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

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

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

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

Indicate the number of shares outstanding of each of the Issuer’s classes of common stock as of October 1, 2006: 15,247,617 shares of common stock.

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

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| **LaBarge, Inc.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
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| **FORM 10-Q**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| **For the Quarter Ended October 1, 2006**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| **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 Financial Statements |  |
|                                                                                                                                                                                                         |
| **                **                                                                                                         | Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |  |
| **                **                                                                                                         |
|                                                                                                                                                                                                              | Item 3. | Quantitative and Qualitative Disclosures About Market Risk |  |
|                                                                                                                                                                                                         |  |
| **                **                                                                                                         | Item 4. | Controls and Procedures |  |
|                                                                                                                                                                                                         |
| **Part II**                                                                                                                                                                                                  |  | **Other Information** |  |
|                                                                                                                                                                                                         |
|                                                                                                                                                                                                         | Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |  |
|                                                                                                                                                                                                              |  |  |
|                                                                                                                                                                                                              | Item 6. | Exhibits |  |
|                                                             |
| Signature                                                                                                                                                                                                    |
|                                                                                                                                                                                                         |
|                                                                                                                                                                                                              |

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

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***(Amounts In Thousands -- Except Per-Share Amounts)***

**TableofContents**

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| **                                                                                                                **                   | **Three Months Ended**                                                                                                                                                                                                                                                                                                                                                               |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                      | **                       ** |  |  |                          |  |
| **                                                                                                                   ** | ** **                                                                                                                                                                                                                                                                                                                                                                           | **October 1, 2006** | **  ** |   | October 2, 2005 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                      |  |  |  |  |
| **Net sales**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                      | **$** | **49,900** |        | $ | 39,639 |  |
| **Cost and expenses:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                      |  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | Cost of sales                                                                                                                                                                                                                                                                                                                                                                        |   |  | **39,243** |        |  | 30,141 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | Selling and administrative expense                                                                                                                                                                                                                                                                                                                                                   |   |  | **5,991** |  |   | 5,625 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | Interest expense                                                                                                                                                                                                                                                                                                                                                                     |   |  | **651** |  |  | 404 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | Other (income) and expense, net                                                                                                                                                                                                                                                                                                                                                      |   |  | **44** |  |   | (33 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                      |  |  |  |  |
| Earnings before income taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                 |  | **3,971** |  |  | 3,502 |   |
| Income tax expense                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                      |  | **1,560** |  |  | 1,471 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                      |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                 |  |  |  |   |
| **Net earnings**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                                                                 | **$** | **2,411** |  | $ | 2,031 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                      |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                      |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                      |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| **Basic net earnings per share:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                      |  | **     ** |  |  |
| **Basic net earnings**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                      | **$** | **0.16** |  | $ | 0.13 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                      |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| **Average common shares outstanding**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                 |  | **15,121** |  |   | 15,084 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                      |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                      |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                      |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| **Diluted net earnings per share:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                 |  |  |       |  |  |  |
| **Diluted net earnings**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                                      | **$** | **0.15** |  | $ | 0.13 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                      |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| **Average diluted common shares outstanding**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                      |  | **15,984** |  |  | 16,069 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                      |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                      |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                      |  |  |  |  |

  See accompanying notes to consolidated financial statements.

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**LaBARGE, INC.CONSOLIDATED BALANCE SHEETS*****(Amounts In Thousands -- Except Share Amounts)***

**TableofContents**
| **   **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | ** **                                                                                                                                            | **October 1, 2006**                                                                                                                                                                                                                                                                                                                  |                                                                                                                                      |                                      | July 2, 2006                         |                                                                                                                      |
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|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                      |                                      |                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                      | *(Unaudited)*                                                                                                                        |                                      |                                      |                                                                                                                      |  |
| **                                                                                                                    ** |                                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                      | *                 *                             |                                      |                  | *                   * |  |
| **ASSETS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                      |                        |                                 |                                      |                                                                                                                 |
| **Current assets:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                  |                                                                |                                      |                  |                       |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | Cash and cash equivalents                                                                                                                             |                                                                                                                                                                                                                                                                                                                                 | **  **                                                                                                                     | **$**                                | **1,600**                            |                                                                                   |     | $ | 947 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | Accounts and other receivables, net                                                                                                                   |                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                      | **27,058**                           |                                      |                                                                                                                 | 29,759 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | Inventories                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                      | **56,728**                           |                                      |                                                                                                                      | 53,819 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | Prepaid expenses                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                      | **1,597**                            |                                      |                                                                                                                 | 1,743 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | Deferred tax assets, net                                                                                                                              |                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                      | **1,437**                            |                                      |                                                                                                                      | 1,395 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                      |                                      |                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | **Total current assets**                                                                                                                              |                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                      | **88,420**                           |                                      |                                                                                                                      | 87,663 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                      |                                      |                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                      |                                      |                                 |
| Property, plant and equipment, net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                  | **20,878**                                                                                                                           |                                      |                                      | 20,453                                                                                                               |   |
| Intangible assets, net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                      | **2,604**                                                                                                                            |                                      |                                 | 2,743                                                                                                                |   |
| Goodwill, net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                      | **24,292**                                                                                                                           |                                      |                                 | 24,292                                                                                                               |  |
| Other assets, net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                      | **5,349**                                                                                                                            |                                      |                                 | 5,199                                                                                                                |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                      |                                      |                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | **Total assets**                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                 | **  **                                                                                                                     | **$**                                | **141,543**                          |                                                                                                                      |     | $ | 140,350 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                      |                                      |                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                      |                                      |                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                      |                                      |                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| **LIABILITIES AND STOCKHOLDERS’ EQUITY**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                  |                                                        |
| **Current liabilities:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                      | **              **                                             |        |                                      |                                                                    |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | Short-term borrowings                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                      | **  **                                                                                                                     | **$**                                | **12,750**                           |                                                                                                                      |     | $ | 19,475 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | Current maturities of long-term debt                                                                                                                  |                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                      | **6,042**                            |                                      |                                                                                                                      | 5,791 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | Trade accounts payable                                                                                                                                |                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                      | **16,775**                           |                                      |                                                                                                                 | 15,714 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | Accrued employee compensation                                                                                                                         |                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                      | **8,218**                            |                                      |                                                                                                                 | 7,783 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | Other accrued liabilities                                                                                                                             |                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                      | **3,377**                            |                                      |                                                                                                                 | 1,961 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | Cash advances                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                      | **8,995**                            |                                      |                                                                                                                 | 5,395 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                      |                                      |                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | **Total current liabilities**                                                                                                                         |                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                      | **56,157**                           |                                      |                                                                                                                      | 56,119 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                      |                                      |                                      |
| Long-term advances from customers for purchase of materials                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                      | **2,621**                                                                                                                            |                                      |                                      | 2,760                                                                                                                |   |
| Deferred tax liabilities, net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                      | **113**                                                                                                                              |                                      |                                 | 235                                                                                                                  |  |
| Long-term debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                      | **15,017**                                                                                                                           |                                      |                                      | 16,402                                                                                                               |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                      |                                      |                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| **Stockholders’ equity:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                  |                                                        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | Common stock, $.01 par value.  Authorized 40,000,000 shares; 15,773,253 issued at October 1, 2006 and July 2, 2006, including shares in treasury |                                                                                                                                                                                                                                                                                                                                 |                                                                                                                            | **158**                              |        |                                                                                                                 | 158 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | Additional paid-in capital                                                                                                                            |                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                      | **15,491**                           |                                      |                                                                                                                 | 15,185 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | Retained earnings                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                      | **54,843**                           |                                      |                                                                                                                      | 52,431 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | Less cost of common stock in treasury, shares of 525,636 at October 1, 2006 and 606,262 at July 2, 2006                                               |                                                                                                                                                                                                                                                                                                                                      | **(2,857**                                                                                                                           | **)**                                | (2,940                               | )                                                                                                                    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                      |                                      |                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | **Total stockholders’ equity**                                                                                                                  |                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                      | **67,635**                           |                                      |                                                                                                                 | 64,834 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                      |                                      |                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                       | **Total liabilities and stockholders’ equity**                                                                                                                                                                                                                                                                                 |                                                                                                                                 | **  **                     | **$**                                | **141,543**                                                                                                          |  |     | $ | 140,350 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                      |                                      |                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                      |                                      |                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                      |                                      |                                      |

****

See accompanying notes to consolidated financial statements.

----

**LaBARGE, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)**

***(Amounts In Thousands)***

TableofContents
| **                                                                                         **       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | **Three Months Ended**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                       |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                            |  |  |
| **                                                                                          ** | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | **October 1, 2006**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | ** **                                                                                                                                                                                 | October 2, 2005 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                            |  |  |
| **Cash flows from operating activities:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Net earnings                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | **      **                                                                                                                                                   | **$** | **2,411** | **         ** |         | $ | 2,031 |           |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Adjustments to reconcile net cash provided by operating activities:                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                          |                                                                                                                                                                                       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Depreciation and amortization                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                       | **1,240** |  |              | 1,075 |  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Stock-based compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                            | **332** |  |          | 475 |  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Other than temporary impairment of investment                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                            | **105** |  |  | --- |  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Realized gain on sale of investment                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                            | **---** |  |  | (5 | ) |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Deferred taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                       | **(164** | **)** |   | (169 | ) |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Other                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                       | **(3** | **)** |   | --- |  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Changes in assets and liabilities, net of acquisitions:                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                       |  |  |   |  |  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Accounts and notes receivable, net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                       |   | **2,681** |  |   | 2,484 |  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Inventories                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                       |   | **(2,909** | **)** |   | (3,987 | ) |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Prepaid expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                                                                       |   | **146** |  |   | (111 | ) |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Trade accounts payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                            |  | **936** |  |  | 2,382 |  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Accrued liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                       |   | **2,124** |  |   | (1,371 | ) |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Advance payments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                                                                            |  | **3,461** |  |  | (1,354 | ) |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                            |  |  |
| **Net cash provided by operating activities**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | **10,360**                                                                                                                                                                                 |  |        | 1,450 |  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                            |  |  |
| **    **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| **Cash flows from investing activities:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Additions to property, plant and equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                        | **(1,229** | **)** |  | (1,078 | ) |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Proceeds from disposal of property and equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                            | **5** |  |  | 62 |  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Additions to other assets and intangibles                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                       | **(428** | **)** |  | (92 | ) |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Proceeds from sale of other assets and intangibles                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                            | **20** |  |  | --- |  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                            |  |  |
| **Net cash (used) by investing activities**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | **(1,632**                                                                                                                                                                                 | **)** |  | (1,108 | ) |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                            |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| **Cash flows from financing activities:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                 |  |  |                      |  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Borrowings on revolving credit facility                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                            | **13,450** |  |  | 12,525 |  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Payments of revolving credit facility                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                            | **(20,175** | **)** |  | (10,675 | ) |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Borrowings of long-term debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                            | **250** |  |  | --- |  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Repayments of long-term senior debt                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                            | **(1,384** | **)** |  | (1,100 | ) |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Issuance of stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                       | **381** |  |  | 163 |  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Purchase of treasury stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                       | **(597** | **)** |  | (96 | ) |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                            |  |  |
| **                                                                                         **       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | **                      **                                                   |  |  |                        |  |   |
| **Net cash (used) provided by financing activities**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | **(8,075**                                                                                                                                                                                 | **)** |  | 817 |  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                            |  |  |
| **Net increase in cash and cash equivalents**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | **653**                                                                                                                                                                                    | **        ** |  | 1,159 |  |   |
| **Cash and cash equivalents at beginning of year**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       | **947**                                                                                                                                                                                    |  |  | 820 |  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                            |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| **Cash and cash equivalents at end of period**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | **      **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | **$**                                                                                                                                                                                      | **1,600** | **           ** |       | $ | 1,979 |             |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                            |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                            |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                            |  |  |
|                                                                                            |                                       |                                                                                    |                                                                                    |       |         |                                                            |                                                                          |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------|------------------------------------------------------------------------------------|------------------------------------------------------------------------------------|-------|---------|------------------------------------------------------------|--------------------------------------------------------------------------|---|
| Non-cash transactions:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                        | **             ** | **             ** |       |         |                                                            |              |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | Increase in capital lease obligations |                                                                               | **     **                                                 | **$** | **---** | **         ** |                                       | $ | 304 |           |

See accompanying notes to consolidated financial statements.

----

TableofContents

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

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

The consolidated balance sheet at October 1, 2006, the related consolidated statements of income for the three months ended October 1, 2006 and October 2, 2005, and the consolidated statements of cash flows for the threemonths ended October 1, 2006 and October 2, 2005, have been prepared by LaBarge, Inc. (the “Company”) without audit.  In the opinion of management, adjustments, all of a normal and recurring nature, necessary to present fairly the financial positionand the results of operations and cash flows for the aforementioned periods, have been made.

Certain information and footnote disclosures normally included in consolidated financial statements prepared in conformity with U.S. generally accepted accounting principles have been condensed or omitted.  Theseconsolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended July 2, 2006.

**Stock-Based Compensation**For the three months ended October 1, 2006, total stock-based compensation was $0.3 million ($0.2 million after tax), equivalent to earnings per basic and diluted share of $0.01. For the three months ended October 2,2005, total stock based compensation was $0.5 million ($0.3 million after tax), or $0.02 for both basic and diluted earnings per share.

As of October 1, 2006, the total unrecognized compensation expense related to nonvested awards was $0.9 million pretax, and the period over which it is expected to be recognized is approximately 1.4 years. At October 1,2005, the total unrecognized compensation expense, including stock options and performance units, was $1.2 million pretax, and the period over which it was expected to be recognized was 1.4 years.

No stock options were issued in the fiscal quarters ended October 1, 2006 and October 2, 2005, respectively. On January 11, 2005, the Company awarded performance units to certain key executives tied to fiscal year 2007financial performance. Compensation expense related to this award was recognized in the 2007 first fiscal quarter, but no shares are included in the dilutive shares, as the performance condition had not been met at October 1, 2006.

All stock options outstanding at October 1, 2006 and October 2, 2005 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 Standard (“SFAS”) No. 157, “Fair Value Measurements” (“SFAS No. 157”) to clarifythe definition of fair value, establish a framework for measuring fair value and expand the disclosures on fair value measurements. SFAS No. 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderlytransaction between market participants at the measurement date (an exit price). SFAS No. 157 also stipulates that, as a market-based measurement, fair value measurement should be determined based on the assumptions that market participants would use in pricing theasset or liability, and establishes a fair value hierarchy that distinguishes between (a) market participant assumptions developed based on market data obtained from sources independent of the reporting entity (observable inputs) and (b) the reporting entity’sown assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). SFAS No. 157 becomes effective for the Company in its fiscal year ending June 30, 2009. The Company is currentlyevaluating the impact of the provisions of SFAS No. 157 on its consolidated financial statements.

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

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

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

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

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

Gross and net sales consist of the following:*(dollars in thousands)*
| **                                                                    ** | **Three Months Ended** |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                              |                        |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                   | **October 1,**         |          | October 2, |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                   | **2006**               |             | 2005 |
|                                                                                                                                                                                                                                                                                                                                                                                                                              |
| Gross sales                                                                                                                                                                                                                                                                                                                                                                                                                  | ** **             | **$** | **50,046** |          |                 | $ | 39,907 |  |
| Less sales discounts                                                                                                                                                                                                                                                                                                                                                                                                         |                        | **146** |  | **     ** |  | 268 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                              |
| Net sales                                                                                                                                                                                                                                                                                                                                                                                                                    | ** **             | **$** | **49,900** |  |  | $ | 39,639 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                              |
|                                                                                                                                                                                                                                                                                                                                                                                                                              |                        |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                              |

*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.

For the three months ended October 1, 2006, the Company’s three largest customers, and the percentage of revenues each contributed, were Schlumberger Ltd., 14%; Northrop Grumman Corp, 9%; and Owens-Illinois,Inc., 9%.  For the three months ended October 2, 2005, the Company’s three largest customers, and the percentage of revenues each contributed, were Owens-Illinois, Inc., 12%; Schlumberger Ltd., 11%; and Lockheed Martin Corp., 8%.
| **3.** | **  ** | **ACCOUNTS AND OTHER RECEIVABLES** |
|--------|------------------|------------------------------------|

Accounts and other receivables consist of the following:*(dollars in thousands)*
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | **October 1,**               |          | July 2,    |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------|--------------------------------------------------|------------|
|                                                                                                    | **2006**                     |                                                  |            | 2006 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                              |                                                  |
| Billed shipments, net of progress payments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | **    ** | **$**                                            | **26,400** | ** ** | $ | 28,886 |   |
| Less allowance for doubtful accounts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                              | **178**                                          | ** ** |  | 174 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                              |                                                  |
| Trade receivables, net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                              | **26,222**                                       | ** ** | 28,712 |   |
| Other current receivables                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                              | **836**                                          | ** ** | 1,047 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                              |                                                  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | **    ** | **$**                                            | **27,058** | ** ** | $ | 29,759 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                              |                                                  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                              |                                                  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                              |                                                  |

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

Included in other receivables at October 1, 2006 was $0.6 million of unbilled receivables related to an equitable price adjustment for units already shipped on a contract that was terminated for convenience and settled inSeptember 2006.  Included in other receivables at July 2, 2006 was $0.9 million related to a contractually guaranteed reimbursement for a manufacturing feasibility study. This amount was collected in September 2006.

At October 1, 2006, the amounts due from the three largest accounts receivable debtors and the percentage of total accounts receivable those amounts represented were $3.5 million, 13%; $2.4 million, 9%; and $2.2 million,8%. This compares with $4.9 million, 17%, $2.4 million, 8%; and $2.1 million, 7% at July 2, 2006.
| **4.** | **  ** | **INVENTORIES** |
|--------|------------------|-----------------|

Inventories consist of the following:*(dollars in thousands)*
|   |                                                                           |                                            | **October 1,** |                     | July 2, |                            |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------|----------------|--------------------------------------------------------------------------------------|---------|--------------------------------------------------------------------|
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                      | **2006**       |                                                                                      | 2006    |                                                                    |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                      |                |                                                                                      |         |                                                                    |
|        | Raw materials                                                                                                                                                                                                                                                                                                                                                                                                                                          | **        ** | **$**          | **38,124**                                                                           |         |             | $ | 35,889 |  |
|        | Work in progress                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                      | **18,604**     |                | 17,930  |                                                                    |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                      |                |                                                                                      |         |                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                        | **       **       | **$**          | **56,728**                                                                           |         |                  | $ | 53,819 |  |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                      |                |                                                                                      |         |                                                                    |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                      |                |                                                                                      |         |                                                                    |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                      |                |                                                                                      |         |                                                                    |

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

For the three months ended October 1, 2006 and October 2, 2005, expense for obsolescence charged to income before taxes was $0.2 million and $0.1 million, respectively.

TableofContents
| **5.** | **  ** | **INTANGIBLE ASSETS, NET** |
|--------|------------------|----------------------------|

Intangible assets, net, is summarized as follows:*(dollars in thousands)*
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                            | **October 1,**                                               |                    | July 2,                                                            |      |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------|--------------------------------------------------------------------------------|--------------------------------------------------------------------|--------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                            | **2006**                                                     |               | 2006                                                               |                          |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                              |                                                                                |                                                                    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Software                                                                                                                                                                                                                                                                                                                                                                                                                                                     | **         **   | **$**                                                                          | **3,358**                                                          |                          |  |            | $ | 3,228 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Less accumulated amortization                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                              | **2,760**                                                                      |                                                                    |                          |  | 2,661 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                              |                                                                                |                                                                    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Net software                                                                                                                                                                                                                                                                                                                                                                                                                                                 |            | **598**                                                                        |             |                |            | 567 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                              |                                                                                |                                                                    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Customer list                                                                                                                                                                                                                                                                                                                                                                                                                                                |                 | **3,400**                                                                      |                                                                    |                          |  | 3,400 |                 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Less accumulated amortization                                                                                                                                                                                                                                                                                                                                                                                                                                |                      | **1,493**                                                                      |                                                                    |                          |  | 1,351 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                              |                                                                                |                                                                    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Net customer list                                                                                                                                                                                                                                                                                                                                                                                                                                            |            | **1,907**                                                                      |                                                                    |                          |  | 2,049 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                              |                                                                                |                                                                    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Other, net                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                              | **99**                                                                         |                                                                    |                          |  | 127 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                              |                                                                                |                                                                    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Total intangible assets, net                                                                                                                                                                                                                                                                                                                                                                                                                                 |                      | **$**                                                                          | **2,604**                                                          |                          |  |             | $ | 2,743 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                              |                                                                                |                                                                    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                              |                                                                                |                                                                    |                          |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                              |                                                                                |                                                                    |
|                                                                                                                                                                  |

Intangibles are amortized over a three-to-six-year period.  Amortization expense was $280,000 and $283,000 for the three months ended October 1, 2006 and October 2, 2005, respectively.

The Company anticipates that amortization expense will approximate $1.3 million for fiscal year 2007, $1.2 million for fiscal year 2008, $1.1 million for fiscal year 2009, $0.8 million for fiscal year 2010 and $0.5million for fiscal year 2011.
| **6.** | **  ** | **GOODWILL** |
|--------|------------------|--------------|

Goodwill is summarized as follows:*(dollars in thousands)*
|   |                                                                      |                                      | **October 1,** |                                    | July 2, |                |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------|----------------|--------------------------------------------------------------------------------------|---------|--------------------------------------------------------|
|        |                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                | **2006**       |                                                                                      | 2006    |                                                        |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                |                |                                                                                      |         |                                                        |
|        | Goodwill                                                                                                                                                                                                                                                                                                                                                                                                                 | **       ** | **$**          | **24,492**                                                                           |         |                | $ | 24,492 |  |
|        | Less accumulated amortization                                                                                                                                                                                                                                                                                                                                                                                            |                                                | **200**        |                | 200     |                                                        |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                |                |                                                                                      |         |                                                        |
|   |  Net goodwill                                                                                                                                                                                                                                                                                                                                                                                                       | **       ** | **$**          | **24,292**                                                                           |         |           | $ | 24,292 |  |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                |                |                                                                                      |         |                                                        |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                |                |                                                                                      |         |                                                        |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                |                |                                                                                      |         |                                                        |

There were no changes in the carrying amount of goodwill at October 1, 2006 and July 2, 2006.
| **7.** | **  ** | **OTHER ASSETS** |
|--------|------------------|------------------|

Other assets is summarized as follows:*(dollars in thousands)*
|   |                                                                           |                                            | **October 1,** |                 | July 2,                                                                                                      |                            |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------|----------------|--------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------|
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                      | **2006**       |                                                                                            | 2006                                                                                                         |                                                                    |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                      |                |                                                                                            |                                                                                                              |                                                                    |
|        | Cash value of life insurance                                                                                                                                                                                                                                                                                                                                                                                                                           | **        ** | **$**          | **4,462**                                                                                  |                                                                                                              |             | $ | 4,285 |  |
|        | Deposits, licenses and other, net                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                      | **499**        |                                                                                            |                                                                                                              | 390                                                                |  |
|        | Securities held for sale                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                      | **159**        |                      | 264                                                                                                          |                                                                    |
|        | Deferred financing costs, net                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                      | **157**        |                                                                                            | 173                                                                                                          |                                                                    |
|        | Other                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                      | **72**         |                                                                                            | 87                                                                                                           |                                                                    |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                      |                |                                                                                            |                                                                                                              |                                                                    |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                        | **       **       | **$**          | **5,349**                                                                                  |                    | $                                                                  | 5,199 |  |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                      |                |                                                                                            |                                                                                                              |                                                                    |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                      |                |                                                                                            |                                                                                                              |                                                                    |
|        |                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                      |                |                                                                                            |                                                                                                              |                                                                    |

The Company’s investment in securities held for sale of $159,000 at October 1, 2006 consists of approximately 1.6 million shares of Norwood Abbey Ltd.  This investment is the result of shares and optionsacquired as a partial settlement of a note receivable.

In the quarter ended October 1, 2006, the Company booked an other-than-temporary write down of the remaining shares, resulting in the recognition of $105,000 pretax expense.
| **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)*
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                            | **October 1,**                                 |                    | July 2,    |      |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------|--------------------------------------------------------------------------------|------------|--------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                            | **2006**                                       |               | 2006       |                          |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                |                                                                                |            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | **Short-term borrowings:**                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                |                                                                                |            |                          |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  Revolving credit agreement:                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                |                                                                                |            |                          |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   Balance at quarter-end                                                                                                                                                                                                                                                                                                                                                                                                                           | **       ** | **$**                                                                          | **12,750** |                          |  |            | $ | 19,475 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   Interest rate at quarter-end                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                | **7.27**                                                                       | **%**      |                          |  | 7.28 | % |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   Average amount of short-term borrowings                                                                                                                                                                                                                                                                                                                                                                                                          |                                                |                                                                                |            |                          |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |    outstanding during period                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                | **$**                                                                          | **15,773** |                          |    |  | $ | 8,729 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   Average interest rate for fiscal quarter                                                                                                                                                                                                                                                                                                                                                                                                         |                                                | **7.44**                                                                       | **%**      |                          |  | 6.85 | % |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   Maximum short-term borrowings at                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                |                                                                                |            |                          |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |    any month-end                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                | **$**                                                                          | **16,675** |                          |  |  | $ | 19,475 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                |                                                                                |            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                |                                                                                |            |                          |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                |                                                                                |            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | **Senior long-term debt:**                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                |                                                                                |            |                          |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  Senior lender:                                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                |                                                                                |            |                          |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   Term loan                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                | **$**                                                                          | **14,500** |                          |  |  | $ | 15,750 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   Mortgage loan                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                |                                                                                | **5,419**  |                          |  |  |  | 5,483 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | ** ** Other                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                |                                                                                | **1,140**  |                          |  |  |  | 960 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                |                                                                                |            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Total senior long-term debt                                                                                                                                                                                                                                                                                                                                                                                                                                  |                       | **21,059**                                                                     |            |                          |  | 22,193 |                 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Less current maturities                                                                                                                                                                                                                                                                                                                                                                                                                                      |                  | **6,042**                                                                      |            |                          |  | 5,791 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                |                                                                                |            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Long-term debt, less current maturities                                                                                                                                                                                                                                                                                                                                                                                                                      |                                      | **$**                                                                          | **15,017** |                          |  |  | $ | 16,402 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                |                                                                                |            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                |                                                                                |            |                          |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                |                                                                                |            |
|                                                                                                                                                                  |

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

The Company entered into a senior loan agreement on February 17, 2004, which was amended in February 2006.  The Company incurred $330,000 of financing costs that have been deferred and are being amortized over a periodbeginning May 2004 and ending February 2009.  At October 1, 2006, the unamortized amount was $157,000.

**Senior Lender:**

The Company entered into a senior secured loan agreement with a group of banks on February 17, 2004 that was amended on February 10, 2006, increasing the revolving credit facility by $10.0 million.  The following is asummary of the agreement:
|  •                   |   | A revolving credit facility, up to $30.0 million available for direct borrowings or letters of credit.  The facility is based on a borrowing base formula equal to the sum of 85% of eligible receivables and 35% of eligibleinventories. As of October 1, 2006, outstanding loans under the revolving credit facility were $12.8 million.  Letters of credit outstanding were $1.5 million, and $15.7 million was available at October 1, 2006. This credit facility matures on February 17,2009.                                                                                                                                                                                                                                                                                                                                                                          |              |
|--------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------|
|       |   |                                                                                                                                                                                    |                                                                          |
|  •                   |   | A $25.0 million term loan amortized beginning May 2004, at a quarterly rate of $1.0 million, increased to $1.25 million in May 2006 and increasing to $1.5 million in May 2007.  Final maturity is February2009.  As of October 1, 2006, the amount outstanding was $14.5 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                          |
|            |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                          |
|  •                   |        | On April 15, 2004, the Company entered into an Interest Rate Cap Agreement with a bank.  This Cap Agreement caps the Company’s exposure to increases in LIBOR at 4% for a period of three years on a notional amountbeginning at $24.0 million and amortizing on a schedule that matches amortization of the $25.0 million term loan dated February 17, 2004. As a result of this Cap Agreement, for the quarter-ended period, interest expense was reduced by $50,000.                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                          |
|                                |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                          |
|  •                   |        | Interest on both loans is at a percentage of prime or a stated rate over LIBOR based on certain ratios.  For the quarter ended October 1, 2006, the average rate including the effect of the interest rate cap wasapproximately 6.70%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                          |
|       |   |                                                                                                                                                 |                                                                          |
|  •                   |   | Both loans are secured by substantially all the assets of the Company other than real estate.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                          |
|                           |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                          |
|  •                   |        | Covenants and performance criteria consist of Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) in relation to debt, EBITDA in relation to fixed charges and minimum net worth. The Company isin compliance with its borrowing agreement covenants as of October 1, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                          |
|            |   |                                                                                                                                                           |                                                                     |

***Other Long-term Debt:****Mortgage Loan:*The Company has a $6.4 million term loan secured by the Company’s headquarters building in St. Louis, Missouri.  The loan repayment schedule is based on a 25-year amortization with a final balloon payment due in October2009.  The balance at October 1, 2006 was $5.4 million.  Interest is at a percentage of prime or a stated rate over LIBOR based on certain ratios.  For the quarter ended October 1, 2006, the average rate was approximately 5.64%.

*****Industrial Revenue Bonds:*In July 1998, the Company acquired tax-exempt Industrial Revenue Bond financing in the amount of $1.3 million.  The debt is payable over 10 years with an interest rate of 5.28%.  This funding was used to expand the Berryville,Arkansas, facility.  The outstanding balance at October 1, 2006 was $329,000.

*Capital Lease Obligations:*In fiscal year 2005, the Company entered into a capital lease agreement to fund the purchase of machinery with a fair market value of $664,000. The lease is for five years with an interest rate of 6.18%. The obligation outstanding at October1, 2006 was $557,000.

*City of Joplin Loan:*

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

The aggregate maturities of long-term obligations are as follows:*(dollars in thousands)*
| **Fiscal Year**               |
|-------------------------------|
|                               |
| 2007                          | ...............................................................  | $ | 4,407 |   |
| 2008                          | ...............................................................  |      | 6,553 |   |
| 2009                          | ...............................................................  |       | 4,937 |   |
| 2010                          | ...............................................................  |       | 4,861 |   |
| 2011                          | ...............................................................  |       | 51 |   |
| Thereafter                    | ...............................................................  |       | 250 |   |
|                               |
|     Total | ...............................................................  |  $ | 21,059 |   |
|                               |
| **9.** | **  ** | **CASH FLOWS** |
|--------|------------------|----------------|

****

Total cash payments for interest for the three months ended October 1, 2006 and October 2, 2005 amounted to $646,000 and $363,000, respectively.  Net cash payments for federal and state income taxes were $0and $745,000 for the three months ended October 1, 2006 and October 2, 2005, respectively.
| **10.** | **  ** | **EARNINGS PER COMMON SHARE** |
|---------|------------------|-------------------------------|

Basic and diluted earnings per share are computed as follows:*(amounts in thousands, except per-share amounts)*
|                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | **October 1,** |                                      | October 2, |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------|------------------------------------------------|------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                             |                | **2006**                                       |            | 2005 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | Net earnings                                                                                                                                                                                                                                                                                                                                                                                                                                                       | **$**          | **2,411**                                      |            | $ | 2,031 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                |                                                |            |  |  |
| Basic net earnings per share                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | **$**                                                                                                                                                                                                                                                                                                                                                                                                                                                              | **0.16**       | **       ** | $          | 0.13 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                |                                                |            |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                |                                                |            |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                |                                                |            |  |  |
| Diluted net earnings per share                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                          | **$**          | **0.15**                                       |            | $ | 0.13 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                |                                                |            |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |

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 and vesting of restrictive stock by using the treasury stock method.

*(share amounts in thousands)*
|                                                                                               |                                                      | **Three Months Ended** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------|------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                      |                        |
|                                                                                               |                                                      | **October 1,**         |      | October 2, |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                      | **2006**               |  | 2005 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                      |                        |  |  |  |
| Average common shares outstanding -- basic                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | **        ** | **15,121**             |        |  | 15,084 |   |
| Dilutive options and restrictive shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                      | **863**                |  |  | 985 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                      |                        |  |  |  |
| Adjusted average common shares outstanding -- diluted                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                      | **15,984**             |  |  | 16,069 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                      |                        |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                      |                        |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                      |                        |  |  |  |

All stock options outstanding and nonvested restricted shares at October 1, 2006 and October 2, 2005 were dilutive and included in the computation of diluted earnings per share. These options expire in various periods through2014. The restricted shares vest over the next two fiscals years.
| **11.** | **  ** | **STOCK PROGRAMS** |
|---------|------------------|--------------------|

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

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

For the three months ended October 1, 2006, stock-based compensation attributable to the adoption of Share-Based Payment No. 123R, (“SFAS No. 123R”) was $61,000 ($37,000 after tax), equivalent to $0.00 per basicand diluted share. For the three months ended October 2, 2005, stock-based compensation attributable to the adoption of SFAS No. 123R was $244,000 ($153,000 after tax), equivalent to earnings per basic and diluted share of $0.01.

As of October 1, 2006, the total unrecognized compensation expense related to nonvested awards was $0.9 million pretax, and the period over which it is expected to be recognized is approximately 1.4 years. As of October 2,2005, the total unrecognized compensation expense related to nonvested awards, including stock options, restricted shares and performance units, was $1.2 million pretax, and the period over which it was expected to be recognized was approximately 1.4years.

A summary of the Company’s Plans as of October 1, 2006 is presented below:

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

__________

The following table summarizes information about stock options outstanding:
| **                                               ** | **  ** | ***Outstanding and Exercisable Options*** |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------|-------------------------------------------|
|                                                                                                                                                                                                                                                                                                |                  |                                           |
| **Range of Exercise Prices**                                                                                                                                                                                                                                                                   | ** **       | **Number Outstanding at October 1, 2006** | **  ** | **Weighted Average Remaining Contractual Life (In Years)** | **  ** | **Weighted Average Exercise Price** | **  ** | **Aggregate Intrinsic Value****(1)********(In Millions)** |
| $2.50 - 3.56                                                                                                                                                                                                                                                                                   |                  | 1,386,086                                 |         | 4.4 |  | $ | 2.81 | $ | --- |  |   |
| $3.57 - 5.96                                                                                                                                                                                                                                                                                   |                  | 27,513                                    |  | 0.9 |  |  | 5.86 |  | --- |  |   |
| $5.97 - 8.54                                                                                                                                                                                                                                                                                   |                  | 304,277                                   |  | 7.9 |  |  | 8.54 |  | --- |  |   |
|                                                                                                                                                                                                                                                                                                |                  | 1,717,876                                 |  | 4.9 |  | $ | 3.88 | $ | 11.2 |  |   |

___________

(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.

The total intrinsic value of stock options exercised during the three months ended October 1, 2006 was $0.2 million. The exercise period for all stock options generally may not exceed 10 years from the date of grant.Stock option grants to individuals generally become exercisable over a service period of one to five years.

There were no stock options granted in the three months ended October 1, 2006 or October 2, 2005.

*Performance Units*

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

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

During the three months ended October 1, 2006, the Company issued 79,693 shares of restricted stock, subject to the two-year vesting condition, associated with the fiscal 2006 award. In addition, the Company recordedcompensation expense for the awards granted for fiscal 2007. During the three months ended October 2, 2005, the Company issued 56,251 shares of restricted stock subject to the two-year vesting condition associated with the 2005 award.

Compensation expense of $260,000 ($160,000 after tax) related to the LTIP was recorded in the three-month period ended October 1, 2006, compared with $218,000 ($136,000 after tax) in the three-month period ended October 2,2005.

The weighted-average grant date fair value of the restricted stock issued during the three months ended October 1, 2006 was $13.27 per share. The weighted-average grant date fair value of the restricted stock issued during thethree months ended October 2, 2005 was $18.00 per share.

----

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

**Forward-Looking Statements**

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

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

The Company markets its services to customers who are looking for an engineering and manufacturing partner capable of developing and providing high-reliability electronic equipment, including products capable of performing inharsh environmental conditions, such as high and low temperatures, severe shock and vibration.  The Company serves customers in a variety of markets including defense, government systems, aerospace, natural resources, industrial and other commercialmarkets.  The Company’s engineering and manufacturing facilities are located in Arkansas, Missouri, Oklahoma, Pennsylvania and Texas.  The Company employs approximately 1,250 people, including approximately 1,060 people (of which 46 are engineers) whoprovide support for production activities and approximately 190 people who provide administrative support.

**Results of Operations - Three Months Ended October 1, 2006**

***Net Sales****(dollars in thousands)*
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | **Three Months Ended**                                                                                                                                       |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                            | **October 1,** | **           ** | October 2, |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | Change                                                                                                                                                       | **2006** |  | 2005 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                              |  |
| Net sales                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | 25.9%                                                                                                                                                        | **$** | **49,900** |  | **    ** | $ | 39,639 |          |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                              |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                              |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                              |  |
|                                                                                                                                                                                |

The primary contributor to fiscal 2007 first-quarter revenues was shipments to defense customers that generated $18.5 million of sales versus $16.4 million in 2006. During the current fiscal year’s first quarter, LaBargeprovided cables and electronic assemblies for a variety of defense applications, including military aircraft, radar systems and shipboard programs.  In addition, shipments of capital equipment to natural resources customers, including downhole tools and miningsystems, represented $11.1 million of fiscal 2007 first-quarter revenues, compared with $8.3 million in the year-ago period.  Sales to industrial customers represented $7.6 million of fiscal 2007 first-quarter revenues, compared with $7.2 million in the year-agoperiod. Sales to government systems customers represented $5.9 million of fiscal 2007 first-quarter revenues, compared with $1.7 million in the year-ago period, largely due to the result of shipments of postal automation and airport security equipment.

Sales to the Company’s 10 largest customers represented 69% of total revenue in the first quarter of fiscal 2007 versus 68% for the same period of fiscal 2006.  The Company’s top three customersand the portion of total fiscal 2007 first-quarter sales they represented were as follows:  Schlumberger Ltd., 14%; Northrop Grumman Corp., 9%, and Owens-Illinois, Inc., 9%.

The backlog of unshipped orders at October 1, 2006 was $211.8 million, up 15% compared with $183.9 million at July 2, 2006, and up 28% from $164.9 million at October 2, 2005. The growth in backlog is the result of a salesand marketing effort that focuses on the needs of targeted large customers in a variety of industries. Approximately $51.9 million of the backlog at the quarter ended October 1, 2006 is scheduled to ship beyond the next 12 months pursuant to the shipment schedulescontained in the related contracts. This compares with $38.9 million at fiscal 2006 year-end.

***Gross Profit****(dollars in thousands)*
|                                                                          |                    | **Three Months Ended** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------|------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                      |                    |
|                                                                | ****Change         |                        | **October 1, 2006** | **          ** | October 2, 2005 |
|                                                                                                                                                                                                                                                                                                                                                                                      |                    |                        |  |  |
| Gross profit Gross margin                                                                                                                                                                                                                                                                                                                                                            |     | $                 | 1,159 (2.6) | bp | **   ** | **$** | **10,657 21.4** | **%** |  | $ | 9,498 24.0 | % |
|                                                                                                                                                                                                                                                                                                                                                                                      |                    |                        |
|                                                                                                                                                                                                                                                                                                                                                                                      |                    |                        |
|                                                                                                                                                                                                                                                                                                                                                                                      |                    |                        |  |  |

The Company’s gross profit margin percentage generally runs in a range of 20% to 23%, and gross margin for the three months ended October 1, 2006 was within this range. An unusually favorable sales mix in the threemonths ended October 2, 2005 pushed our gross margin slightly higher than our historical range.

***Selling and Administrative Expenses****(dollars in thousands)*
|                                                                             | **Three Months Ended**                                                                                                          |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                 |
|                                                                        |                      Change | **October 1, 2006** | **         ** | October 2, 2005 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                 |  |
| Selling and administrative expenses                                                                                                                                                                                                                                                                                                                                                                                                  | $                                                                                                                               | 366 |      | **$** | **5,991** |  | ** ** | $ | 5,625 |         |
| Percent of sales                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                             | (2.2) | bp | **       ** | **12.0** | **%** | **   ** |           | 14.2 | % |
|                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                 |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                 |  |

Selling and administrative expenses increased over prior periods primarily as a result of an increase in compensation cost of $0.2 million due to wage inflation and headcount increase, an increase in commissions of $0.1 million due to higher sales, and an increase inmoving expense of $0.1 million, offset by a $0.1 million reduction of contract labor.

As a percentage of sales, selling and administrative expenses decreased on higher sales volume.

***Interest Expense****(dollars in thousands)*
|                                                                               | **Three Months Ended** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                        |
|                                                                                    | Change                 | **October 1, 2006** | **          ** | October 2, 2005 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                        |  |
|  Interest expense                                                                                                                                                                                                                                                                                                                                                                                                                                                         | $247                   | **$** | **651** | **        ** | **         ** | $ | 404 |           |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                        |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                        |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                        |  |

Interest expense increased for the three months ended October 1, 2006.  The increase reflects higher average debt levels and higher average interest rates.

Average interest rates during the period were 6.5%, compared with 5.1% in the comparable quarter.

***Tax Expense from Continuing Operations****(dollars in thousands)*
|                                                                                   | **Three Months Ended** |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | Change                 | **October 1, 2006** | **      ** | October 2, 2005 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                        |  |
| Tax expense from operations                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | $                      | 89 |      | **$** | **1,560** | **   ** | **      ** | $ | 1,471 |    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                        |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                        |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                        |  |

The income tax rate was 39.3% and 42.0% for the periods ended October 1, 2006 and October 2, 2005, respectively. The higher tax rate in the year-ago period reflected additional Sub Part F income from the Company’sinvestment in an offshore captive insurance company. The effective income tax rate for the three-month period ended October 1, 2006, excluding the impact of the additional Sub Part F income, was 38.4%, compared with 37.5% for the three-month period ended October 2,2005.  The increase in the effective tax rate in the current-year period is due to the lapse of research and engineering credits, which expired in December 2005.

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

***Stockholders’ Equity and Debt****(dollars in thousands)*
|                                                                                                                                                                                                                                                                                                                                        | **October 1,**                                                                                                                                                                                                                                                                     | July 2,                                                                                                                                                                                                                                                |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                               | **2006**                                                                                                                                                                                                                                                                           | 2006                                                                                                                                                                                                                                                   |
|                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                                                                                                                                | **                                             ** |                                           |
| Stockholders’ equity                                                                                                                                                                                                                                                                                                                                                     | **         **                                                                                                                                                                                                                         | **$**                                                                                                                                                                                                                                                  | **67,635** |                 |          | $ | 64,834 |             |
| Debt                                                                                                                                                                                                                                                                                                                                                                           | **    **                                                                                                                                                                                                                                                       | **33,809**                                                                                                                                                                                                                                             | **     ** |     | 41,668 |              |
|                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                        |
|                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                                        |

The Company’s continuing operations provided $10.4 million of net cash for the three months ended October 1, 2006.

**Senior Lender:**

The Company entered into a senior secured loan agreement with a group of banks on February 17, 2004 that was amended on February 10, 2006, increasing the revolving credit facility by $10.0 million.  The following is asummary of the agreement:
|  •                   |   | A revolving credit facility with 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 October 1, 2006, outstanding loans under the revolving credit facility were $12.8 million.  Letters of credit outstanding were $1.5 million, and $15.7 million was available at October 1, 2006. This credit facility matures onFebruary 17, 2009.                                                                                                                                                                                                                                                                                                                                                                      |              |
|--------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------|
|       |   |                                                                                                                                                                                    |                                                                          |
|  •                   |   | A $25.0 million term loan amortized beginning May 2004, at a quarterly rate of $1.0 million, increased to $1.25 million in May 2006 and increasing to $1.5 million in May 2007.  Final maturity is February2009.  As of October 1, 2006, the amount outstanding was $14.5 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                                          |
|            |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                          |
|  •                   |        | On April 15, 2004, the Company entered into an Interest Rate Cap Agreement with a bank.  This Cap Agreement caps the Company’s exposure to increases in LIBOR at 4% for a period of three years on a notional amountbeginning at $24.0 million and amortizing on a schedule that matches amortization of the $25.0 million term loan dated February 17, 2004. As a result of this Cap Agreement, for the quarter-ended period, interest expense was reduced by $50,000.                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                          |
|                                |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                          |
|  •                   |        | Interest on both loans is at a percentage of prime or a stated rate over LIBOR based on certain ratios.  For the quarter ended October 1, 2006, the average rate including the effect of the interest rate cap wasapproximately 6.70%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                          |
|       |   |                                                                                                                                                 |                                                                          |
|  •                   |   | Both loans are secured by substantially all the assets of the Company other than real estate.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                          |
|                           |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                          |
|  •                   |        | Covenants and performance criteria consist of Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) in relation to debt, EBITDA in relation to fixed charges and minimum net worth. The Company isin compliance with its borrowing agreement covenants as of October 1, 2006.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                          |
|            |   |                                                                                                                                                           |                                                                     |

***Other Long-term Debt:****Mortgage Loan:*The Company has a $6.4 million term loan secured by the Company’s headquarters building in St. Louis, Missouri.  The loan repayment schedule is based on a 25-year amortization with a final balloon payment due in October2009.  The balance at October 1, 2006 was $5.4 million.  Interest is at a percentage of prime or a stated rate over LIBOR based on certain ratios.  For the quarter ended October 1, 2006, the average rate was approximately 5.64%.

*****Industrial Revenue Bonds:*In July 1998, the Company acquired tax-exempt Industrial Revenue Bond financing in the amount of $1.3 million.  The debt is payable over 10 years with an interest rate of 5.28%.  This funding was used to expand the Berryville,Arkansas, facility.  The outstanding balance at October 1, 2006 was $329,000.

*Capital Lease Obligations:*

In fiscal year 2005, the Company entered into a capital lease agreement to fund the purchase of machinery with a fair market value of $664,000. The lease is for five years with an interest rate of 6.18%. The obligationoutstanding at October 1, 2006 was $557,000.

*City of Joplin Loan:*

In September 2006, the Company acquired a loan from the City of Joplin, Missouri in the amount $250,000. The debt is to be repaid at the end of a five-year loan period with annual interest payments at an interest rate of 3%.This funding was used to expand the Joplin, Missouri, facility.

The aggregate maturities of long-term obligations are as follows:*(dollars in thousands)*
| **Fiscal Year**               |
|-------------------------------|
|                               |
| 2007                          | ...............................................................  | $ | 4,407 |   |
| 2008                          | ...............................................................  |      | 6,553 |   |
| 2009                          | ...............................................................  |       | 4,937 |   |
| 2010                          | ...............................................................  |       | 4,861 |   |
| 2011                          | ...............................................................  |       | 51 |   |
| Thereafter                    | ...............................................................  |       | 250 |   |
|                               |
|     Total | ...............................................................  |  $ | 21,059 |   |
|                               |

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

***Critical Accounting Policies***The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions in certain circumstances that affect amountsreported in the accompanying consolidated financial statements.  In preparing these financial statements, management has made its best estimates and judgment of certain amounts included in the financial statements.  The Company believes there is alikelihood that materially different amounts would be reported under different conditions or using different assumptions related to the accounting policies described below.  Application of these accounting policies involves the exercise of judgment and use ofassumptions as to future uncertainties and, as a result, actual results could differ from these estimates.  The Company’s senior management discusses the accounting policies described below with the audit committee of the Company’s Board of Directorson a periodic basis.The following discussion of critical accounting policies is intended to bring to the attention of readers those accounting policies that management believes are critical to the Company’s consolidated financial statements and other financial disclosures. It is not intended to be a comprehensive list of all of our significant accounting policies that are more fully described in the Notes to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended July2, 2006.

***Revenue Recognition and Cost of Sales***Revenue is generally recognized on the percentage-of-completion method based upon the units delivered.   The percentage-of-completion method gives effect to the most recent contract value and estimates of cost at completion. Whenappropriate, contract prices are adjusted for increased scope and other changes ordered or caused by the customer.  When percentage-of-completion is not appropriate, the Company recognizes revenue when title transfers, which is usually upon shipment. On a verylimited number of contracts, at a customers’ request, the Company will recognize revenue when ownership passes. As of October 1, 2006 and October 2, 2005, the Company has recognized revenue under these arrangements of $2.4 million and $1.7 million,respectively. The Company recognizes revenue for storage and other related services when the services are provided.Management’s estimates of material, labor and overhead costs on long-term contracts are critical to the Company.  Since some contracts extend over a long period of time, revisions in cost during the progress of work have the effect of adjusting currentperiod earnings applicable to performance in prior periods.  When the current contract cost estimate indicates a loss, provision is made for the total anticipated loss in the period the loss becomes evident.

***Inventories***Inventories, which consist of materials, labor and manufacturing overhead, are carried at the lower of cost or market value. Inventory that has been held beyond specific time limits is automatically reserved. Inaddition, management regularly reviews inventory for obsolescence to determine whether any additional write-down is necessary.  Various factors are considered in making this determination, including expected program life, recent sales history, predicted trendsand market conditions.  If actual demand or market conditions are less favorable than those projected by management, additional inventory write-downs may be required.  For the quarters ended October 1, 2006 and October 2, 2005, expense for obsolete orslow-moving inventory charged to income before income taxes was $0.2 million and $0.1 million, respectively.

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

***Recently Issued Accounting Standards***In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standard (“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 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in anorderly transaction between market participants at the measurement date (an exit price). SFAS No. 157 also stipulates that, as a market-based measurement, fair value measurement should be determined based on the assumptions that market participants would use inpricing the asset or liability, and establishes a fair value hierarchy that distinguishes between (a) market participant assumptions developed based on market data obtained from sources independent of the reporting entity (observable inputs) and (b) the reportingentity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (unobservable inputs). SFAS No. 157 becomes effective for the Company in its fiscal year ending June 30, 2009. The Company iscurrently evaluating the impact of the provisions of SFAS No. 157 on its consolidated financial statements.

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

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

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

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

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

----

**TableofContents**

****
| **ITEM 3.**                                                                                                                                            | **Quantitative and Qualitative Disclosures About Market Risk**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
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| **                        **   | **                                                                                                                                                       **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                                                                                                                                        | *Foreign Currency Risk***No information has been included hereunder because the Company’s foreign sales in each of the three months ended October 1, 2006 and October 2, 2005 were less than 10% of total Company revenue.  All foreign contracts are paid inU.S. dollars and the Company is not significantly exposed to foreign currency translation.  However, if the significance of foreign sales grows, management will continue to monitor whether it would be appropriate to use foreign currency risk managementinstruments to mitigate any exposures.*Interest Rate Risk* As of October 2, 2006, the Company had $33.8 million in total debt.  Industrial revenue bonds totaling $329,000 and the City of Joplin Loan for $250,000 have a fixed rate and are not subject to interest rate risk.  The interest rate on the remaining$33.5 million is subject to fluctuation. On April 15, 2004, the Company entered into an Interest Rate Cap Agreement with a bank.  This Agreement caps the Company's exposure to 90-day LIBOR at 4% for a period of three years on a notional amount beginning at $24.0million and amortizing on a schedule that matches amortization of the $25.0 million term loan dated February 17, 2004. The additional interest cost to the Company if interest rates increased 1% would be approximately $186,000 for one year.                                      |
| ** **                                                                                                                                             | ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |  |
| **ITEM 4.        **                                                                                            | **Controls and Procedures**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | **                                  ** |
|                           | The Company’s Chief Executive Officer and President, and the Company’s Vice President, Chief Financial Officer and Secretary, have conducted an evaluation of the design and effectiveness the Company’sdisclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as of the end of the period covered by this report.

The Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are functioning effectively at the reasonable assurance level.  The Company’sdisclosure controls are based upon a chain of financial and general business reporting lines that converge in the headquarters of the Company in St. Louis, Missouri.  The disclosure controls and procedures are designed to ensure that information required to bedisclosed by the Company in the reports that it files with or submits to the Securities and Exchange Commission is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms.

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

**PART II**

****

****

**TableofContents**

****
|  | **ITEM 2.** | **Unregistered Sales of Equity Securities and Use of Proceeds** |
|--|-------------|-----------------------------------------------------------------|
|  |             |                                                                 |
| **Repurchases:**                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                            |                                                                                                              |                    |                                            |                                      |                                                                                                        |              |                                                                                                                                                              |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------|--------------------|--------------------------------------------|--------------------------------------|--------------------------------------------------------------------------------------------------------|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **Period**                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                            | **Total Number of Shares (or Units) Purchased**                                                              |                    | **Average Price Paid per Share (or Unit)** |                                      | **Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs****(1)** |              | **Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs**                                  |
|                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                            |                                                                                                              |                    |                                            |                                      |                                                                                                        |              |                                                                                                                                                              |
|                                            |                                                                                                                                                                                                                                            |                    |     |                                            |        |                   |              |                            |  |                                    |
|                                                                                                                                                                                                                                               | July 3 - July 30                                                                                                                                                                                                                           |                                                                                                              | ---                |                             |                                      |                                                                                                        | ---          |                                                                                                                                                              |  | --- |  |  |          | --- |  |
|                                                                                                                                                                                                                                                              |                                         |                                                                                                              |                    |                                            |                                      |                                                                                                        |    |                                                                                                                                                              |    |  |                                  |
|                                                                                                                                                                                                                                                              | July 31 - August 27                                                                                                                                                                                                                        |                                                                                                              | ---                |                                            |                                      |                                                                                                        | ---          |                                                                                                                                                              |  | --- |  |  |  | --- |  |
|                                                                                                                                                                                                                                               |                                                                                                                                                                                                                                            |                                                                                                              |                    |                                            |                                      |                                                                                                        |              |                                                                                                                                                              |  |  |  |  |  |
|                                                                                                                                                                                                                                                              | August 28 - October 1                                                                                                                                                                                                                      |                                                                                                              | 45,500             |                                            |                                      | $                                                                                                      | 10.34        |                                                                                                                                                              |  | 45,500 |  |  |  | 888,600 |  |
|                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                            |                                                                                                              |                    |                                            |                                      |                                                                                                        |              |                                                                                                                                                              |
|                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                            |                                                                                                              |                    |                                            |                                      |                                                                                                        |              |                                                                                                                                                              |  |  |  |  |  |  |  |
|                                                                                                                                                                                                                                                              |   Total                                                                                                                                                                                                                          |                                                                                                              | 45,500             |                                            |                                      | $                                                                                                      | 10.34        |                                                                                                                                                              |  | 45,500 |  |  |  | 888,600 |  |
|                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                            |                                                                                                              |                    |                                            |                                      |                                                                                                        |              |                                                                                                                                                              |
|                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                            |                                                                                                              |                    |                                            |                                      |                                                                                                        |              |                                                                                                                                                              |  |  |  |  |
|                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                            |                                                                                                              |                    |                                            |                                      |                                                                                                        |              |                                                                                                                                                              |
|                                                                                                                                                                                                                                                    |                                                                                                                                                                                                                                            |                                                                                                              |                    |                                            |                                      |                                                                                                        |              |                                                                                                                                                              |  |  |  |  |

(1)  Shares repurchased under resolution of the Board of Directors dated August 23, 2006, authorizing repurchase of up to 1,000,000 shares. Authorization expires on June 29, 2008.
| ** **                                                                                                                                 | **           **                                                                                                                                                                                                                                                                                                                                                   |                                                                                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|--------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                            | **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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.LaBARGE, INC.Date:  November 6, 2006
| /S/DONALD H. NONNENKAMP         |
|---------------------------------|
|                                 |
| Donald H. Nonnenkamp            |
| Vice President                  |
| and Chief Financial Officer     |
| *(Principal Financial Officer)* |