |    outstanding during period                                                                                                                                                                                                                                                                                                                                                                                                                  | **$**            | **12,751**                                                                         |                          |                          | $       | 13,486                                                                                                                   |  |
|              |   Average interest rate for period                                                                                                                                                                                                                                                                                                                                                                                                                 |                  | **6.79**                                                                           | **%**                    |                          |         | 7.29                                                                                                                     | % |
|              |   Maximum short-term borrowings at                                                                                                                                                                                                                                                                                                                                                                                                                 |                  |                                                                                    |                          |                          |         |                                                                                                                          |  |
|              |    any month-end                                                                                                                                                                                                                                                                                                                                                                                                                              | **$**            | **15,775**                                                                         |                          |           | $       | 16,675                                                                                                                   |  |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                  |                                                                                    |                          |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                  |                                                                                    |                          |                          |         |                                                                                                                          |  |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                  |                                                                                    |                          |
|              | **Senior long-term debt:**                                                                                                                                                                                                                                                                                                                                                                                                                                   |                  |                                                                                    |                          |                          |         |                      |  |
|              |  Senior lender:                                                                                                                                                                                                                                                                                                                                                                                                                                         |                  |                                                                                    |                          |                          |         |                                                                                                                          |  |  |
|              |    Term loan                                                                                                                                                                                                                                                                                                                                                                                                                                  |                  | **$**                                                                              | **7,500**                |                          |         | $                                                                                                                        | 10,500 |  |
|         |  Other                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                  | **782**                                                                            |                          |                          |         | 931                                                                                                                      |  |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                  |                                                                                    |                          |
|         | Total senior long-term debt                                                                                                                                                                                                                                                                                                                                                                                                                                  |                  | **8,282**                                                                          |                          |                          |         | 11,431                                                                                                                   |  |
|              | Less current maturities                                                                                                                                                                                                                                                                                                                                                                                                                                      |                  |                                                                                    | **6,265**                |                          |         |                                                                                                                          | 6,300 |  |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                  |                                                                                    |                          |
|              | Long-term debt, less current maturities                                                                                                                                                                                                                                                                                                                                                                                                                      | **$**            | **2,017**                                                                          |                          |                          | $       | 5,131                                                                                                                    |  |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                  |                                                                                    |                          |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                  |                                                                                    |                          |                          |         |                                                                                                                          |  |  |  |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                  |                                                                                    |                          |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                  |                                                                                    |                          |                          |         |                                                                                                                          |  |  |  |

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 December 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 30, 2007, the unamortized amount was $75,000.

**Senior Lender:**

The Company entered into a senior secured loan agreement with a group of banks on February 17, 2004. The following is a summary of the agreement:
|  •                   |   | A revolving credit facility, up to $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% ofeligible inventories. As of December 30, 2007, outstanding loans under the revolving credit facility were $15.8 million; letters of credit issued were $1.2 million; and an aggregate of $13.0 million was available under the revolving credit facility. Thiscredit facility matures on February 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 increased to $1.5 million in May 2007.  Final maturity is February2009.  As of December 30, 2007, the amount outstanding was $7.5 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                          |
|            |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                          |
|  •                   |        | Interest on both loans is calculated at a percentage of prime or a stated rate over LIBOR based on certain ratios.  For the three- and six-month periods ended December 30, 2007, the average rates were approximately 6.75%and 6.78%, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                          |
|       |   |                                                                                                                                                 |                                                                          |
|  •                   |   | 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 Companywas in compliance with its borrowing agreement covenants as of December 30, 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                          |
|            |   |                                                                                                                                                           |                                                                     |

**Other Long-Term Debt:**Other long-term debt includes capital lease agreements with outstanding balances totaling $404,000 at December 30, 2007 and $470,000 at July 1, 2007.

The aggregate maturities of long-term obligations are as follows:*(in thousands)*
| **Fiscal Year**               |
|-------------------------------|
|                               |
| 2008                          | ...............................................................  | $ | 3,153 |   |
| 2009                          | ...............................................................  |      | 4,681 |   |
| 2010                          | ...............................................................  |       | 147 |   |
| 2011                          | ...............................................................  |       | 51 |   |
| 2012                          | ...............................................................  |       | 250 |   |
|                               |
|     Total | ...............................................................  | $ | 8,282 |   |
|                               |
| **9.** | **  ** | **CASH FLOWS** |
|--------|------------------|----------------|

****

Total cash payments for interest for the three months ended December 30, 2007 and December 31, 2006 amounted to $411,000 and $578,000, respectively.  Total cash payments for interest for the six months endedDecember 30, 2007 and December 31, 2006 amounted to $867,000 and $1.2 million, respectively.  Net cash payments for both federal and state income taxes were $3.4 million for the three and six months ended December 30, 2007, compared with $3.0 millionfor the three and six months ended December 31, 2006, respectively.
| **10.** | **  ** | **EARNINGS PER COMMON SHARE** |
|---------|------------------|-------------------------------|

Basic and diluted earnings per share are computed as follows:*(amounts in thousands, except earnings per-share amounts)*
| **                        ** | Three Months Ended |   | Six Months Ended |
|------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------|--------|------------------|
|                                                                                                                                                      |                    |        |                  |  |  |  |  |  |
| ** **                                                                                                                                           | **December 30,**   |        | December 31,     | ** ** | **December 30,** |  | December 31, |
| **               **                                                       | **2007**           |        | 2006             |  | **2007** |  | 2006 |
|                                                                                                                                                      |                    |        |                  |  |  |  |  |  |
|                                                                                                                                                      |                    |        |                  |  |  |  |  |  |
| Net earnings                                                                                                                                         |     | **$**  | **3,397**        |  |  | $ | 3,197 |     | **$** | **5,917** |  | $ | 5,608 |  |
|                                                                                                                                                      |                    |        |                  |  |  |  |  |  |
|                                                                                                                                                      |                    |        |                  |  |  |  |  |  |  |  |  |  |  |  |
|                                                                                                                                                      |                    |        |                  |  |  |  |  |  |
| **     **                                                                                                                   |                    |        |                  |  |  |  |  |  |  |  |  |       |  |  |
| Basic net earnings per share                                                                                                                         |                    | **$**  | **0.22**         | ** ** |  | $ | 0.21 |  | **$** | **0.39** |  | $ | 0.37 |  |
|                                                                                                                                                      |                    |        |                  |  |  |  |  |  |
|                                                                                                                                                      |                    |        |                  |  |  |  |  |  |  |  |  |  |  |
|                                                                                                                                                      |                    |        |                  |  |  |  |  |  |
|                                                                                                                                  |                    |        |                  |  |  |  |  |  |  |  |  |                |  |
| Diluted earnings per share                                                                                                                           |                    | **$**  | **0.21**         |  |  | $ | 0.20 |  | **$** | **0.37** |  | $ | 0.35 |  |
|                                                                                                                                                      |                    |        |                  |  |  |  |  |  |
|                                                                                                                                                      |                    |        |                  |  |  |  |  |  |
|                                                                                                                                                      |                    |        |                  |  |  |  |  |  |

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.

*(in thousands)*
| ** **                                                        | Three Months Ended |            | Six Months Ended |
|-------------------------------------------------------------------|--------------------|------------|------------------|
|                                                                   |                    |            |                  |  |  |  |  |  |
|                                                                   | **December 30,**   | ** ** | December 31,     |  | **December 30,** |  | December 31, |
| **          **  | **2007**           |            | 2006             |  | **2007** |  | 2006 |
|                                                                   |                    |            |                  |  |  |  |  |  |
| Average common shares outstanding -- basic                        |                    | **15,216** |                  |   |  | 15,112 |   |   | **15,208** |  |   |  | 15,116 |  |
| Dilutive options and nonvested restricted shares                  |                    | **876**    |        | 896 |  |    | **851** |  |  | 924 |  |
|                                                                   |                    |            |                  |  |  |  |  |  |
| Adjusted average common shares   outstanding -- diluted |          | **16,092** |                  |  |  | 16,008 |  |  | **16,059** | **  ** |  | 16,040 |   |
|                                                                   |                    |            |                  |  |  |  |  |  |
|                                                                   |                    |            |                  |  |  |  |  |  |
|                                                                   |                    |            |                  |  |  |  |  |  |
|                                                                   |                    |            |                  |  |  |  |  |  |

All stock options outstanding and nonvested restricted shares at December 30, 2007 and December 31, 2006 were dilutive and included in the computation of diluted earnings per share. These options expire in various periodsthrough 2014. The restricted shares vest over the next two fiscal years.
| **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 2.2 million 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 grantedin the 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 30, 2007 include stockoptions, restricted stock and performance units.

As of December 30 2007, the total unrecognized compensation expense related to nonvested awards, including stock options, restricted shares and performance units, was $826,000 pretax and the period over which it is expected tobe recognized is approximately 1.3 years.

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 recognizes as expense the difference between the price the employee pays and the market price of the stock on the last day of the quarter.

A summary of the Company’s Plans as of December 30, 2007 is presented below:
| **        ** | **Number of Shares** | ** **  | **Weighted- Average Exercise Price** | ** ** | **Number of Shares Exercisable** | ** ** | **Weighted- Average Exercise Price** | ** **    | **Weighted- Average Fair Value Granted Option** |
|------------------------------------------------------|----------------------|-------------|--------------------------------------|------------|----------------------------------|------------|--------------------------------------|---------------|-------------------------------------------------|
|                                                      |
| Outstanding at July 1, 2007                          |                      | 1,581,313   |                                      |            | $                                | 3.90       |                                      |               | 1,581,313                                       |       | $ | 3.90 |   |   |
|                                                      |
| Canceled                                             |                      | ---         |                                      |            |                                  |            |                                      |               |                                                 |  |  |     |  |  |   |
| Granted                                              |                      | ---         |                                      |            |                                  |            |                                      |               |                                                 |  |  | $ | --- |  |   |
| Exercised                                            |                      | (24,500     | )                                    |            | 8.54                             |            |                                      |               |                                                 |  |  |  |  |  |   |
|                                                      |
| **Outstanding at September 30, 2007**                | 1,556,813            |             |                                      | $          | 3.83                             |            |                            | 1,556,813     |                                                 | $ | 3.83 |          |  |  |
|                                                      |
|                                                      |
| **Canceled**                                         |                      | **---**     |                                      |            | **---**                          |            |                                      | **---**       |                                                 | **---** |  | **   ** |  |  |   |
| **Granted**                                          |                      | **---**     |                                      |            | **---**                          |            |                                      | **---**       |                                                 | **---** |  | **$** | **---** |  |   |
| **Exercised**                                        |                      | **(14,950** | **)**                                |            | **2.86**                         |            |                                      | **---**       |                                                 | **---** |  |  |  |  |   |
|                                                      |
| **Outstanding at December 30, 2007**                 | **1,541,863**        |             |                                      | **$**      | **3.83**                         |            | **  **                     | **1,541,863** |                                                 | **$** | **3.83** | **        ** | **** | **** |   |
|                                                      |
|                                                      |
|                                                      |

**Stock Options**

The following table summarizes information about stock options outstanding:
|                                                                                                                                                                                                                                                                    |            | **Outstanding and Exercisable Options**                                                          |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                    |            |                                                                                                  |  |  |  |  |  |  |
| **Range of Exercise Prices**                                                                                                                                                                                                                                       | ** ** | **Number Outstanding at December 30, 2007**                                                      | **  ** | **Weighted- Average Remaining Contractual Life (In Years)** | **  ** | **Weighted- Average Exercise Price** | **  ** | **Aggregate Intrinsic Value****(1)*********(in thousands)***** ** |
|                                                                                                                                                                                                                                                                    |
| $2.50 - 3.00                                                                                                                                                                                                                                                       |            | 975,586                                                                                          |  | 2.5 |  |  | $ | 2.58 |  |  | $ | 11,580 |  |
| $3.03 - 5.96                                                                                                                                                                                                                                                       |            | 288,200                                                                                          |  | 5.2 |  |  | 3.51 |  | 3,153 |  |
| $5.97 - 8.54                                                                                                                                                                                                                                                       |            | 278,077                                                                                          |  | 6.7 |  |  | 8.54 |  | 1,638 |  |
|                                                                                                                                                                                                                                                                    |
|                                             |            | 1,541,863                                                                                        |  | 3.7 |  | $ | 3.83 |  | $ | 16,371 |  |
|                                                                                                                                                                                                                                                                    |
|                                                                                                                                                                                                                                                                    |
|                                                                                                                                                                                                                                                                    |
|                                                                                                                                                                                                                                                                    |            |                  |  |  |  |  |  |  |  |  |  |

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 30, 2007 was $156,000 and $259,000, 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 fiscal quarter ended December 30, 2007.

**Performance Units and Restricted Stock**

The Company entered into performance unit award agreements with certain key executives under the LTIP in August 2005, August 2006 and August 2007. These agreements provide for the issuance of performance units, to be settledin stock, subject to the achievement of the Company’s financial goals. Settlements are made pursuant to a range of opportunities relative to net earnings. No settlement occurs for results below the minimum threshold and additional shares shall be issued if theperformance exceeds the target goals. The compensation cost of performance units is subject to adjustment based upon the attainability of the target goals.

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

During the six months ended December 30, 2007, the Company issued 108,084 shares of restricted stock, associated with the fiscal 2007 award, which are subject to the two-year vesting condition. In addition, the Companyrecorded compensation expense for the awards granted for fiscal 2007. During the six months ended December 31, 2006, the Company issued 79,763 shares of restricted stock associated with the fiscal 2006 award, which are subject to the two-year vestingcondition.

During the three and six months ended December 30, 2007, the compensation expense related to the LTIP was $411,000 and $683,000. During the three and six months ended December 31, 2006, the compensation expense related to theLTIP was $309,000 and $569,000, respectively.

The grant date fair value of the restricted stock issued during the six months ended December 30, 2007 was $12.29. The grant date fair value of the restricted stock issued during the six months ended December 31, 2006 was$13.27.

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**

*This report contains forward-looking statements that relate to future events or our future financial performance.  We have attempted to identify these statements by terminology including“believe,” “anticipate,” “plan,” “expect,” “estimate,” “intend,” “seek,” “goal,” “may,” “will,” “should,” “can,”“continue,” or the negative of these terms or other comparable terminology.  These statements include statements about our market opportunity, our growth strategy, competition, expected activities, and the adequacy of our available cashresources.  These statements may be found throughout the report, including in the section of this report entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”  Readers are cautioned that matterssubject to forward-looking statements involve known and unknown risks and uncertainties, including those discussed in our most recent Annual Report on Form 10-K. These risks and uncertainties may cause our actual results, levels of activity, performance orachievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Accordingly, we can give no assurances that any of the events anticipated by the forward-lookingstatements will occur, or if any of them do, what impact they will have on our results of operations or financial condition. We expressly decline any obligation to publicly revise any forward-looking statements that have been made to reflect the occurrence of eventsafter the date of this report.*

**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 desiring an engineering and manufacturing partner capable of developing and providing high-reliability electronic and electromechanical equipment, including products capable ofperforming in harsh environmental conditions, such as high and low temperature, severe shock and vibration.  The Company serves customers in a variety of markets including defense, natural resources, industrial, aerospace, medical, government systems, and othercommercial markets. The Company’s engineering and manufacturing facilities are located in Arkansas, Missouri, Oklahoma, Texas and Pennsylvania.  The Company employs approximately 1,400 people, including approximately 1,200 people who provide support forproduction activities (including assembly, test and engineering) and approximately 200 people who provide administrative support.

**Results of Operations - Three and Six Months Ended December 30, 2007**

***Backlog****(in thousands)*
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                            |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                         | **December 30,** | **           ** | July 1, |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | Change                                                                                                                                     | **2007** |  | 2007 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                            |  |
| Backlog                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | $39,333                                                                                                                                    |  | **$** | **245,542** |  | **    ** | $ | 206,209 |    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                            |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                            |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                            |  |
|                                                                                                                                                                      |

The backlog of unshipped orders at December 30, 2007 was $245.5 million.  The growth in backlog from the previous fiscal year-end is the result of a sales and marketing effort that focuses on the needs of targeted largecustomers in a variety of industries. Approximately $32.7 million of the backlog at December 30, 2007 is scheduled to ship beyond the next 12 months pursuant to the shipment schedules contained in those contracts. This compares with $55.1 million at fiscalyear-end 2007.

***Net Sales******(in thousands)*
| ** **                                                                                                                                                                                                                                                                                                                               | Three Months Ended     |   | Six Months Ended |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------|--------|------------------|
|                                                                                                                                                                                                                                                                                                                                          |                        |        |                  |  |  |  |  |  |
| **  **                                                                                                                                                                                                                                                                                                                         | **December 30, ** |        | December 31,     | ** ** | **December 31,** | ** ** | December 31, |
| **                                                      ** | **2007**               |        | 2006             | ** ** | **2007** | ** ** | 2006 |
|                                                                                                                                                                                                                                                                                                                                          |                        |        |                  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                          |                        |        |                  |  |  |  |  |  |
| Net sales                                                                                                                                                                                                                                                                                                                                | **   ** | **$**  | **67,052**       |      |   |     | $ | 60,820 |  |      | **$** | **126,242** |  |  | $ | 110,720 |  |
|                                                                                                                                                                                                                                                                                                                                          |                        |        |                  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                          |                        |        |                  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                          |                        |        |                  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                          |                        |        |                  |  |  |  |  |  |

The largest contributor to fiscal 2008 second-quarter revenues was shipments to defense customers that generated $23.5 million of sales, versus $18.9 million in the second quarter of fiscal 2007. 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.  Shipments of capital equipment to natural resourcescustomers, including downhole tools and mining systems, represented $18.7 million of fiscal 2008 second-quarter revenues, compared with $14.5 million in the year-ago period.  Sales to industrial customers, largely shipments of equipment used in glass fabricationsystems, represented $11.6 million of fiscal 2008 second-quarter revenues, compared with $8.7 million in the year-ago period. Sales to commercial aerospace customers represented $5.1 million of fiscal year 2008 second-quarter revenues compared with$6.7 million in the year-ago period. Sales to medical customers represented $4.4 million of fiscal 2008 second-quarter revenues, compared with $1.5 million in the year-ago period. Sales to government systems customers represented $2.6 million of fiscal 2008second-quarter revenues, compared with $8.3 million in the year-ago period, which included shipments of postal automation equipment and higher shipments of airport security equipment.

For the six months ended December 30, 2007, shipments to defense customers generated $46.4 million of sales, versus $37.4 million in 2007. 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. Shipments of capital equipment to natural resources customers, including downhole tools and mining systems, represented$34.1 million of fiscal 2008 year-to-date revenues, compared with $25.6 million in the year-ago period. Sales to industrial customers, largely shipments of equipment used in glass fabrication systems, represented $22.5 million of fiscal 2008 first-half revenues,compared with $16.3 million in the year-ago period. Sales to commercial aerospace customers generated $9.2 million of fiscal 2008 revenues, compared with $11.1 million in the year-ago period. Sales to medical customers represented $7.5 million of fiscal 2008first-half revenues, compared with $2.4 million in the fiscal 2007 first half. Sales to government systems customers represented $4.1 million of fiscal 2008 first-half revenues, compared with $14.3 million in the year-ago period, which included shipments of postalautomation equipment and higher shipments of airport security equipment.

Sales to the Company’s 10 largest customers represented 71.1% of total revenue in the second quarter of fiscal 2008, compared with 72.4% for the same period of fiscal 2007.  The Company’s topthree customers accounted for $8.9 million (15%), $8.6 million (14%) and $8.1 million (13%), respectively, of total sales for the second quarter of fiscal 2008. This compares with $7.8 million (13%), $6.9 million (11%), and $6.0 million (10%), respectively, for thesecond quarter of fiscal 2007.

***Gross Profit****(dollars in thousands)*
| ** **                                                                                                                                                                                                                                                                                                                   | Three Months Ended |            | Six Months Ended |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------|------------|------------------|
|                                                                                                                                                                                                                                                                                                                              |                    |            |                  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                              | **December 30,**   | ** ** | December 31,     | ** ** | **December 30,** | ** ** | December 31, |
| **                                                    ** | **2007**           |            | 2006             | ** ** | **2007** |  | 2006 |
|                                                                                                                                                                                                                                                                                                                              |                    |            |                  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                              |                    |            |                  |  |  |  |  |  |
| Gross profit                                                                                                                                                                                                                                                                                                                 |          | **$**      | **13,376**       |   |    | $ | 12,506 |   | **$** | **24,748** | ** ** | **   ** | $ | 23,163 |  |
| Gross margin                                                                                                                                                                                                                                                                                                                 | **  **   | **19.9**   | **%**            |   | 20.6 | % |  | **19.6** | **%** |  | 20.9 | % |
|                                                                                                                                                                                                                                                                                                                              |                    |            |                  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                              |                    |            |                  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                              |                    |            |                  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                              |                    |            |                  |  |  |  |  |  |

The gross profit for the three and six months ended December 30, 2007, decreased by 70 and 130 basis points, respectively, from the same periods ended December 31, 2006.

For the fiscal year ended July 1, 2007, the Company’s gross margins were adversely affected by higher than anticipated labor and material costs on certain contracts. For the three and six months ended December 30, 2007,gross margins continued to be negatively impacted by shipments under those contracts. Gross margin in the three months ended December 30, 2007 was 70 basis points higher than gross margin in the three months ended September 30, 2007. 

Gross margins vary significantly from contract to contract. The gross margin for any particular quarter will reflect the mix of contracts recognized in revenue for the quarter.

***Selling and Administrative Expenses****(dollars in thousands)*
| ** **                                                                                                                                                                                                                                                                                                                         | Three Months Ended |                   | Six Months Ended |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------|------------------------|------------------|
|                                                                                                                                                                                                                                                                                                                                    |                    |                        |                  |  |  |  |  |  |
| **      **                                                                                                                                                                                                                                                                                           | **December 30,**   | **   ** | December 30,     |  | **December 30,** | ** ** | December 31, |
| **                                                     ** | **2007**           |                        | 2006             | ** ** | **2007** |  | 2006 |
|                                                                                                                                                                                                                                                                                                                                    |                    |                        |                  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                    |                    |                        |                  |  |  |  |  |  |
| Selling and administrative expenses                                                                                                                                                                                                                                                                                                | ** **         | **$**                  | **7,465**        |   |  | $ | 6,800 |   | **$** | **14,412** |   | $ | 12,791 |  |
| Percent of sales                                                                                                                                                                                                                                                                                                                   |                    | **11.1**               | **%**            |   | 11.2 | % |  | **11.4** | **%** |  | 11.6 | % |
|                                                                                                                                                                                                                                                                                                                                    |                    |                        |                  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                    |                    |                        |                  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                    |                    |                        |                  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                    |                    |                        |                  |  |  |  |  |  |

For the three months ended December 30, 2007, selling and administrative expenses increased from the year-ago period, primarily due to higher compensation costs and related fringes of $390,000, insurance expense of $54,000 and medical insurance of $64,000.

For the six months ended December 30, 2007, selling and administrative expenses increased versus the year-ago period. This is primarily a result of higher compensation costs and related fringes of $680,000 due to wageinflation and higher accrued incentive pay; professional services of $268,000; general insurance expense of $124,000; medical insurance of $110,000; computer maintenance of $108,000; and contract labor of $54,000.

***Interest Expense****(in thousands)*
| ** **                                                                                                                                                                                                                                                                                                                         | Three Months Ended |    | Six Months Ended |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------|---------|------------------|
|                                                                                                                                                                                                                                                                                                                                    |                    |         |                  |  |  |  |  |  |
| ** **                                                                                                                                                                                                                                                                                                                         | **December 30,**   |         | December 31,     |  | **December 30,** |  | December 31 |
| **                                                     ** | **2007**           |         | 2006             |  | **2007** |  | 2006 |
|                                                                                                                                                                                                                                                                                                                                    |                    |         |                  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                    |                    |         |                  |  |  |  |  |  |
| Interest expense                                                                                                                                                                                                                                                                                                              | **$**              | **387** |                  |      | $ | 564 |      |       | **$** | **814** |   |     | $ | 1,215 |  |
|                                                                                                                                                                                                                                                                                                                                    |                    |         |                  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                    |                    |         |                  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                    |                    |         |                  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                    |                    |         |                  |  |  |  |  |  |

Interest expense decreased in the three and six months ended December 30, 2007, compared with the year-ago period. The reduction reflects lower average debt levels which more than offset the impact of higher average interestrates.

Average debt levels for the three- and six-month periods ended December 30, 2007 were $22.8 million and $21.9 million, respectively. Average debt levels for the three- and six-month periods ended December 31, 2006 were$32.3 million and $34.9 million, respectively.

Average interest rates for the three and six month periods ended December 30, 2007 were 6.68% and 6.73%, respectively. Average interest rates for the three and six month periods ended December 31, 2006 were 6.34% and 6.44%,respectively.

***Tax Expense****(in thousands)*
| ** **                                                                                                                                                                                                                                                                                                                                                 | Three Months Ended |           | Six Months Ended |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------|-----------|------------------|
|                                                                                                                                                                                                                                                                                                                                                            |                    |           |                  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                            | **December 30,**   |           | December 31,     |  | **December 30,** |  | December 31, |
| **                                                         ** | **2007**           |           | 2006             |  | **2007** |  | 2006 |
|                                                                                                                                                                                                                                                                                                                                                            |                    |           |                  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                            |                    |           |                  |  |  |  |  |  |
| Tax expense                                                                                                                                                                                                                                                                                                                                                | **$**              | **2,105** |                  |    | $ | 2,009 |  |      | **$** | **3,573** |  |     | $ | 3,569 |  |
|                                                                                                                                                                                                                                                                                                                                                            |                    |           |                  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                            |                    |           |                  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                            |                    |           |                  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                            |                    |           |                  |  |  |  |  |  |

The tax rates for the three- and six-month periods ended December 30, 2007 were 38.3% and 37.7%, respectively.  For the three- and six-month periods ended December 31, 2006, the tax rate was 38.3%.

**Liquidity and Capital Resources******The following table shows LaBarge’s equity and total debt positions:

***Stockholders’ Equity and Debt****(in thousands)*
|                                                                               | **December 30,**                                                                   | July 1,    |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------|------------|
|                                                                | **2007**                                                                           | 2007       |
|                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                    |            |
| Stockholders’ equity                                                                                                                                                                                                                                                                                                                                                           | **    **                                                       | **$**      | **83,366** |             |       | $ | 76,410 |          |
| Debt                                                                                                                                                                                                                                                                                                                                                                                 | **             ** | **24,057** | **     ** |     | 26,256 |  |
|                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                    |            |

The Company’s operations provided $5.2 million of net cash in the six months ended December 30, 2007.

The Company’s net cash flow from operations was negatively impacted by a customer’s decision during the Company’s second fiscal quarter to stop taking early payment discounts and pay invoices in normalcontract terms. The impact for this on net cash from operations for the six months ended December 30, 2007, was a decrease of approximately $4.5 million.

***Senior Lender:***

The Company entered into a senior secured loan agreement with a group of banks on February 17, 2004. The following is a summary of the agreement:
|  •                   |   | A revolving credit facility, up to $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% ofeligible inventories. As of December 30, 2007, outstanding loans under the revolving credit facility were $15.8 million; letters of credit issued were $1.2 million; and an aggregate of $13.0 million was available under the revolving credit facility. Thiscredit facility matures on February 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 increased to $1.5 million in May 2007.  Final maturity is February2009.  As of December 30, 2007, the amount outstanding was $7.5 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                          |
|            |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                          |
|  •                   |        | Interest on both loans is calculated at a percentage of prime or a stated rate over LIBOR based on certain ratios.  For the three- and six-month periods ended December 30, 2007, the average rates were approximately 6.75%and 6.78%, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                          |
|       |   |                                                                                                                                                 |                                                                          |
|  •                   |   | 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 Companywas in compliance with its borrowing agreement covenants as of December 30, 2007.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                          |
|            |   |                                                                                                                                                           |                                                                     |

***Other Long-Term Debt:***Other long-term debt includes capital lease agreements with outstanding balances totaling $404,000 at December 30, 2007, and $470,000 at July 1, 2007.

The aggregate maturities of long-term obligations are as follows:*(in thousands)*
| **Fiscal Year**               |
|-------------------------------|
|                               |
| 2008                          | ...............................................................  | $ | 3,153 |   |
| 2009                          | ...............................................................  |      | 4,681 |   |
| 2010                          | ...............................................................  |       | 147 |   |
| 2011                          | ...............................................................  |       | 51 |   |
| 2012                          | ...............................................................  |       | 250 |   |
|                               |
|     Total | ...............................................................  | $ | 8,282 |   |
|                               |

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

The following discussion of critical accounting policies is intended to bring to the attention of readers those accounting policies that management believes are critical to the Company’s consolidated financial statementsand other financial disclosures.  It is not intended to be a comprehensive list of all of our significant accounting policies that are more fully described in the Notes to the Consolidated Financial Statements included in the Company’s Annual Report onForm 10-K for the fiscal year ended July 1, 2007.

***Revenue Recognition and Cost of Sales***Revenue is generally recognized when title transfers, which is usually upon shipment.  On a very limited number of contracts, the Company will recognize revenue prior to shipment if certain criteria have been met. As of December 30,2007, and December 31, 2006, the Company has recognized revenue under these arrangements of $1.9 million and $4.4 million, respectively. The Company recognizes revenue for storage and other related services as the services are provided.

The percentage-of-completion method gives effect to the most recent contract value and estimates of cost at completion. Management’s estimates of material, labor and overhead costs on long-term contracts are critical tothe Company. Since some contracts extend over a long period of time, revisions in cost during the progress of work have the effect of adjusting current period earnings applicable to performance in prior periods. When the current contract cost estimate indicates aloss, provision is made for the total anticipated loss in the period the loss becomes evident.

During fiscal year 2007, the Company entered into a new significant agreement with an industrial customer to manufacture certain assemblies and supply certain parts. Revenue related to the manufactured assemblies will berecognized as gross revenue when the product is shipped. Under the Financial Accounting Standards Board’s (“FASB”) Emerging Issues Task Force (“EITF”) No. 99-19, “Reporting Revenue Gross as a Principle versus Net as anAgent,” the cost of the supplied parts will be netted against the invoice price to determine net sales when the part is shipped. During the six months ended December 30, 2007, sales under this contract were $4.5 million related to the manufactured assembliesand $111,000 related to the supplied parts.

***Inventories***Inventories, which consist of materials, labor and manufacturing overhead, are carried at the lower of cost or market value. In addition, management regularly reviews inventory for obsolescence to determine whether any additional write-down isnecessary.  Various factors are considered in making this determination, including expected program life, recent sales history, predicted trends and market conditions.  If actual demand or market conditions are less favorable than those projected bymanagement, additional inventory write-downs may be required.  For the quarters ended December 30, 2007 and December 31, 2006, expense for obsolete or slow-moving inventory charged to income before income taxes was $502,000 and $306,000, respectively.

***Goodwill and Other Intangibles***In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 142, “Goodwill and Other Intangible Assets,” intangible assets deemed to have indefinite lives and goodwill are not subject toamortization. All other intangible assets are amortized over their estimated useful lives.  Goodwill and other intangible assets not subject to amortization are tested for impairment annually or more frequently if events or changes in circumstances indicate thatthe asset might be impaired.  This testing requires comparison of carrying values to fair values, and when appropriate, the carrying value of impaired assets is reduced to fair value.  During the fourth quarter of fiscal year 2007, the Company completed itsquarterly impairment test and determined that the carrying value is 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 September 2006, the FASB issued 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 onfair value measurements. SFAS No. 157 becomes effective for the Company in its fiscal year ending June 28, 2009. The Company does not believe that adopting the provisions of SFAS No. 157 will have a material impact on its consolidated financial statements.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities” (“SFAS No. 159”), to permit all entities to choose to elect, at specified electiondates, to measure eligible financial instruments at fair value. An entity shall report unrealized gains and losses on items for which the fair value option has been elected in earning at each subsequent reporting date, and recognize upfront costs and fees related tothose items in earnings as incurred and not deferred. SFAS No. 159 applies to fiscal years beginning after November 15, 2007, with early adoption permitted for an entity that has also elected to apply the provisions of SFAS No. 157. An entity is prohibited fromretrospectively applying SFAS No. 159, unless it chooses early adoption. The Company does not believe that the adoption of the provisions of SFAS No. 159 will have a material impact on its consolidated financial statements when it becomes effective for the fiscalyear ending June 28, 2009.

In September 2006, the FASB’s EITF reached a consensus on EITF Issue No. 06-4, “Accounting for Deferred Compensation and Postretirement Benefits Aspects of Endorsement Split-Dollar Life InsuranceArrangements” (“EITF 06-4”).  This addresses only endorsement split-dollar life insurance arrangements that provide a benefit to an employee that extends to postretirement periods. EITF 06-4 becomes effective for the Company in its fiscal yearending June 28, 2009. The Company does not believe that adopting the provisions of EITF 06-4 will have a material impact on its consolidated financial statements.

***Recently Adopted Accounting Standards***The Company adopted the provisions of FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes as Interpretation of FASB Statement No. 109” (“FIN 48”) on July 2, 2007. The implementation of FIN 48did not result in an adjustment to the liability for unrecognized income tax benefits. At the adoption date of July 2, 2007, there was approximately $630,000 of unrecognized tax benefits, all of which would affect the Company’s effective tax rate ifrecognized. At December 30, 2007, there was approximately $630,000 of unrecognized tax benefits.

The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. As of December 30, 2007, there was approximately $121,000 of accrued interest related to uncertain tax positions, $19,000and $39,000 of which was recognized in the three and six months ended December 30, 2007, respectively.

The Company’s federal income tax returns for fiscal years 2004 through 2006 are open tax years. We file in numerous state jurisdictions with varying statutes of limitation open from 2003 through 2006, depending on eachjurisdiction’s unique tax laws. The Company’s federal returns for fiscal year 2005 and fiscal year 2006 are currently being examined by the Internal Revenue Service (“IRS”). The IRS has proposed adjustments related to the Company’sclaimed research and experimentation credits and other issues. The Company is currently evaluating the proposed adjustments and believes it is reasonably possible that a decrease of $250,000 to $350,000 of the unrecognized tax benefits may occur when the audit iscompleted. The impact of the proposed adjustment on the statement of income is not expected to be material.

In September 2006, the FASB’s EITF reached a consensus on EITF Issue No. 06-5, “Accounting for Purchases of Life Insurance—Determining the Amount That Could Be Realized in Accordance with FASB TechnicalBulletin No. 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 asset inaccordance with Technical Bulletin 85-4. EITF 06-5 became effective for the Company in the current fiscal year. Adopting the provisions of EITF 06-5 did not have a material impact on the Company’s consolidated financial statements.

Table of Contents

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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 fiscal quarters ended December 30, 2007, and December 31, 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 30, 2007, the Company had $24.1 million in total debt.  Of the total debt, $782,000 has a fixed rate and is not subject interest rate risk. The interest rate on the remaining $23.3 million is subject tofluctuation.  If interest rates increased 1%, the additional interest cost to the Company would be approximately $180,000 for one year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| ** **                                                                                                                                             | **                                                                                                                 **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |
| **ITEM 4.        **                                                                                            | **Controls and Procedures**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | **                                  ** |
| ** **                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |
|                           | *Evaluation Of Disclosure Controls And Procedures*

The Company’s Chief Executive Officer and President, and the Company’s Vice President and Chief Financial Officer, have conducted an evaluation of the design and effectiveness of the Company’s disclosurecontrols and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, as of the end of the period covered by this report.

The Chief Executive Officer and Chief Financial Officer have concluded that as of the end of the period covered by this report, the Company’s disclosure controls and procedures are functioning adequately and effectivelyto provide reasonable assurance that the Company can meet its disclosure obligations.  The Company’s disclosure controls and procedures are based upon a chain of financial and general business reporting lines that converge in the headquarters of theCompany in St. Louis, Missouri.  The reporting process is designed to ensure that information required to be disclosed by the Company in the reports that it files with or submits to the Securities and Exchange Commission is recorded, processed, summarized andreported within the time periods specified in the Commission’s rules and forms.

*Changes In Internal Controls*

During our second fiscal quarter of 2008, there were no changes in internal control over financial reporting identified in connection with Management’s evaluation that have materially affected or that are reasonablylikely to materially affect these controls. |

Table of Contents

**PART II**

****

****

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

****

The Company held its Annual Meeting of Stockholders on November 14, 2007.

At the meeting, Messrs. Clark and Thomas were elected as Class C Directors with terms expiring in 2010.  The votes with respect to each nominee and with respect to the other matter voted on by shareholders at the meetingare set forth below:
| **Proposal No. 1**                                                                                                                                                                                                                                                                                                                                                                   | **Number of Votes FOR**                                                                                                                                                                                                                                                                                | **Withheld Authority to Vote**                                                                                                                                                                                                                                                                               |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                              |
|                                                                     |                                                   |                                                    |
| **  Robert G. Clark**                                                                                                                                                                                                                                                                                                                                                           | 13,010,978                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                              | 34,825 |
| **  Jack E. Thomas, Jr.**                                                                                                                                                                                                                                                                                                                                                       | 12,862,136                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                              | 183,667 |
|                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                              |
|                                                                |                                                                       |                                                                                                                                                                                                                                                                                               |                                               |
| **Proposal No. 2**                                                        | **FOR**    | **AGAINST** | **ABSTAIN** |
|---------------------------------------------------------------------------|------------|-------------|-------------|
|                                                                           |            |             |
| Ratification of KPMG LLP as Independent Registered Public Accounting Firm | 12,880,263 | 157,214     | 8,326       |
|                                                                           |            |             |
|                                                                      |            |             |             |
| **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.              |
|            |          |

Table of Contents

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.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
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|                                                                                    | Date:  February 7, 2008                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | By:  /s/DONALD H. NONNENKAMP                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | Name:  Donald H. Nonnenkamp                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | Title:    Vice President and Chief Financial Officer                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
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