UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended December 28, 2008
 or
 o
    
    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.
 
 Delaware
    
    73-0574586(State or Other Jurisdiction of
    
    (I.R.S. Employer IdentificationIncorporation or Organization)
    
    Number)9900 Clayton Road, St. Louis, Missouri
    
    63124(Address of Principal Executive Offices)
    
    (Zip Code)
 
 
 þ o
  Large accelerated filer oAccelerated filer þNon-accelerated filer o(Do not check if a smaller reporting company)Smaller reporting company o o þ




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##### 



LaBarge, Inc.
 FORM 10-Q
 For the Quarterly Period Ended December 28, 2008
 Table of Contents
  Part I
    
    Financial Information (Unaudited)
    
    
    3Item 1.
    
    Financial StatementsConsolidated Statements of Income
    
    
    3Consolidated Balance Sheets
    
    
    4Consolidated Statements of Cash Flows
    
    
    5Notes to Consolidated Financial Statements
    
    
    6Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    15Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    21Item 4.
    
    Controls and Procedures
    
    
    21Part II
    
    Other Information
    
    
    22Item 1A.
    
    Risk Factors
    
    
    22Item 4
    
    Submission of Matters to a Vote of Security Holders
    
    
    22Item 5
    
    Other Events
    
    
    22Item 6.
    
    Exhibits
    
    
    23Signatures
    
    
    
    
    23
 2




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##### 



a   (Unaudited)
 (amounts in thousands  except per-share amounts)
 Three Months Ended
    
    Six Months EndedDecember 28,
    
    December 30,
    
    December 28,
    
    December 30,2008
    
    2007
    
    2008
    
    2007Net sales
    
    $
    68,207
    
    
    $
    67,052
    
    
    $
    136,399
    
    
    $
    126,242Costs and expenses:Cost of sales
    
    
    57,955
    
    
    
    53,676
    
    
    
    111,884
    
    
    
    101,494Selling and administrative expense
    
    
    9,642
    
    
    
    7,465
    
    
    
    17,912
    
    
    
    14,412Interest expense
    
    
    145
    
    
    
    387
    
    
    
    303
    
    
    
    814Other expense, net
    
    
    6
    
    
    
    22
    
    
    
    16
    
    
    
    32Earnings before income taxes
    
    
    459
    
    
    
    5,502
    
    
    
    6,284
    
    
    
    9,490Income tax expense
    
    
    210
    
    
    
    2,105
    
    
    
    2,366
    
    
    
    3,573Net earnings
    
    $
    249
    
    
    $
    3,397
    
    
    $
    3,918
    
    
    $
    5,917Basic net earnings per common share
    
    $
    0.02
    
    
    $
    0.22
    
    
    $
    0.26
    
    
    $
    0.39Average common shares outstanding
    
    
    15,451
    
    
    
    15,216
    
    
    
    15,343
    
    
    
    15,208Diluted net earnings per share
    
    $
    0.02
    
    
    $
    0.21
    
    
    $
    0.24
    
    
    $
    0.37Average diluted common
shares outstanding
    
    
    16,059
    
    
    
    16,092
    
    
    
    16,070
    
    
    
    16,059
  3




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##### 



a   (amounts in thousands  except share amounts)
 December 28,
    
    June 29,2008
    
    2008(unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    1,695
    
    
    $
    1,646Accounts and other receivables, net
    
    
    36,799
    
    
    
    40,778Inventories
    
    
    62,588
    
    
    
    66,927Prepaid expenses
    
    
    1,295
    
    
    
    1,245Deferred tax assets, net
    
    
    4,943
    
    
    
    1,960Total current assets
    
    
    107,320
    
    
    
    112,556Property, plant and equipment, net
    
    
    26,054
    
    
    
    17,248Intangible assets, net
    
    
    12,707
    
    
    
    1,548Goodwill, net
    
    
    42,161
    
    
    
    24,292Deferred tax asset, net
    
    
    137
    
    
    
    Other assets, net
    
    
    5,266
    
    
    
    4,828Total assets
    
    $
    193,645
    
    
    $
    160,472LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Short-term borrowings
    
    $
    5,850
    
    
    $
    10,500Current maturities of long-term debt
    
    
    2,152
    
    
    
    4,682Trade accounts payable
    
    
    20,841
    
    
    
    22,684Accrued employee compensation
    
    
    10,342
    
    
    
    13,494Other accrued liabilities
    
    
    2,586
    
    
    
    2,552Cash advances
    
    
    10,081
    
    
    
    11,897Total current liabilities
    
    
    51,852
    
    
    
    65,809Long-term advances from customers for purchase of materials
    
    
    47
    
    
    
    622Deferred gain on sale of real estate and other liabilities
    
    
    1,888
    
    
    
    2,125Long-term debt
    
    
    43,414
    
    
    
    447Stockholders equity:Common stock, $.01 par value. Authorized 40,000,000 shares;
15,958,839 issued at December 28, 2008 and 15,773,253 at
June 29, 2008, respectively, including shares in treasury
    
    
    160
    
    
    
    158Additional paid-in capital
    
    
    14,247
    
    
    
    16,547Retained earnings
    
    
    82,519
    
    
    
    78,601Less cost of common stock in treasury, shares of 47,727 at
December 28, 2008 and 419,503 at June 29, 2008
    
    
    (482
    )
    
    
    (3,837
    )Total stockholders equity
    
    
    96,444
    
    
    
    91,469Total liabilities and stockholders equity
    
    $
    193,645
    
    
    $
    160,472
  4




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##### 



a    (amounts in thousands)
 Six Months EndedDecember 28,
    
    December 30,2008
    
    2007Cash flows from operating activities:Net earnings
    
    $
    3,918
    
    
    $
    5,917Adjustments to reconcile net cash provided by
operating activities:Depreciation and amortization
    
    
    2,765
    
    
    
    2,535Amortization of deferred gain on sale of real estate
    
    
    (241
    )
    
    
    (240
    )Stock-based compensation
    
    
    575
    
    
    
    718Other than temporary impairment of investment
    
    
    19
    
    
    
    34Deferred taxes
    
    
    (3,120
    )
    
    
    (256
    )Other
    
    
    
    
    
    
    8Changes in assets and liabilities, net of acquisitions:Accounts and other receivables, net
    
    
    11,218
    
    
    
    (6,779
    )Inventories
    
    
    11,200
    
    
    
    (6,294
    )Prepaid expenses
    
    
    97
    
    
    
    444Trade accounts payable
    
    
    (7,477
    )
    
    
    5,181Accrued liabilities
    
    
    (3,276
    )
    
    
    (172
    )Advance payments from customers
    
    
    (2,391
    )
    
    
    4,087Net cash provided by operating activities
    
    
    13,287
    
    
    
    5,183Cash flows from investing activities:Acquisition of Pensar, net of cash acquired
    
    
    (44,802
    )Additions to property, plant and equipment
    
    
    (3,280
    )
    
    
    (2,818
    )Proceeds from disposal of property and equipment
    
    
    10
    
    
    
    18Additions to other assets and intangibles
    
    
    (592
    )
    
    
    (340
    )Net cash used by investing activities
    
    
    (48,664
    )
    
    
    (3,140
    )Cash flows from financing activities:Borrowings on revolving credit facility
    
    
    35,375
    
    
    
    41,925Payments of revolving credit facility
    
    
    (40,025
    )
    
    
    (40,975
    )Borrowings of long-term debt
    
    
    42,014
    
    
    
    Repayments of long-term debt
    
    
    (1,577
    )
    
    
    (3,149
    )Payment of debt issuance costs
    
    
    (274
    )
    
    
    Excess tax benefits from stock option exercises
    
    
    3,029
    
    
    
    77Remittance of minimum taxes withheld as part of a
net share settlement of stock option exercises
    
    
    (1,689
    )
    
    
    Issuance of treasury stock
    
    
    1,894
    
    
    
    403Purchase of treasury stock
    
    
    (3,321
    )
    
    
    (265
    )Net cash provided (used) by financing activities
    
    
    35,426
    
    
    
    (1,984
    )Net increase in cash and cash equivalents
    
    
    49
    
    
    
    59Cash and cash equivalents at beginning of period
    
    
    1,646
    
    
    
    392Cash and cash equivalents at end of period
    
    $
    1,695
    
    
    $
    451Non-cash transactions:Increase in capital lease obligations
    
    $
    49
    
    
    $
    
  5




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##### 



LaBarge, Inc .
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. CONSOLIDATED FINANCIAL STATEMENTS  BASIS OF PRESENTATION
   Recently Adopted Accounting Standards
    2. ACQUISITION
   6




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##### 



(in thousands)
 As ofDecember 22, 2008Current assets
    
    $
    14,549Property and equipment
    
    
    7,169Intangible assets
    
    
    11,465Goodwill
    
    
    17,869Total assets acquired
    
    $
    51,052Current liabilities
    
    
    5,643Long-term liabilities
    
    
    Total liabilities assumed
    
    $
    5,643Net assets acquired
    
    $
    45,409
    Three Months Ended
    
    Six Months EndedDecember 28,
    
    December 30,
    
    December 28,
    
    December 30,2008
    
    2007
    
    2008
    
    2007Net sales
    
    $
    80,139
    
    
    $
    79,430
    
    
    $
    161,317
    
    
    $
    150,144Net earnings
    
    
    388
    
    
    
    3,938
    
    
    
    4,340
    
    
    
    6,226Basic net earnings per share
    
    $
    0.03
    
    
    $
    0.26
    
    
    $
    0.28
    
    
    $
    0.41Diluted earnings per share
    
    $
    0.02
    
    
    $
    0.24
    
    
    $
    0.27
    
    
    $
    0.39
 7




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3. SALES AND NET SALES
 (in thousands)
 Three Months Ended
    
    Six Months EndedDecember 28,
    
    December 30,
    
    December 28,
    
    December 30,2008
    
    2007
    
    2008
    
    2007Sales
    
    $
    68,361
    
    
    $
    67,349
    
    
    $
    136,831
    
    
    $
    126,693Less sales discounts
    
    
    154
    
    
    
    297
    
    
    
    432
    
    
    
    451Net sales
    
    $
    68,207
    
    
    $
    67,052
    
    
    $
    136,399
    
    
    $
    126,242
 Geographic Information
  4. ACCOUNTS AND OTHER RECEIVABLES
 (in thousands)
 December 28,
    
    June 29,2008
    
    2008Billed shipments
    
    $
    39,211
    
    
    $
    40,105Less allowance for doubtful accounts
    
    
    3,986
    
    
    
    252Trade receivables, net
    
    
    35,225
    
    
    
    39,853Other current receivables
    
    
    1,574
    
    
    
    925Total
    
    $
    36,799
    
    
    $
    40,778
      8




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5. INVENTORIES
 (in thousands)
 December 28,
    
    June 29,2008
    
    2008Raw materials
    
    $
    43,842
    
    
    $
    47,221Work in progress
    
    
    14,339
    
    
    
    16,319Finished goods
    
    
    4,407
    
    
    
    3,387Total
    
    $
    62,588
    
    
    $
    66,927
      6. INTANGIBLE ASSETS, NET
 (in thousands)
 December 28,
    
    June 29,2008
    
    2008Software
    
    $
    4,506
    
    
    $
    4,090Less accumulated amortization
    
    
    3,669
    
    
    
    3,457Net software
    
    
    837
    
    
    
    633Customer list
    
    
    13,070
    
    
    
    3,400Less accumulated amortization
    
    
    2,791
    
    
    
    2,485Net customer list
    
    
    10,279
    
    
    
    915Employee agreements
    
    $
    1,600
    
    
    $
    Less accumulated amortization
    
    
    9
    
    
    
    Net employee agreements
    
    
    1,591
    
    
    
    Total intangible assets, net
    
    $
    12,707
    
    
    $
    1,548
 9




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7. GOODWILL
 (in thousands)
 December 28,
    
    June 29,2008
    
    2008Goodwill
    
    $
    42,361
    
    
    $
    24,492Less accumulated amortization
    
    
    200
    
    
    
    200Net goodwill
    
    $
    42,161
    
    
    $
    24,292
  8. OTHER ASSETS
 (in thousands)
 December 28,
    
    June 29,2008
    
    2008Cash value of life insurance
    
    $
    4,828
    
    
    $
    4,612Deposits, licenses and other, net
    
    
    96
    
    
    
    112Securities held for sale
    
    
    7
    
    
    
    26Deferred financing costs, net
    
    
    299
    
    
    
    42Other
    
    
    36
    
    
    
    36Total
    
    $
    5,266
    
    
    $
    4,828
 9. SHORT- AND LONG-TERM OBLIGATIONS
 (dollars in thousands)
 December 28,
    
    June 29,2008
    
    2008Short-term borrowings:Revolving credit agreement:Balance at period-end
    
    $
    5,850
    
    
    $
    10,500Interest rate at period-end
    
    
    4.00
    %
    
    
    3.83
    %Average amount of short-term borrowings
outstanding during period
    
    $
    647
    
    
    $
    14,764Average interest rate for period
    
    
    4.19
    %
    
    
    5.79
    %Maximum short-term borrowings at
any month-end
    
    $
    5,875
    
    
    $
    19,025Senior long-term debt:Senior lender:Term loans
    
    $
    45,000
    
    
    $
    4,500Other
    
    
    566
    
    
    
    629Total senior long-term debt
    
    
    45,566
    
    
    
    5,129Less current maturities
    
    
    2,152
    
    
    
    4,682Long-term debt, less current maturities
    
    $
    43,414
    
    
    $
    447
 10




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Senior Lender:
  
    
    A revolving credit facility, up to $30.0 million, available for direct borrowings or
letters of credit. The facility is based on a borrowing base formula equal to the sum of
85% of eligible receivables and 35% of eligible inventories. As of December 28, 2008, the
outstanding loans under the revolving credit facility were $5.9 million. As of December
28, 2008, letters of credit issued were $1.0 million; and an aggregate of $23.1 million was
available under the revolving credit facility. This credit facility matures on December 28,
2011.
    
    An aggregate $45.0 million term loan amortized beginning September 2009, at a quarterly
rate of $2.0 million, increasing to $2.5 million in September 2010, and increasing to $2.7
million in September 2011. The balance is due in December 2011.
    
    Interest on the revolving facility and the term loans is calculated at a base rate or LIBOR
plus a stated spread based on certain ratios. For the fiscal quarter ended December 28,
2008, the average rate was approximately 3.98%.
    
    All loans are secured by substantially all the assets of the Company other than real estate.
    
    Covenants and performance criteria consist of Earnings Before Interest, Taxes, Depreciation
and Amortization (EBITDA) in relation to debt, EBITDA in relation to fixed charges and
minimum net worth. The Company was in compliance with its borrowing agreement covenants as
of December 28, 2008. The write-off of certain assets related to Eclipse did not impact the
Companys debt covenant compliance.
    
    Subsequent to the quarter ended December 28, 2008, the Company entered into an Interest
Rate Swap Agreement with a bank. Under this agreement, the Company fixed the interest
payments to a base rate of 1.885% plus a stated spread based on certain ratios. The
beginning notional amount is $35 million, which will amortize simultaneously with the term
loan schedule in the loan agreement and will mature on December 22, 2011.
 Other Long-Term Debt:
  (in thousands)
 Fiscal Year2009
    
    $
    772010
    
    
    8,1622011
    
    
    10,0692012
    
    
    27,2582013
    
    
    Total
    
    $
    45,566
 11




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##### 



10. CASH FLOWS
  11. EARNINGS PER COMMON SHARE
 (amounts in thousands, except earnings per-share amounts)
 Three Months Ended
    
    Six Months EndedDecember 28,
    
    December 30,
    
    December 28,
    
    December 30,2008
    
    2007
    
    2008
    
    2007Net earnings
    
    $
    249
    
    
    $
    3,397
    
    
    $
    3,918
    
    
    $
    5,917Basic net earnings per share
    
    $
    0.02
    
    
    $
    0.22
    
    
    $
    0.26
    
    
    $
    0.39Diluted earnings per share
    
    $
    0.02
    
    
    $
    0.21
    
    
    $
    0.24
    
    
    $
    0.37
  (in thousands)
 Three Months Ended
    
    Six Months EndedDecember 28,
    
    December 30,
    
    December 28,
    
    December 30,2008
    
    2007
    
    2008
    
    2007Average common shares outstanding  basic
    
    
    15,451
    
    
    
    15,216
    
    
    
    15,343
    
    
    
    15,208Dilutive options and nonvested restricted shares
    
    
    608
    
    
    
    876
    
    
    
    727
    
    
    
    851Adjusted average common shares
outstanding  diluted
    
    
    16,059
    
    
    
    16,092
    
    
    
    16,070
    
    
    
    16,059
  12. STOCK-BASED COMPENSATION
   12




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Stock Options
  Weighted-AverageWeighted-
    
    Number of
    
    Weighted-
    
    Fair ValueNumber of
    
    Average
    
    Shares
    
    Average
    
    GrantedShares
    
    Exercise Price
    
    Exercisable
    
    Exercise Price
    
    OptionOutstanding at June 29, 2008
    
    
    1,481,324
    
    
    $
    3.84
    
    
    
    1,481,324
    
    
    $
    3.84Canceled
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercised
    
    
    11,675
    
    
    
    8.54
    
    
    
    
    
    
    
    Outstanding at
September 28, 2008
    
    
    1,469,649
    
    
    $
    3.81
    
    
    
    1,469,649
    
    
    $
    3.81
    
    
    
    Canceled
    
    
    Exercised
    
    
    857,610
    
    
    $
    3.02
    
    
    
    
    
    
    
    
    
    
    
    Outstanding at
December 28, 2008
    
    
    612,039
    
    
    $
    4.91
    
    
    
    612,039
    
    
    $
    4.91
    
    
    
    
  Outstanding and Exercisable Options as of December 28, 2008Weighted-
    
    Weighted-Average
    
    Average
    
    AggregateRange of
    
    Number
    
    Remaining
    
    Exercise
    
    Intrinsic Value (1)Exercise Prices
    
    Outstanding
    
    Contractual Life
    
    Price
    
    (in millions)$2.50  3.00
    
    
    232,787
    
    
    
    2.0
    
    
    $
    2.70
    
    
    $
    2.3$3.01  5.96
    
    
    172,100
    
    
    
    4.5
    
    
    
    3.51
    
    
    
    1.6$5.97  8.54
    
    
    207,152
    
    
    
    5.7
    
    
    
    8.54
    
    
    
    .8612,039
    
    
    
    3.9
    
    
    $
    4.91
    
    
    $
    4.7
 (1)
    
    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.   13




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##### 



Performance Units and Nonvested Stock
    Number of
    
    Weighted-Nonvested
    
    AverageShares
    
    Grant PriceNonvested shares at June 29, 2008
    
    
    108,084
    
    
    $
    12.29Issued
    
    
    141,923
    
    
    
    13.00Vested
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    Nonvested shares at December 28, 2008
    
    
    250,007
    
    
    $
    12.69
  14




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##### 



L a BARGE, INC.
FORM 10-Q
 
  MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
 Forward-Looking Statements
 This report contains forward-looking statements that relate to future events or our future
financial performance. We have attempted to identify these statements by terminology including
believe, anticipate, plan, expect, estimate, intend, seek, goal, may, will,
should, can, continue, or 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 cash resources. 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 matters subject 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 or achievements 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-looking statements 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 events after the date of this report.
 General
 General Development of Business and Information about Business Activity
       15




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##### 



Results of Operations  Three and Six Months Ended December 28, 2008  Backlog  (in thousands)
 December 28,
    
    June 29,Change
    
    2008
    
    2008Backlog
    
    $
    (20,611
    )
    
    $
    200,682
    
    
    $
    221,293
   Net Sales  (in thousands)
 Three Months Ended
    
    Six Months EndedDecember 28,
    
    December 30,
    
    December 28,
    
    December 30,2008
    
    2007
    
    2008
    
    2007Net sales
    
    $
    68,207
    
    
    $
    67,052
    
    
    $
    136,399
    
    
    $
    126,242
   16




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##### 



Gross Profit  (dollars in thousands)
 Three Months Ended
    
    Six Months EndedDecember 28,
    
    December 30,
    
    December 28,
    
    December 30,2008
    
    2007
    
    2008
    
    2007Gross profit
    
    $
    10,252
    
    
    $
    13,376
    
    
    $
    24,515
    
    
    $
    24,748Gross margin
    
    
    15.0
    %
    
    
    19.9
    %
    
    
    18.0
    %
    
    
    19.6
    %
   Selling and Administrative Expenses  (dollars in thousands)
 Three Months Ended
    
    Six Months EndedDecember 28,
    
    December 30,
    
    December 28,
    
    December 30,2008
    
    2007
    
    2008
    
    2007Selling and administrative expenses
    
    $
    9,642
    
    
    $
    7,465
    
    
    $
    17,912
    
    
    $
    14,412Percent of sales
    
    
    14.1
    %
    
    
    11.1
    %
    
    
    13.1
    %
    
    
    11.4
    %
    17




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##### 



Interest Expense  (in thousands)
 Three Months Ended
    
    Six Months EndedDecember 28,
    
    December 30,
    
    December 28,
    
    December 302008
    
    2007
    
    2008
    
    2007Interest expense
    
    $
    145
    
    
    $
    387
    
    
    $
    303
    
    
    $
    814
    Tax Expense  (in thousands)
 Three Months Ended
    
    Six Months EndedDecember 28,
    
    December 30,
    
    December 28,
    
    December 30,2008
    
    2007
    
    2008
    
    2007Tax expense
    
    $
    210
    
    
    $
    2,105
    
    
    $
    2,366
    
    
    $
    3,573
  Liquidity Capital Resources
  Stockholders Equity and Debt  (in thousands)
 December 28,
    
    June 29,2008
    
    2008Stockholders equity
    
    $
    96,444
    
    
    $
    91,469Debt
    
    
    51,416
    
    
    
    15,629
   
    
    A revolving credit facility, up to $30.0 million, available for direct borrowings or
letters of credit. The facility is based on a borrowing base formula equal to the sum of
85% of eligible receivables and 35% of eligible inventories. As of December 28, 2008, the
outstanding loans under the revolving credit facility were $5.9 million. As of December
28, 2008, letters of credit issued were $1.0 million; and an aggregate of $23.1 million was
available under the revolving credit facility. This credit facility matures on December 28,
2011.
 18




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##### 




    
    An aggregate $45.0 million term loan amortized beginning September 2009, at a quarterly
rate of $2.0 million, increasing to $2.5 million in September 2010, and increasing to $2.7
million in September 2011. The balance is due in December 2011.
 
    
    Interest on the revolving facility and the term loans is calculated at a base rate or LIBOR
plus a stated spread based on certain ratios. For the fiscal quarter ended December 28,
2008, the average rate was approximately 3.98%.
 
    
    All loans are secured by substantially all the assets of the Company other than real estate.
 
    
    Covenants and performance criteria consist of Earnings Before Interest, Taxes, Depreciation
and Amortization (EBITDA) in relation to debt, EBITDA in relation to fixed charges and
minimum net worth. The Company was in compliance with its borrowing agreement covenants as
of December 28, 2008. The write-off of certain assets related to Eclipse did not impact the
Companys debt covenant compliance.
 
    
    Subsequent to the quarter ended December 28, 2008, the Company entered into an Interest
Rate Swap Agreement with a bank. Under this agreement, the Company fixed the interest
payments to a base rate of 1.885% plus a stated spread based on certain ratios. The
beginning notional amount is $35 million, which will amortize simultaneously with the term
loan schedule in the loan agreement and will mature on December 22, 2011.
 Other Long-Term Debt:
  (in thousands)
 Fiscal Year2009
    
    $
    772010
    
    
    8,1622011
    
    
    10,0692012
    
    
    27,2582013
    
    
    Total
    
    $
    45,566
 Critical Accounting Policies
   19




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##### 



Revenue Recognition and Cost of Sales
       Inventories
  Recently Adopted Accounting Standards
  20




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##### 



ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
 Foreign Currency Risk
  Interest Rate Risk
   
 ITEM 4. Controls and Procedures
 Evaluation Of Disclosure Controls And Procedures
   Changes In Internal Controls
  21




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##### 



PART II
 
 ITEM 1A. Risk Factors
  Prolonged economic recession will have an adverse impact on
Company sales and profits in future periods.
  
 ITEM 4. Submission of Matters to a Vote of Security Holders
   Proposal No. 1
    
    Number of Votes FOR
    
    Withheld Authority to VoteThomas A. Corcoran
    
    
    13,268,518
    
    
    
    119,856Craig E. LaBarge
    
    
    13,311,094
    
    
    
    77,280
 Proposal No. 2
    
    FOR
    
    AGAINST
    
    ABSTAINRatification of KPMG LLP
as Independent Registered
Public Accountants
    
    
    13,215,332
    
    
    
    138,706
    
    
    
    34,336
 
 ITEM 5. Other Information
   22




---



##### 



ITEM 6. Exhibits
 2.1
    
    Asset Purchase Agreement by and between Pensar
Electronics Solutions, LLC, all Members Pensar
Electronic Solutions, LLC and LaBarge Acquisition
Company, Inc., dated as of December 22, 2008, filed
herewith.10.1
    
    Loan Agreement by and among LaBarge, Inc., LaBarge
Electronics, Inc. and LaBarge Acquisition Company,
Inc., as Borrowers, U.S. Bank National Association
and Wells Fargo Bank, National Association, as
Lenders, and U.S. Bank National Association, as
Agent, dated December 22, 2008, filed herewith.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.
 
 SIGNATURE
  LaBARGE, INC.
Date: February 5, 2009By:
    /s/ DONALD H. NONNENKAMPName:
    Donald H. NonnenkampTitle:
    Vice President and Chief Financial Officer 23