| **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 April 2, 2006                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| **[  ]  Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| For the transition period from _________ to _________                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| ****                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| Commission File Number:  1-5761                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| **                                                                                                                                                                        ** |
| **LaBarge, Inc.**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | (Exact name of registrant as specified in its charter) |   |
|                                                                                                                                                                                   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | Delaware |                              | 73-0574586 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | (State or Other Jurisdiction of Incorporation or Organization) |           | (I.R.S. Employer Identification Number) |              |
|                                                                                                                                                                              |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | 9900 Clayton Road, St. Louis, Missouri |     | 63124 |      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | (Address of Principal Executive Offices) |   | (Zip Code) |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |   |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | (314) 997-0800 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | (Registrant’s Telephone Number, Including Area Code) |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                      |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 | N/A |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   | (Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report) |   |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                                                                                                                         |   |   |

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

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

Indicate the number of shares outstanding of each of the Issuer’s classes of common stock as of May 3, 2006: 15,221,591 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 Quarterly Period Ended April 2, 2006**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| **Table of Contents**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|                                                                                                                                                                              |

|                  |
|------------------|
| **Part I**       | **     ** | **Financial Information (Unaudited)** |
|             |
| Item 1.          |  | Financial Statements  |
|             |
|             | Consolidated Statements of Income |
|        | Consolidated Balance Sheets |
|             | Consolidated Statements of Cash Flows |
|             | Notes to Financial Statements |
|             |
| Item 2.          |  | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
| **  ** |
| Item 3.          |  | Quantitative and Qualitative Disclosures About Market Risk |
|             |  |
| Item 4.          |  | Controls and Procedures |
|             |
| **Part II**      |  | **Other Information** |
|             |
| Item 1.          |  | Legal Proceedings |
| Item 2.          |  | Unregistered Sales of Equity Securities and Use of Proceeds |
| Item 6.          |  | Exhibits |
|             |
| Signatures       |
|             |
|                  |

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

***(Amounts In Thousands -- Except Per-Share Amounts)***
|                                                                             | Three Months Ended                                                                                                                                                                                                                                                                                                                                                                                                 |                                 | Nine Months Ended                                                                                                                                                                  |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                    |                                      |                                                                                                                                                                                    |  |  |
|                                                                        | **April 2,**                                                                                                                                                                                                                                                                                                                                                                                                       |                                      | April 3,                                                                                                                                                                           |   | **April 2,** |  | April 3, |
|                                                                        | **2006**                                                                                                                                                                                                                                                                                                                                                                                                           |                                      | 2005                                                                                                                                                                               |   | **2006** |  | 2005 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                      | **Net sales**                                                                                                                                                                                                                                                                                                                                                                                                      | **$**                                | **47,273**                                                                                                                                                                         |  | $ | 44,837 |  | **$** | **135,059** |  | $ | 137,189 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                     |                                      | **                   **                                                             |  |  |                 |  |  | **                 ** |  |  |                    |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                      | **Costs and expenses:**                                                                                                                                                                                                                                                                                                                                                                                            |                                      |                                                                                                                                                                                    |   |  |  |  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                               | Cost of sales                        | **37,483**                                                                                                                                                                         | **           ** |  | 34,706 | **           ** | **105,304** |              | 106,476 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                               | Selling and administrative expense   | **5,509**                                                                                                                                                                          |  |  | 5,972 |  |  | **16,969** |  |  | 17,642 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                               | Interest expense                     | **554**                                                                                                                                                                            |  |  | 426 |  | **     ** | **1,407** |  |  | 1,345 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                               | Other (income) other deductions, net | **17**                                                                                                                                                                             |  |  | (228 | ) |  | **(129** | **)** |  | (430 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                      | Earnings from continuing operations before income taxes                                                                                                                                                                                                                                                                                                                                                            | **3,710**                            |                                                                                                                                                                                    |  | 3,961 |  |  | **11,508** |  |  | 12,156 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                      | Income tax expense                                                                                                                                                                                                                                                                                                                                                                                                 | **1,405**                            |                                                                                                                                                                                    |  | 954 |  |  | **4,510** |  |  | 4,125 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                      | **Net earnings**                                                                                                                                                                                                                                                                                                                                                                                                   | **$**                                | **2,305**                                                                                                                                                                          |  | $ | 3,007 |  | **$** | **6,998** |  | $ | 8,031 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                    |                                      |                                                                                                                                                                                    |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                               |                                      |                                                                                                                                                                                    |  |  |  |  |  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                      | **Basic net earnings per common share:**                                                                                                                                                                                                                                                                                                                                                                           | **  **                     |                                                                                                                                                                                    |  |  |  |  |  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                      | **Basic net earnings**                                                                                                                                                                                                                                                                                                                                                                                             | **$**                                | **0.15**                                                                                                                                                                           |  | $ | 0.20 |  | **$** | **0.46** |  | $ | 0.54 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                      | **Average common shares outstanding**                                                                                                                                                                                                                                                                                                                                                                              | **15,187**                           |                                                                                                                                                                                    |  | 15,026 |  |  | **15,140** |  |  | 15,002 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                    |                                      |                                                                                                                                                                                    |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                      | ** **                                                                                                                                                                                                                                                                                                                                                                                                         |                                      |                                                                                                                                                                                    |  |  |  |  |  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                      | **Diluted net earnings per share:**                                                                                                                                                                                                                                                                                                                                                                                |                                      | **                             ** |  |  |                 |  |  | **                   ** |  |  |                   |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                      | **Diluted net earnings**                                                                                                                                                                                                                                                                                                                                                                                           | **$**                                | **0.14**                                                                                                                                                                           |  | $ | 0.19 |  | **$** | **0.44** |  | $ | 0.51 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                      | **Average diluted common shares outstanding**                                                                                                                                                                                                                                                                                                                                                                      | **16,125**                           |                                                                                                                                                                                    |  | 15,938 |  |  | **16,086** |  |  | 15,803 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                    |                                      |                                                                                                                                                                                    |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                     |                                      |                                                                                                                                                                                    |  |  |  |  |  |  |  |  |

See accompanying notes to consolidated financial statements.

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LaBARGE, INC.CONSOLIDATED BALANCE SHEETS***(Amounts In Thousands -- Except Share Amounts)***
| **   **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | ** **                                                                                                                                          | **April 2, 2006**                                                                                                                                                                                                                                                                                                                    |                                                                                                                                      |             | July 3, 2005                               |                                                                                                                                                  |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------|-------------|--------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                      |             |                                            |
| **                                                                                                                    **                                                                                                                                                                                                                                                                                                                                                                     |                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                      | *(Unaudited)*                                                                                                                        |             |                                            | *                   *                             |  |
| **ASSETS**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                      |                        |        |                                            |                                                                                                                                             |
| **Current assets:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                      |                                                                |             |                                       |                          |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Cash and cash equivalents                                                                                                                           |                                                                                                                                                                                                                                                                                                                                 | **$**                                                                                                                                | **715**     |         | $                                                                                                                                                | 820 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Accounts and other receivables, net                                                                                                                 |                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                      | **26,170**  |                                            |                                                                                                                                             | 23,371 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Inventories                                                                                                                                         |                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                      | **54,742**  |                                            |                                                                                                                                                  | 41,342 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Prepaid expenses                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                      | **1,391**   |                                            |                                                                                                                                             | 974 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Deferred tax assets, net                                                                                                                            |                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                      | **1,493**   |                                            |                                                                                                                                                  | 1,387 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                      |             |                                            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | **Total current assets**                                                                                                                            |                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                      | **84,511**  |                                            |                                                                                                                                                  | 67,894 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                      |             |                                            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                      |             |                                       |
| Property, plant and equipment, net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                      | **20,230**                                                                                                                           |             |                                            | 18,849                                                                                                                                           |   |
| Intangible assets, net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                      | **2,808**                                                                                                                            |             |                                       | 3,388                                                                                                                                            |   |
| Goodwill, net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                      | **24,292**                                                                                                                           |             |                                       | 24,292                                                                                                                                           |  |
| Other assets, net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                      | **5,431**                                                                                                                            |             |                                       | 5,514                                                                                                                                            |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                      |             |                                            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | **Total assets**                                                                                                                                    |                                                                                                                                                                                                                                                                                                                                 | **$**                                                                                                                                | **137,272** |         | $                                                                                                                                                | 119,937 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                      |             |                                            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                      |             |                                            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                      |             |                                            |
|                                                                                                                                                                                  |
| **LIABILITIES AND STOCKHOLDERS’ EQUITY**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                |                                                        |
| **Current liabilities:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                      | **              **                                             |             |                                            |                                                                                                |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Short-term borrowings                                                                                                                               |                                                                                                                                                                                                                                                                                                                                      | **$**                                                                                                                                | **13,125**  |              | $                                                                                                                                                | 1,650 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Current maturities of long-term debt                                                                                                                |                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                      | **5,537**   |                                            |                                                                                                                                                  | 4,661 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Trade accounts payable                                                                                                                              |                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                      | **17,707**  |                                            |                                                                                                                                             | 10,026 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Accrued employee compensation                                                                                                                       |                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                      | **8,083**   |                                            |                                                                                                                                             | 9,511 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Other accrued liabilities                                                                                                                           |                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                      | **1,697**   |                                            |                                                                                                                                             | 2,609 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Cash advances                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                      | **7,375**   |                                            |                                                                                                                                             | 11,445 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                      |             |                                            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | **Total current liabilities**                                                                                                                       |                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                      | **53,524**  |                                            |                                                                                                                                                  | 39,902 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                      |             |                                            |
| Long-term advances from customers for purchase of materials                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                      | **2,884**                                                                                                                            |             |                                            | 3,854                                                                                                                                            |   |
| Deferred tax liabilities, net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                      | **305**                                                                                                                              |             |                                       | 746                                                                                                                                              |  |
| Long-term debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                      | **18,038**                                                                                                                           |             |                                            | 21,605                                                                                                                                           |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                      |             |                                            |
|                                                                                                                                                                                  |
| **Stockholders’ equity:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                |                                                        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Common stock, $.01 par value.  Authorized 40,000,000 shares; 15,773,254 issued at April 2, 2006 and July 3, 2005, including shares in treasury |                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                      | **158**     |                                            |                                                                                                                                             | 158 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Additional paid-in capital                                                                                                                          |                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                      | **14,898**  |                                            |                                                                                                                                             | 13,722 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Retained earnings                                                                                                                                   |                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                      | **49,721**  |                                            |                                                                                                                                                  | 42,723 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | Less cost of common stock in treasury, shares of 556,659 at April 2, 2006 and 723,345 at July 3, 2005                                               |                                                                                                                                                                                                                                                                                                                                      | **(2,256**                                                                                                                           | **)**       | (2,773                                     | )                                                                                                                                                |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                      |             |                                            |
|                                                                                                                                                                                       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  | **Total stockholders’ equity**                                                                                                                |                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                      | **62,521**  |                                            |                                                                                                                                             | 53,830 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                      |             |                                            |
|                                                                                                                                                                                  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                     | **Total liabilities and stockholders’ equity**                                                                                                                                                                                                                                                                                 |                                                                                                                                 | **$**       | **137,272**                                |                                                                                                               | $ | 119,937 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                      |             |                                            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                      |             |                                            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                                                                     |                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                      |             |                                            |

See accompanying notes to consolidated financial statements.

----

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

***(Amounts In Thousands)***
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                      | Nine Months Ended                                                                                                        |                                                                     |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                          |                                                                          |
| **                                                                                        **                   | **April 2, 2006**                                                                                                                                                                                                                                                                                                                                                                                                                    | **  **                                                                                                         | April 3, 2005                                                            |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                          |                                                                          |  |  |
| **Cash flows from operating activities:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                    |              |  |                  |  |   |
|  Net earnings                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | **$**                                                                                                                                                                                                                                                                                                                                                                                                                                | **6,998**                                                                                                                | **          **         | $ | 8,031 |   |   |
|   Adjustments to reconcile net cash provided by                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                      | ** **                                                                                                               |                                                                     |  |   |   |
|   operating activities:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                          |                                                                          |  |  |   |
|   Depreciation and amortization                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | **3,388**                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                          |                                                                     | 3,395 |  |   |
|   Stock-based compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | **1,207**                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                          |                                                                          | 82 |  |   |
|   Realized gain on sale of investment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | **(30**                                                                                                                                                                                                                                                                                                                                                                                                                              | **)**                                                                                                                    |                                                                          | --- |  |   |
|   Other than temporary impairment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            | **37**                                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                                          |                                                                          | 283 |  |   |
|   Deferred taxes                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | **(524**                                                                                                                                                                                                                                                                                                                                                                                                                             | **)**                                                                                                                    |                                                                     | 122 |  |   |
|   Other                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      | **2**                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                          |                                                                          | 10 |  |   |
|  Changes in assets and liabilities, net of acquisitions:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                        |                                                                                                                     |
|   Accounts and notes receivable, net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | **(2,799**                                                                                                                                                                                                                                                                                                                                                                                                                           | **)**                                                                                                                    |                                                                     | 36 |  |   |
|   Inventories                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | **(13,400**                                                                                                                                                                                                                                                                                                                                                                                                                          | **)**                                                                                                                    |                                                                     | (3,598 | ) |   |
|   Prepaid expenses                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | **(417**                                                                                                                                                                                                                                                                                                                                                                                                                             | **)**                                                                                                                    |                                                                     | (147 | ) |   |
|   Trade accounts payable                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | **7,600**                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                          |                                                                          | (3,069 | ) |   |
|   Accrued liabilities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | **(2,532**                                                                                                                                                                                                                                                                                                                                                                                                                           | **)**                                                                                                                    |                                                                          | 931 |  |   |
|   Advance payments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | **(5,040**                                                                                                                                                                                                                                                                                                                                                                                                                           | **)**                                                                                                                    |                                                                     | 1,361 |  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                          |                                                                          |  |  |
| **Net cash (used) provided by operating activities**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                      | **(5,510**                                                                                                               | **)**                                                                    | 7,437 |  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                          |                                                                          |  |  |
| **                                                                                           ** |                                                                                                                                                                                                                                                                                                                                                                                                                                      |                      |                                                                          |  |  |   |
| **Cash flows from investing activities:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                     |                                                                     |  |   |   |
|  Additions to property, plant and equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                      | **(3,095**                                                                                                               | **)**                                                                    | (2,677 | ) |   |
|  Proceeds from disposal of property and equipment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                      | **62**                                                                                                                   |                                                                          | 2 |  |   |
|  Additions to other assets and intangibles                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                      | **(449**                                                                                                                 | **)**                                                                    | (341 | ) |   |
|  Proceeds from sale of investment                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                      | **89**                                                                                                                   |                                                                          | --- |  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                          |                                                                          |  |  |
| **Net cash (used) by investing activities**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                 | **(3,393**                                                                                                               | **)**                                                                    | (3,016 | ) |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                          |                                                                          |  |  |
| **                                                                                          **       |                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                          |                                                                          |  |  |   |
| **Cash flows from financing activities:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                                          |                                                                          |  |  |   |
|  Borrowing on revolving credit facility                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                                                                                                                                                                                                                                                                                                                                                                      | **50,050**                                                                                                               |                                                                          | 46,125 |  |   |
|  Payments of revolving credit facility                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                      | **(38,575**                                                                                                              | **)**                                                                    | (47,750 | ) |   |
|  Repayments of long-term senior debt                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                 | **(3,355**                                                                                                               | **)**                                                                    | (3,339 | ) |   |
|  Excess tax benefits from disqualifying stock options                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                      | **184**                                                                                                                  |                                                                          | --- |  |   |
|  Additional capital contribution by shareholder                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                      | **---**                                                                                                                  |                                                                          | 58 |  |   |
|  Issuance of stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                                                                                                                                                                                                                                                                                                                                                                                 | **682**                                                                                                                  |                                                                          | 413 |  |   |
|  Purchase of treasury stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                                                                                                                                                                                                                                                                                                 | **(188**                                                                                                                 | **)**                                                                    | (76 | ) |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                          |                                                                          |  |  |
| **Net cash provided (used) by financing activities**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                                                                                                                                                                                                                                                                                                 | **8,798**                                                                                                                |                                                                          | (4,569 | ) |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                          |                                                                          |  |  |
| **Net decrease in cash and cash equivalents**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                                                                                                                                                                                                                                                                 | **(105**                                                                                                                 | **)**                                                                    | (148 | ) |   |
| **Cash and cash equivalents at beginning of year**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     | ** **                                                                                                                                                                                                                                                                                                                                                                                                                           | **820**                                                                                                                  |                                                                          | 793 |  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                          |                                                                          |  |  |
| **                                                                                           ** |                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                          | **           **   |             |                 |  |   |
| **Cash and cash equivalents at end of period**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | **$**                                                                                                                                                                                                                                                                                                                                                                                                                                | **715**                                                                                                                  |                                                                          | $ | 645 |  |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                          |                                                                          |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                          |                                                                          |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                                          |                                                                          |  |  |
| **                                                                                          ** |                                       |        |                                                                                    |         |                                                            |                                            |                                                                          |     |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------|--------|------------------------------------------------------------------------------------|---------|------------------------------------------------------------|--------------------------------------------|--------------------------------------------------------------------------|-----|
| **Non-cash transactions:**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                       |        | **             ** |         |                                                            |                                            |              |     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | Increase in capital lease obligations |   | **$**                                                                              | **664** | **         ** |         | $                                                                        | --- |           |

See accompanying notes to consolidated financial statements.

----

 

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

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

The consolidated balance sheet at April 2, 2006, the related consolidated statements of income for the three and nine months ended April 2, 2006 and April 3, 2005, and the consolidated statements of cash flows for the threeand nine months ended April 2, 2006 and April 3, 2005, have been prepared by LaBarge, Inc. (the “Company” or “LaBarge”) without audit.  In the opinion of management, adjustments, all of a normal and recurring nature, necessary to presentfairly the financial position and the results of operations and cash flows for the aforementioned periods, have been made.  Certain prior-year amounts have been reclassified to conform to the current year’s presentation.

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

***Stock-Based Compensation***As of April 2, 2006, the Company had previously established a number of share incentive programs, which are discussed in more detail in Note 11.  Prior to fiscal 2006, the Company applied the intrinsic value-based method as outlined in Accounting PrinciplesBoard Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB No. 25”) and related interpretations, in accounting for stock options and share units granted under these programs. Under the intrinsic value-based method, no compensationexpense was recognized if the exercise price of the Company’s employee stock options were equal to or greater than the market price of the underlying stock on the date of the grant. Accordingly, prior to fiscal year 2006, no compensation cost was recognized inthe accompanying consolidated statements of income on stock options granted to employees, since all options granted under the Company’s share incentive programs had an exercise price equal to or greater than the market value of the underlying common stock onthe date of the grant.

Effective July 4, 2005, the Company adopted Statement of Financial Accounting Standards (“SFAS”) “Share-Based Payment” (“SFAS 123R”). This statement replaces SFAS No. 123, “Accountingfor Stock-Based Compensation,” and supersedes APB No. 25.  SFAS No. 123R requires that all stock-based compensation be recognized as an expense in the financial statements and that such cost be measured at the fair value of the award.  This statementwas adopted using the modified prospective method of application, which requires the Company to recognize compensation expense on a prospective basis. Therefore, prior-period financial statements have not been restated. Under this method, in addition to reflectingcompensation expense for new share-based awards, expense is also recognized to reflect the remaining service period of awards that had been included in pro forma disclosures in prior periods. SFAS No. 123R also requires that excess tax benefits related to stockoption exercises be reflected as financing cash inflows instead of operating cash inflows.

During the nine months ended April 2, 2006, the Company was notified that shares issued upon the exercise of incentive stock options (ISOs) were sold prior to being held by the employee for 12 months.  These disqualifyingdispositions resulted in an excess tax benefit for the Company.  Since the ISOs were vested prior to adoption of FAS 123R, the entire tax benefit of $184,000 was charged to additional paid-in capital.

Total stock-based compensation in the third fiscal quarter of 2006 was $362,000 ($226,000 after tax), or $0.01 basic and diluted earnings per share. For the nine months ended April 2, 2006, totalstock-based compensation was $1.2 million ($755,000 after tax), or $0.05 basic and diluted earnings per share.

Included in total stock-based compensation expense for the third fiscal quarter of 2006 is $128,000 ($80,000 after tax), or $0.01 basic and diluted earnings per share, attributable to the Company’s adoption of SFAS 123R.For the nine months ended April 2, 2006, stock-based compensation attributable to the adoption of SFAS 123R was $501,000 ($313,000 after tax), or $0.02 basic and diluted earnings per share.

As of April 2, 2006, the total unrecognized compensation expense related to nonvested awards, including stock options and performance units, was $712,000 pretax and the period over which it is expected to be recognized isapproximately one year.

The following table illustrates the effect on net income and earnings per share as if SFAS 123R had been applied to all outstanding awards for the three and nine months ended April 2, 2006 and April 3,2005:

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

**
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | ** ** | Three Months Ended |           | Nine Months Ended |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------|-----------|-------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |            |                    |           |                   |  |  |  |  |
| **                                                                           ** |            | **April 2,**       |           | April 3,          | ** ** | **April 2,** |  | April 3, |
| **   **                                                                                                                                                                                                                                                                                                                                                                                                                                                 |            | **2006**           |           | 2005              |  | **2006** |  | 2005 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |            |                    |           |                   |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |            |                    |           |                   |  |  |  |  |
| Net earnings, as reported                                                                                                                                                                                                                                                                                                                                                                                                                                              |       | **$**              | **2,305** |              | $ | 3,007 |   | **$** | **6,998** |   | $ | 8,031 |  |
| Add: Stock-based employee compensation                                                                                                                                                                                                                                                                                                                                                                                                                                 |            |                    |           |                   |  |  |  |  |  |  |  |  |
|  expense included in reported net income, net                                                                                                                                                                                                                                                                                                                                                                                                                     |            |                    |           |                   |  |  |  |  |  |  |  |  |
|  of related tax effects                                                                                                                                                                                                                                                                                                                                                                                                                                           |            |                    | **226**   |                   |  | 37 |  |  | **755** |  | 51 |  |
| Deduct: Total stock-based employee                                                                                                                                                                                                                                                                                                                                                                                                                                     |            |                    |           |                   |  |  |  |  |  |  |  |  |
|  compensation expense determined under fair                                                                                                                                                                                                                                                                                                                                                                                                                       |            |                    |           |                   |  |  |  |  |  |  |  |  |
|  value-based method for all awards, net of                                                                                                                                                                                                                                                                                                                                                                                                                        |            |                    |           |                   |  |  |  |  |  |  |  |  |
|  related tax effects                                                                                                                                                                                                                                                                                                                                                                                                                                              |            |                    | **(226**  | **)**             |  | (176 | ) |  | **(755** | **)** | (506 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |            |                    |           |                   |  |  |  |  |
|   Pro forma net earnings                                                                                                                                                                                                                                                                                                                                                                                                                                     |            | **$**              | **2,305** |                   | $ | 2,868 |  | **$** | **6,998** |  | $ | 7,576 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |            |                    |           |                   |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |            |                    |           |                   |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |            |                    |           |                   |  |  |  |  |
| **Net earnings per share:**                                                                                                                                                                                                                                                                                                                                                                                                                                            |            |                    |           |                   |  |  |  |  |  |  |  |  |
| Basic--as reported                                                                                                                                                                                                                                                                                                                                                                                                                                                     |            | **$**              | **0.15**  |                   | $ | 0.20 |  | **$** | **0.46** |  | $ | 0.54 |  |
| Basic--pro forma                                                                                                                                                                                                                                                                                                                                                                                                                                                       |            |                    | **0.15**  |                   |  | 0.19 |  |  | **0.46** |  | 0.50 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |            |                    |           |                   |  |  |  |  |
| Diluted--as reported                                                                                                                                                                                                                                                                                                                                                                                                                                                   |            | **$**              | **0.14**  |                   | $ | 0.19 |  | **$** | **0.44** |  | $ | 0.51 |  |
| Diluted--pro forma                                                                                                                                                                                                                                                                                                                                                                                                                                                     |            |                    | **0.14**  |                   |  | 0.18 |  |  | **0.44** |  | 0.48 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |            |                    |           |                   |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |            |                    |           |                   |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |            |                    |           |                   |  |  |  |  |

No new stock options were issued in the three- and nine-month periods ended April 2, 2006. On January 11, 2005, the Company awarded performance units tied to fiscal year 2006 financial performance to certain keyexecutives. Compensation expense related to these awards was recognized in the third fiscal quarter of 2006, but no shares are included in the dilutive shares, as the performance condition had not been met at April 2, 2006.

The fair value of stock options granted in the nine-month period ended April 3, 2005 was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions: risk-freeinterest rate of 3.8%; expected dividend yield of 0%; expected life of six years; and expected volatility of 66.5%.

All stock options outstanding at April 2, 2006 and April 3, 2005 were dilutive and included in the computation of diluted earnings per share.  These options expire in various periods through 2014.
| **2.** | **  ** | **GROSS AND NET SALES** |
|--------|------------------|-------------------------|

Gross and net sales consist of the following:*(dollars in thousands)*
|                                                                       | ** ** | Three Months Ended |       | Nine Months Ended |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------|------------|-------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                |            |                    |            |                   |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                |            | **April 2,**       |            | April 3,          | ** ** | **April 2,** |  | April 3, |
| **   **                                                                                                                                                                                                                                                                                                                                                                                                         |            | **2006**           |            | 2005              |  | **2006** |  | 2005 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                |            |                    |            |                   |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                |            |                    |            |                   |  |  |  |  |
| Gross sales                                                                                                                                                                                                                                                                                                                                                                                                                    |       | **$**              | **47,758** |         |   | $ | 44,974 |   | **$** | **136,072** |     |   | $ | 137,614 |  |
| Less sales discounts                                                                                                                                                                                                                                                                                                                                                                                                           |            |                    | **485**    |                   |  |  | 137 |  |  | **1,013** |  |  | 425 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                |            |                    |            |                   |  |  |  |  |
| Net sales                                                                                                                                                                                                                                                                                                                                                                                                                      |            | **$**              | **47,273** |                   |  | $ | 44,837 |  | **$** | **135,059** |  |  | $ | 137,189 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                |            |                    |            |                   |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                |            |                    |            |                   |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                |            |                    |            |                   |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                |            |                    |            |                   |  |  |  |  |

****

**Geographic Information**The Company has no sales offices or facilities outside of the United States.  Sales for export did not exceed 10% of total sales in any of the last three fiscal years.

For the three months ended April 2, 2006, the Company’s three largest customers were Owens-Illinois, Inc., 12.5% of total sales; Northrop Grumman Corp., 11.6%; and Schlumberger Ltd., 11.1%.  For thenine months ended April 2, 2006, the Company’s three largest customers were Schlumberger Ltd, 11.6%; Owens-Illinois, Inc., 10.8%; and Northrop Grumman, Corp., 10.0%.
| **3.** | **  ** | **ACCOUNTS AND OTHER RECEIVABLES** |
|--------|------------------|------------------------------------|

Accounts and other receivables consist of the following:*(dollars in thousands)*
|                                                                                           | **April 2,** | July 3,    |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------|------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | **2006**     | 2005       |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |              |            |
| Billed shipments, net of progress payments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | **$**        | **26,106** | **             ** | $ | 23,352 |   |
| Less allowance for doubtful accounts                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |              | **176**    | ** ** |  | 326 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |              |            |
| Trade receivables, net                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |              | **25,930** |  | 23,026 |   |
| Other current receivables                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |              | **240**    | ** ** | 345 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |              |            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | **$**        | **26,170** | ** ** | $ | 23,371 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |              |            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |              |            |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |              |            |

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

At April 2, 2006, the amounts due from the three largest accounts receivable debtors and the percentage of total accounts receivable represented by those amounts were $3.9 million, 14.6%; $2.9 million, 11.0%; and $2.2 million,8.3%. This compares with $4.7 million, 20%; $2.9 million, 12%; and $2.4 million, 10% at July 3, 2005.
| **4.** | **  ** | **INVENTORIES** |
|--------|------------------|-----------------|

Inventories consist of the following:*(dollars in thousands)*
|                                                                                                                                                                                                                                                                                                                                                                                                                 |                    |           |                                         | **April 2,**       |     |      |                                          | July 3, |     |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------|--------------------------------------------------------|--------------------------------------------------------|--------------------|--------------------|--------------------------|--------------------------------------------------------------|---------|--------------------|--------|
|                                                                            | **2006**                                                                                                     |                                                        |                                                        |                    | 2005               |                          |                                                         |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                              |                                                        |
| Raw materials                                                                                                                                                                                                                                                                                                                                                                                                                                                | **$**                                                                                                        | **37,362**                                             |           |          | $                  | 29,324                   |            |    |
| Work in progress                                                                                                                                                                                                                                                                                                                                                                                                                                             | **17,565**                                                                                                   |                                                        |                                                        |     | 12,018             |                          |                                                         |
| Less progress billings                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                              | **(185**                                               | )                                                      |                    |                    | ---                      |                                                              |    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                              |                                                        |
|                                                                                 | **$**                                                                                                        | **54,742**                                             |                                                        |                    | $                  | 41,342                   |                                                              |    |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                              |                                                        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                              |                                                        |                                                        |                    |                    |                          |                                                              |         |                    |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                              |                                                        |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                              |                                                        |                                                        |                    |                    |                          |                                                              |         |                    |   |

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

For the three months ended April 2, 2006 and April 3, 2005, expense for obsolescence charged to income before taxes was $324,000 and $236,000, respectively.  For the nine months ended April 2, 2006 and April 3, 2005,expense for obsolescence charged to income before taxes was $611,000 and $467,000, respectively.
| **5.** | **  ** | **INTANGIBLE ASSETS, NET** |
|--------|------------------|----------------------------|

Intangible assets, net, is summarized as follows:*(dollars in thousands)*
|          |                                                                                                                                                                                                                                                                                                                                                                       |                    |           |     | **April 2,** |                       |      |                  | July 3, |      |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------|--------------------------------------------------------|--------------------|--------------|--------------------------------------|--------------------------|--------------------------------------|---------|--------------------------|
|               |                                                                     |                                                                                                              | **2006**                                               |                    |              |                                      | 2005                     |                                      |
|                    |                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                              |                                                        |                    |
|                    | Software                                                                                                                                                                                                                                                                                                                                                                                                           |                                                                                          | **$**                                                  | **2,958**          |              |                                      | $                        | 2,722                                |         |
|                    | Less accumulated amortization                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                     | **2,496**                                              |                    |         |        | 2,192                    |        |
|                    |                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                              |                                                        |                    |
|          | Net software                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                              |                                                        | **462**            |              |                                      |                          | 530                                  |         |
|                    |                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                              |                                                        |                    |
|                    | Customer list                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                              | **3,400**                                              |                    |              |                                      | 3,400                    |                                      |
|                    | Less accumulated amortization                                                                                                                                                                                                                                                                                                                                                                                      |                                                                                                              | **1,210**                                              |                    |              |                                      | 785                      |                                      |
|                    |                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                              |                                                        |                    |
|          | Net customer list                                                                                                                                                                                                                                                                                                                                                                                                  |                                                                                                              | **2,190**                                              |                    |              |                                      | 2,615                    |                                      |
|                    |                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                              |                                                        |                    |
|               | Other, net                                                                                                                                                                                                                                                                                                                                                                                                         |                                                                                                              |                                                        | **156**            |              |                                      |                          | 243                                  |         |
|                    |                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                              |                                                        |                    |
|     | Total intangible assets, net                                                                                                                                                                                                                                                                                                                                                                                       | **$**                                                                                                        | **2,808**                                              |                    |              | $                                    | 3,388                    |                                      |
|                    |                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                              |                                                        |                    |
|                    |                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                              |                                                        |                    |              |                                      |                          |                                      |         |                          |
|                    |                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                              |                                                        |                    |
|                    |                                                                                                                                                                                                                                                                                                                                                                                                               |                                                                                                              |                                                        |                    |              |                                      |                          |                                      |         |                          |

Intangibles are amortized over a three- to six-year period.  Amortization expense was $299,000 and $287,000 for the three months ended April 2, 2006 and April 3, 2005, respectively.  Amortization expense was $931,000and $849,000 for the nine months ended April 2, 2006 and April 3, 2005, respectively.

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

Goodwill is summarized as follows:*(dollars in thousands)*
|    |                                                                          | **April 2,**       |     |            |      | July 3,            |     |
|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------|--------------------|--------------------------------|--------------------------|--------------------|--------------------|
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                             |                    |                    |                                | **2006**                 |                    |                    |  | 2005 |  |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                    |                    |                                |
|         | Goodwill                                                                                                                                                                                                                                                                                                                                                                                                                                         | **$**              | **24,492**         |       |                | $                  | 24,492             |             |
|              | Less accumulated amortization                                                                                                                                                                                                                                                                                                                                                                                                                    |     | **200**            |                                |                          |     | 200                |  |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                    |                    |                                |
|              |   Net goodwill                                                                                                                                                                                                                                                                                                                                                                                                                         |                    | **$**              | **24,292**                     |                          |                    | $                  | 24,292 |  |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                    |                    |                                |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                    |                    |                                |                          |                    |                    |  |  |  |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                    |                    |                                |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                             |                    |                    |                                |                          |                    |                    |  |  |  |

Impairment is tested annually in the fourth quarter of each fiscal year, or more frequently if events or circumstances change.  There was no impairment of goodwill at April 2, 2006 and July 3, 2005.
| **7.** | **  ** | **OTHER ASSETS** |
|--------|------------------|------------------|

Other assets is summarized as follows:*(dollars in thousands)*
|    |                                                                            | **April 2,**                                     |     |            |      | July 3,            |     |
|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------|--------------------|--------------------------------|--------------------------|--------------------|--------------------|
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                  |                    |                                | **2006**                 |                    |                    |  | 2005 |  |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                  |                    |                                |
|         | Cash value of life insurance                                                                                                                                                                                                                                                                                                                                                                                                                                 | **$**                                            | **4,209**          |       |                | $                  | 3,934              |             |
|              | Deposits, licenses and other, net                                                                                                                                                                                                                                                                                                                                                                                                                            |                                   | **544**            |                                |                          |     | 688                |  |
|              | Securities held for sale                                                                                                                                                                                                                                                                                                                                                                                                                                     |                                                  | **385**            |                                |                          |                    | 504                |  |
|              | Deferred financing costs, net                                                                                                                                                                                                                                                                                                                                                                                                                                |          |                    | **190**                        |                          |                    |                    | 239 |  |
|              | Other                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                  |                    | **103**                        |                          |                    |                    | 149 |  |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                  |                    |                                |
|              |                                                                                                                              |                                                  | **$**              | **5,431**                      |                          |                    | $                  | 5,514 |  |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                  |                    |                                |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                  |                    |                                |                          |                    |                    |  |  |  |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                  |                    |                                |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                  |                    |                                |                          |                    |                    |  |  |  |

The Company’s investment in securities held for sale of $385,000 at April 2, 2006, consists of 1.6 million shares of Norwood Abbey Ltd.  This investment is the result of shares and options acquired as a partialsettlement of a note receivable.

In the nine months ended April 2, 2006, the Company sold 210,000 shares at a pretax gain of $30,000.  In addition, an other-than-temporary write down of the remaining shares occurred in the quarter ended April 2,2006, resulting in the recognition of $60,000 pre-tax expense ($37,000 after-tax).
| **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)*
|    |                                                                            | **April 2,**             |                                                                     |      |      | July 3, |                                                                                                           |
|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------|------------------------------------------------------------------------------------|--------------------------|--------------------------|---------|--------------------------------------------------------------------------------------------------------------------------|
|         |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                          |                                                                                    |                          | **2006**                 |         |                                                                                                                          |  | 2005 |  |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                          |                                                                                    |                          |
|              | **Short-term borrowings:**                                                                                                                                                                                                                                                                                                                                                                                                                                   |                          | **             ** |                          |                          |         |                                                              |  |
|              |  Revolving credit agreement:                                                                                                                                                                                                                                                                                                                                                                                                                            |                          |                                                                                    |                          |                          |         |                                                                                                                          |  |
|              |   Balance at quarter-end                                                                                                                                                                                                                                                                                                                                                                                                                           | **$**                    | **13,125**                                                                         |                          |                          | $       | 1,650                                                                                                                    |  |
|              |   Interest rate at quarter-end                                                                                                                                                                                                                                                                                                                                                                                                                     |                          | **7.17**                                                                           | **%**                    |                          |         | 6.25                                                                                                                     | % |
|              |   Average amount of short-term borrowings                                                                                                                                                                                                                                                                                                                                                                                                          | **  **         |                                                                                    |                          |                          |         |                                                                                                                          |  |
|              |    outstanding during period                                                                                                                                                                                                                                                                                                                                                                                                                  | **$**                    | **10,778**                                                                         |                          |                          | $       | 7,922                                                                                                                    |  |
|              |   Average interest rate for fiscal quarter                                                                                                                                                                                                                                                                                                                                                                                                         |                          | **6.60**                                                                           | **%**                    |                          |         | 4.48                                                                                                                     | % |
|              |   Maximum short-term borrowings at                                                                                                                                                                                                                                                                                                                                                                                                                 |                          |                                                                                    |                          |                          |         |                                                                                                                          |  |
|              |    any month-end                                                                                                                                                                                                                                                                                                                                                                                                                              | **$**                    | **13,125**                                                                         |                          |           | $       | 11,650                                                                                                                   |  |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                          |                                                                                    |                          |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                          |                                                                                    |                          |                          |         |                                                                                                                          |  |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                          |                                                                                    |                          |
|              | **Senior long-term debt:**                                                                                                                                                                                                                                                                                                                                                                                                                                   |                          |                                                                                    |                          |                          |         |                      |  |
|              |  Senior lender:                                                                                                                                                                                                                                                                                                                                                                                                                                         |                          |                                                                                    |                          |                          |         |                                                                                                                          |  |  |
|              |    Term loan                                                                                                                                                                                                                                                                                                                                                                                                                                  |                          | **$**                                                                              | **17,000**               |                          |         | $                                                                                                                        | 20,000 |  |
|              |    Mortgage loan                                                                                                                                                                                                                                                                                                                                                                                                                              |      | **5,546**                                                                          |                          |                          |    | 5,738                                                                                                                    |  |
|         |  Other                                                                                                                                                                                                                                                                                                                                                                                                                                                  |                          | **1,029**                                                                          |                          |                          |         | 528                                                                                                                      |  |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                          |                                                                                    |                          |
|         | Total senior long-term debt                                                                                                                                                                                                                                                                                                                                                                                                                                  |                          | **23,575**                                                                         |                          |                          |         | 26,266                                                                                                                   |  |
|              | Less current maturities                                                                                                                                                                                                                                                                                                                                                                                                                                      |                          |                                                                                    | **5,537**                |                          |         |                                                                                                                          | 4,661 |  |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                          |                                                                                    |                          |
|              | Long-term debt, less current maturities                                                                                                                                                                                                                                                                                                                                                                                                                      | **$**                    | **18,038**                                                                         |                          |                          | $       | 21,605                                                                                                                   |  |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                          |                                                                                    |                          |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                          |                                                                                    |                          |                          |         |                                                                                                                          |  |  |  |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                          |                                                                                    |                          |
|              |                                                                                                                                                                                                                                                                                                                                                                                                                                                         |                          |                                                                                    |                          |                          |         |                                                                                                                          |  |  |  |

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

***Senior Lender:***The Company entered into a senior secured loan agreement with a group of banks on February 17, 2004 that was amended on February 10, 2006, increasing the revolving credit facility by $10.0 million.  The followingis a summary of the agreement:
|  •                   |   | A revolving credit facility up to $30.0 million, available for direct borrowings or letters of credit.  The facility is based on a borrowing base formula equal to the sum of 85% of eligible receivables and 35% of eligibleinventories. As of April 2, 2006, outstanding loans under the revolving credit facility were $13.1 million.  Letters of credit outstanding were $1.6 million, and $15.3 million was available. This credit facility matures on February 17, 2009.                                                                                                                                                                                                                                                                                                                                                                                              |              |
|--------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------|
|       |   |                                                                                                                                                                                    |                                                                          |
|  •                   |   | A $25.0 million term loan amortized beginning May 2004, at a quarterly rate of $1.0 million, increasing to $1.25 million in May 2006 and increasing to $1.5 million in May 2007.  Final maturity is February2009.  As of April 2, 2006, the amount outstanding was $17.0 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                          |
|            |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                          |
|  •                   |        | On April 15, 2004, the Company entered into an Interest Rate Cap Agreement with a bank.  This Cap Agreement caps the Company’s exposure to increases in LIBOR at 4% for a period of three years on a notional amountbeginning at $24.0 million and amortizing on a schedule that matches amortization of the $25.0 million term loan dated February 17, 2004. As a result of this Cap Agreement, for the three- and nine-month periods ended April 2, 2006, interest expense was reduced by$25,000 and $32,000, respectively.                                                                                                                                                                                                                                                                                                                                                   |                                                                          |
|                                |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                          |
|  •                   |        | Interest on both loans is at a percentage of prime or a stated rate over LIBOR based on certain ratios.  For the quarter ended April 2, 2006, the average rate was approximately 5.7%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                          |
|       |   |                                                                                                                                                 |                                                                          |
|  •                   |   | Both loans are secured by substantially all the assets of the Company other than real estate.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                          |
|                           |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                          |
|  •                   |        | Covenants and performance criteria consist of Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) in relation to debt, EBITDA in relation to fixed charges and minimum net worth.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                          |
|            |   |                                                                                                                                                           |                                                                     |

***Other Long-term Debt:****Mortgage Loan:*The Company has a $6.4 million term loan secured by the Company’s headquarters building in St. Louis, Missouri.  The loan repayment schedule is based on a 25-year amortization with a final balloon payment due in October2009.  The balance at April 2, 2006 was $5.5 million.  Interest is at a percentage of prime or a stated rate over LIBOR based on certain ratios.  For the quarter ended April 2, 2006, the average rate was approximately 5.0%.

*****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 April 2, 2006 was $0.4 million.

*Capital Lease Obligations:*

In October 2005, the Company entered into a capital lease agreement to fund the purchase of machinery with a fair market value of $664,000. The lease is for five years with an interest rate of 6.20%. The obligation outstandingat April 2, 2006 was $616,000.

The aggregate maturities of long-term obligations are as follows:*(dollars in thousands)*
| **Fiscal Year**               |
|-------------------------------|
|                               |
| 2006                          | ...............................................................  | $ | 1,383 |   |
| 2007                          | ...............................................................  |      | 5,791 |   |
| 2008                          | ...............................................................  |       | 6,553 |   |
| 2009                          | ...............................................................  |       | 4,936 |   |
| 2010                          | ...............................................................  |       | 4,861 |   |
| Thereafter                    | ...............................................................  |       | 51 |   |
|                               |
|     Total | ...............................................................  |  $ | 23,575 |   |
|                               |
| **9.** | **  ** | **CASH FLOWS** |
|--------|------------------|----------------|

Total cash payments for interest for the three months ended April 2, 2006 and April 3, 2005 amounted to $0.5 million and $0.4 million, respectively.  Total cash payments for interest for the nine months endedApril 2, 2006 and April 3, 2005 amounted to $1.3 million and $1.2 million, respectively. Net cash payments for federal and state income taxes for the three months ended April 2, 2006 and April 3, 2005 were $1.4 million and $2.6 million, respectively. Total cashpayments for the federal and state income taxes for the nine months ended April 2, 2006 and April 3, 2005 were $6.1 million and $3.1 million, respectively.
| **10.** | **  ** | **EARNINGS PER COMMON SHARE** |
|---------|------------------|-------------------------------|

Basic and diluted earnings (loss) per share are computed as follows:*(amounts in thousands, except per-share amounts)*
| **                                                                          **       | ** **         | Three Months Ended |                                                                          | Nine Months Ended |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------|--------------------|--------------------------------------------------------------------------|-------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                    |                    |                                                                          |                   |  |  |  |  |
| ** **                                                                                                                                                                                                                                                                                                                                                                                                                                                             |                    | **April 2,**       |                                                                          | April 3,          |  | **April 2,** |  | April 3, |
| **                                                                           ** |                    | **2006**           |                                                                          | 2005              |  | **2006** |  | 2005 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                    |                    |                                                                          |                   |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                    |                    |                                                                          |                   |  |  |  |  |
| Net earnings                                                                                                                                                                                                                                                                                                                                                                                                                                                           |     | **$**              | **2,305**                                                                |                   |  | $ | 3,007 |  | $ | **6,998** |  | $ | 8,031 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                    |                    |                                                                          |                   |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                    |                    |                                                                          |                   |  |  |  |  |  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                    |                    |                                                                          |                   |  |  |  |  |
| **     **                                                                                                                                                                                                                                                                                                                                                                                                                                     |                    |                    |                                                                          |                   |  |  |  |  |  |  |  |       |  |  |
| **Basic net earnings per share**                                                                                                                                                                                                                                                                                                                                                                                                                                       |                    | **$**              | **0.15**                                                                 | ** **        |  | $ | 0.20 |  | $ | **0.46** |  | $ | 0.54 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                    |                    |                                                                          |                   |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                    |                    |                                                                          |                   |  |  |  |  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                    |                    |                                                                          |                   |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                    |                    |              |                   |  |  |  |  |  |  |  |                |  |
| **Diluted earnings per share**                                                                                                                                                                                                                                                                                                                                                                                                                                         |                    | **$**              | **0.14**                                                                 |                   |  | $ | 0.19 |  | $ | **0.44** |  | $ | 0.51 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                    |                    |                                                                          |                   |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                    |                    |                                                                          |                   |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                    |                    |                                                                          |                   |  |  |  |  |

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

*(share amounts in thousands)*
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | ** **   | Three Months Ended |            | Nine Months Ended |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------|--------------------|------------|-------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |              |                    |            |                   |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |              | **April 2,**       | ** ** | April 3,          |  | **April 2,** |  | April 3, |
| **                                                                            ** | ** **   | **2006**           |            | 2005              |  | **2006** |  | 2005 |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |              |                    |            |                   |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |              |                    |            |                   |  |  |  |  |
| Average common shares outstanding -- basic                                                                                                                                                                                                                                                                                                                                                                                                                                   |         |                    | **15,187** |                   |   |  | 15,026 |   |   | **15,140** |  |   |  | 15,002 |  |
| Dilutive options                                                                                                                                                                                                                                                                                                                                                                                                                                                             |              |          | **938**    | ** **        |  |   | 912 |  |    | **946** |  |  | 801 |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |              |                    |            |                   |  |  |  |  |
| Adjusted average common shares   outstanding -- diluted                                                                                                                                                                                                                                                                                                                                                                                                            |    |                    | **16,125** |                   |  |  | 15,938 |  |  | **16,086** | **  ** |  | 15,803 |   |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |              |                    |            |                   |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |              |                    |            |                   |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |              |                    |            |                   |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |              |                    |            |                   |  |  |  |  |

All stock options outstanding at April 2, 2006 and April 3, 2005 were dilutive for the three and nine months ended on those dates. These options expire in various periods through 2014. The Company has awarded certain keyexecutives performance units tied to the Company’s fiscal year 2006 financial performance. The compensation expense related to these awards is recognized quarterly, but no shares are included in the dilutive shares, as the performance condition had not been metat April 2, 2006.
| **11.** | **  ** | **STOCK PROGRAMS** |
|---------|------------------|--------------------|

The Company has established the 1993 Incentive Stock Option Plan, the 1995 Incentive Stock Option Plan, and the 1999 Non-Qualified Stock Option Plan (collectively, the “Plans”). The Plans provide for the 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 April 2, 2006 include stock options,restricted stock and performance units.

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

Total stock-based compensation in the third fiscal quarter of 2006 was $362,000 ($226,000 after tax), or $0.01 basic and diluted earnings per share. For the nine months ended April 2, 2006, total stock-based compensation was$1.2 million ($755,000 after tax), or $0.05 basic and diluted earnings per share.

A summary of the Company’s stock option programs as of April 2, 2006 and changes during the three- and nine-month periods then ended is presented below:
| **                                                           ** | **Shares**            |                    | **Weighted-Average Exercise Price** |   | **Aggregate Intrinsic Value****(1)****(in millions)**  |      | **Weighted-Average Contractual Life Remaining in Years** |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------|--------------------|-------------------------------------|---|--------------------------------------------------------|------|----------------------------------------------------------|
|                                                                                                                                                                                                                                                                                                                                                                        |                       |                    |                                     |   |                                                        |      |                                                          |
| Outstanding at July 3, 2005                                                                                                                                                                                                                                                                                                                                            | 1,880,576             |     |                                     | $ | 3.96                                                   |      |                                                          |                              |  |                                      |
|                                                                                                                                                                                                                                                                                                                                                         | Granted at fair value | ---                |                      |   |                                                        | ---  |                                                          |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                        | Exercised             | (49,050            | )                                   |   |                                                        | 3.89 |                                                          |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                        | Expired               | ---                |                                     |   |           | ---  |                                                          |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                        | Forfeited             | (3,750             | )                                   |   |                                                        | 8.54 |                                                          |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                        |                       |                    |                                     |   |                                                        |      |                                                          |
| Outstanding at January 1, 2006                                                                                                                                                                                                                                                                                                                                         | 1,827,776             |     |                                     | $ | 3.95                                                   |      |                                                          | $ | 19.0 |  |  | 5.5 |
|                                                                                                                                                                                                                                                                                                                                                                        |                       |                    |                                     |   |                                                        |      |                                                          |
|                                                                                                                                                                                                                                                                                                                                                                        |                       |                    |                                     |   |                                                        |      |                                                          |
|                                                                                                                                                                                                                                                                                                                                                                        |                       |                    |                                     |   |                                                        |      |                                                          |
|                                                                                                                                                                                                                                                                                                                                                                        |                       |                    |                                     |   |                                                        |      |                                                          |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                         | Granted at fair value | ---                |                      |   |                                                        | ---  |                                                          |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                        | Exercised             | (56,625            | )                                   |   |                                                        | 4.25 |                                                          |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                        | Expired               | ---                |                                     |   |           | ---  |                                                          |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                        | Forfeited             | ---                |                                     |   |                                                        | ---  |                                                          |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                        |                       |                    |                                     |   |                                                        |      |                                                          |
| Outstanding at April 2, 2006                                                                                                                                                                                                                                                                                                                                           | 1,771,151             |                    |                                     | $ | 3.94                                                   |      |                                                          | $ | 19.5 |  |  | 5.4 |
|                                                                                                                                                                                                                                                                                                                                                                        |                       |                    |                                     |   |                                                        |      |                                                          |
|                                                                                                                                                                                                                                                                                                                                                                        |                       |                    |                                     |   |                                                        |      |                                                          |
|                                                                                                                                                                                                                                                                                                                                                                        |                       |                    |                                     |   |                                                        |      |                                                          |
| Exercisable at April 2, 2006                                                                                                                                                                                                                                                                                                                                           | 1,573,119             |                    |                                     | $ | 3.52                                                   |      |                                                          | $ | 18.0 |  |  | 5.1 |
|                                                                                                                                                                                                                                                                                                                                                                        |                       |                    |                                     |   |                                                        |      |                                                          |
|                                                                                                                                                                                                                                                                                                                                                                        |                       |                    |                                     |   |                                                        |      |                                                          |
|                                                                                                                                                                                                                                                                                                                                                                        |                       |                    |                                     |   |                                                        |      |                                                          |
|                                                                                                                                                                                                                                                                                                                                                         |                       |                    |                                     |   |                                                        |      |                                                          |

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 nine months ended April 2, 2006 and April 3, 2005 was $1.2 million and $0.4 million, respectively. The exercise period for all stock options generally maynot 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 or nine months ended April 2, 2006.

*Performance Units*The Company made awards under the LTIP in January 2005. The Company’s LTIP provides for the issuance of performance units, which will be settled in stock subject to the achievement of the Company’s financial goals. Settlementwill 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 of performanceunits is subject to adjustment based upon the attainability of the target goals.

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

During the three and nine months ended April 2, 2006, the Company issued 57,751 shares of restricted stock, subject to the two-year vesting condition, associated with the fiscal 2005 award. In addition, the Company recordedcompensation expense for the awards granted for fiscal 2006.

The Company recorded compensation expense of $218,000 ($136,000 after tax) related to the LTIP in the quarter ended April 2, 2006, compared with $101,000 ($62,000 after-tax) in the quarter ended April 3, 2005. Compensationexpense of $653,000 ($408,000 after tax) related to the LTIP was recorded in the nine months ended April 2, 2006, compared with $101,000 ($62,000 after tax) in the nine months ended April 3, 2005.
| **12.** | **  ** | **RELATED PARTY TRANSACTIONS** |
|---------|------------------|--------------------------------|

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

In March 2004, the Company received notice from the Library of Congress (“LOC”) that the LOC was seeking financial restitution in the amount of $1.8 million stemming from the Company’s production ofaudiocassette machines during the period 1992 through 1996. The LOC claimed the machines were defective.  The Company disputed the LOC’s position.

During the quarter ended April 2, 2006, in order to avoid future legal expenses, the Company paid $50,000 to settle all claims related to this issue, without an admission of liability.

In March 2005, the Company entered into a contract with Northrop Grumman Corporation to supply equipment used on mail sorting machines. The equipment to be manufactured and the services to be performed have undergone hundredsof design and component changes. The Company is attempting to negotiate a settlement of the claims arising from these changes. If this attempt is not successful, the Company will pursue all legal remedies available to it.

Through April 2, 2006, the Company has delivered units and services with a sales value of $7.4 million related to the Northrop Grumman contract. Included in the Company’s work-in-process balance at April 2, 2006 isapproximately $1.0 million, which would not be recovered at the current contract price. The Company has additional backlog totaling $5.5 million due to be delivered in the next two quarters. Based on current cost estimates, the Company would have additional costs of$0.8 million that would not be recovered.

The Company has consulted with legal counsel and believes that it will recover these contract costs.

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

**Forward-Looking Statements**

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

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

The Company markets its services to customers who are looking for an engineering and manufacturing partner capable of developing and providing high-reliability electronic equipment, including productscapable of performing in harsh 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 andother commercial markets.  The Company’s engineering and manufacturing facilities are located in Arkansas, Missouri, Oklahoma, Pennsylvania and Texas.  The Company employs approximately 1,150 people, including approximately 965 people (of which 40 areengineers) who provide support for production activities and approximately 185 people who provide administrative support.

**Results of Operations - Three and Nine Months Ended April 2, 2006**

***Net Sales****(dollars in thousands)*
|                                                                                                                                                                                                                                                                              | ** **                                                         | Three Months Ended |            | Nine Months Ended |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------|--------------------|------------|-------------------|
|                                                                                                                                                                                                                                                                              |                                                                    |                    |            |                   |  |  |  |  |
|                                                                                                                                                                                                                                                                              | **  **                                                   | **April 2,**       |            | April 3,          | ** ** | **April 2,** | ** ** | April 3, |
| **                                            ** |                                                                    | **2006**           | ** ** | 2005              |  | **2006** |  | 2005 |
|                                                                                                                                                                                                                                                                              |                                                                    |                    |            |                   |  |  |  |  |
|                                                                                                                                                                                                                                                                              |                                                                    |                    |            |                   |  |  |  |  |
| Net sales                                                                                                                                                                                                                                                                    |             | **$**              | **47,273** |              | $ | 44,837 |          | **$** | **135,059** |  |   | $ | 137,189 |  |
|                                                                                                                                                                                                                                                                              |                                                                    |                    |            |                   |  |  |  |  |
|                                                                                                                                                                                                                                                                              |                                                                    |                    |            |                   |  |  |  |  |
|                                                                                                                                                                                                                                                                              |                                                                    |                    |            |                   |  |  |  |  |
|                                                                                                                                                                                                                                                                              |                                                                    |                    |            |                   |  |  |  |  |

The largest contributor to fiscal 2006 third-quarter revenues was shipments to defense customers, representing $18.2 million of sales, versus $20.2 million in 2005.  During the current year’s third 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 industrial customers represented $8.9 million of fiscal 2006third-quarter revenues, compared with $9.0 million in the year-ago period. Offsetting these decreases was an increase in shipments to government systems customers, which represented $5.4 million of fiscal 2006 third-quarter revenue, compared with $1.4 million inthe year-ago period.  The increase is due to shipments on a large Northrop Grumman postal contract in fiscal year 2006.  Also, shipments to natural resource customers were $9.1 million in the third quarter of fiscal 2006, compared with $8.3 million in theyear ago period.

For the nine months ended April 2, 2006, shipments to defense customers contributed $54.1 million of total sales, compared with $62.2 million in the nine months ended April 3, 2005. Sales to industrial customers represented$23.3 million of revenue for the first nine months of fiscal 2006, compared with $26.5 million in the first nine months of fiscal 2005. Offsetting these decreases were increases in shipments to natural resource customers, which represented $29.3 million in the ninemonths ended April 3, 2006, compared with $25.3 million in the year-ago period. Also, shipments to government systems customers increased to $11.3 million of fiscal 2006 third-quarter revenue, compared with $4.9 million in the year-ago period. This is primarilydue to shipments on a large Northrop Grumman postal contract in fiscal year 2006. 

Sales to the Company’s 10 largest customers represented 70% of total revenue in the third quarter of fiscal 2006, compared with 76% for the same period of fiscal 2005.  The Company’s top threecustomers and the portion of total third-quarter fiscal 2006 sales they represented were as follows:  Owens-Illinois, Inc., 13%; Northrop Grumman Corp., 12%; and Schlumberger, Ltd., 11%.

The backlog of unshipped orders at April 2, 2006 was $181.2 million, compared with $164.9 million at July 3, 2005 and $152.4 at April 3, 2005. The growth in backlog is the result of a sales and marketing effortthat focuses on needs of targeted large customers in a variety of industries. Approximately $48.9 million of the backlog at the quarter ended April 2, 2006 is scheduled to ship beyond the next 12 months pursuant to the shipment schedules contained in those contracts.This compares with $32.4 million at fiscal year-end 2005.

***Gross Profit****(dollars in thousands)*
|                                                                                                                                                                                                                                                                                                                                                | ** ** | Three Months Ended |        | Nine Months Ended |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------|--------|-------------------|
|                                                                                                                                                                                                                                                                                                                                                |            |                    |        |                   |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                |            | **April 2,**       |        | April 3,          |  | **April 2,** |  | April 3, |
| **                                                       ** | **2006**   |                    | 2005   |                   | **2006** |  | 2005 |
|                                                                                                                                                                                                                                                                                                                                                |            |                    |        |                   |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                |            |                    |        |                   |  |  |  |  |
| Gross profit                                                                                                                                                                                                                                                                                                                                   | **$**      | **9,790**          |   | $                 | 10,131 |   | **$** | **29,755** | ** ** | $ | 30,713 |  |
| Gross margin                                                                                                                                                                                                                                                                                                                                   |            | **20.7**           | **%**  |              | 22.6 | % |  | **22.0** | **%** |  | 22.4 | % |
|                                                                                                                                                                                                                                                                                                                                                |            |                    |        |                   |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                |            |                    |        |                   |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                |            |                    |        |                   |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                |            |                    |        |                   |  |  |  |  |

The Company’s gross profit margin percentage generally runs in a range of 20% to 23%. Gross margins for the three and nine months ended April 2, 2006 were in this range.

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

***Selling and Administrative Expenses****(dollars in thousands)*
|                                                                                                                                                                                                                                                                                                                                                                  | ** **                               | Three Months Ended |       | Nine Months Ended |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------|--------------------|------------|-------------------|
|                                                                                                                                                                                                                                                                                                                                                                  |                                          |                    |            |                   |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                  | **      ** | **April 2,**       | ** ** | April 3,          | ** ** | **April 2,** | ** ** | April 3, |
| **                                                          ** | **2006**                                 |                    | 2005       |                   | **2006** |  | 2005 |
|                                                                                                                                                                                                                                                                                                                                                                  |                                          |                    |            |                   |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                  |                                          |                    |            |                   |  |  |  |  |
| Selling and administrative expenses                                                                                                                                                                                                                                                                                                                              | **   **                   | **$**              | **5,509**  |              | $ | 5,972 |   | **$** | **16,969** |   | $ | 17,642 |  |
| Percent of sales                                                                                                                                                                                                                                                                                                                                                 |                                          | **11.7**           | **%**      |              | 13.3 | % |  | **12.6** | **%** |  | 12.9 | % |
|                                                                                                                                                                                                                                                                                                                                                                  |                                          |                    |            |                   |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                  |                                          |                    |            |                   |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                  |                                          |                    |            |                   |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                  |                                          |                    |            |                   |  |  |  |  |

For the quarter ended April 2, 2006, selling and administrative expenses declined, versus the year-ago period as a result of lower performance-based incentive expense in the fiscal 2006 period.  This decrease was partially offset by increases in salariedcompensation and insurance expense, and the costs attributable to adopting SFAS 123R.

 

For the nine months ended April 2, 2006, selling and administrative expenses declined versus the year-ago period as a result of lower performance-based incentive expense, lower legal expenses and lower audit fees.  Thesedecreases were partially offset by increases in salaried compensation and the costs attributable to adopting SFAS 123R.

For the three- and nine-month periods ended April 2, 2006, included in selling and administrative expenses were $128,000 and $501,000, respectively, attributable to the adoption of SFAS 123R, “Share-BasedPayment.”

***Interest Expense****(dollars in thousands)*
|                                                                                                                                                                                                                                                                                                                                                      | ** ** | Three Months Ended |   | Nine Months Ended |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------|--------|-------------------|
|                                                                                                                                                                                                                                                                                                                                                      |            |                    |        |                   |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                      | ** ** | **April 2,**       |        | April 3,          |  | **April 2,** |  | April 3, |
| **                                                        ** | **2006**   |                    | 2005   |                   | **2006** |  | 2005 |
|                                                                                                                                                                                                                                                                                                                                                      |            |                    |        |                   |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                      |            |                    |        |                   |  |  |  |  |
| Interest expense                                                                                                                                                                                                                                                                                                                                     | **$**      | **554**            |   |              | $ | 426 |   |      | **$** | **1,407** |   |   | $ | 1,345 |        |
|                                                                                                                                                                                                                                                                                                                                                      |            |                    |        |                   |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                      |            |                    |        |                   |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                      |            |                    |        |                   |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                      |            |                    |        |                   |  |  |  |  |

Interest expense increased significantly for the three and nine months ended April 2, 2006.  The increase is the result of higher average debt levels incurred to fund an increase in inventory and higher interest rates.The average interest rates during the fiscal third quarter was 5.8%, compared with 4.3% in the comparable quarter a year earlier.

***Other (Income) Other Deductions, Net****(dollars in thousands)*
|                                                                                                                                                                                                                                                                                                                                                                                                                  | ** ** | Three Months Ended |                                       | Nine Months Ended |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------|--------------------------------------------|-------------------|
|                                                                                                                                                                                                                                                                                                                                                                                                                  |            |                    |                                            |                   |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                  | ** ** | **April 2,**       |                                            | April 3,          |  | **April 2,** |  | April 3, |
| **                                                                  ** | **2006**   |                    | 2005                                       |                   | **2006** |  | 2005 |
|                                                                                                                                                                                                                                                                                                                                                                                                                  |            |                    |                                            |                   |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                  |            |                    |                                            |                   |  |  |  |  |
| Other (income) other deductions, net                                                                                                                                                                                                                                                                                                                                                                             | **$**      | **17**             |         | $                 | (228 | ) |     | **$** | **(129** | ) | $ | (430 | ) |
|                                                                                                                                                                                                                                                                                                                                                                                                                  |            |                    |                                            |                   |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                  |            |                    |                                            |                   |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                  |            |                    |                                            |                   |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                                                                  |            |                    |                                            |                   |  |  |  |  |

The decrease in other (income) other deductions for the three months ended April 2, 2006, compared with the same period of fiscal 2005, is primarily attributable to a $385,000 gain on a lease termination fee and a $56,000receipt of death benefit under a life insurance benefit program booked in the quarter ended April 3, 2005. The Company owns its headquarters building and leases a significant portion of the facilities to third parties. This reduction in income was partially offset bythe fact that the three months ended April 2, 2006 includes a $60,000 other than temporary impairment of the Company’s investment in Norwood Abbey (see Note 7), while the three months ended April 3, 2005 includes a $284,000 other than temporary impairment ofthe Company’s investment in Norwood Abbey.

The decrease in other (income) other deductions for the nine months ended April 2, 2005, compared with the same period of fiscal 2005, is primarily attributable to a $385,000 gain on a lease termination fee and a $56,000receipt of death benefit under a life insurance benefit program booked in the quarter ended April 3, 2005. In addition, the Company realized $30,000 of realized gain on sales of the Norwood Abbey stock. This reduction in income was partially offset by the fact thatthe nine months ended April 2, 2006 includes a $60,000 other than temporary impairment of the Company’s investment in Norwood Abbey (see Note 7), while the nine months ended April 3, 2005 includes a $284,000 other than temporary impairment of theCompany’s investment in Norwood Abbey.

***Tax Expense from Continuing Operations****(dollars in thousands)*
|                                                                                                                                                                                                                                                                                                                                                                  | ** **   | Three Months Ended                                                                                     |                          | Nine Months Ended  |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------|--------------------------------------------------------------------------------------------------------|--------------------------|--------------------|
|                                                                                                                                                                                                                                                                                                                                                                  |              |                                                                                                        |                          |                    |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                  |              | **April 2,**                                                                                           |                          | April 3,           |  | **April 2,** |  | April 3, |
| **                                                          ** | **2006**     |                                                                                                        | 2005                     |                    | **2006** |  | 2005 |
|                                                                                                                                                                                                                                                                                                                                                                  |              |                                                                                                        |                          |                    |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                  |              |                                                                                                        |                          |                    |  |  |  |  |
| Tax expense from                                                                                                                                                                                                                                                                                                                                                 |    |                   |      |     |                       |  |      |                  |    |   |                |  |
|  continuing operations                                                                                                                                                                                                                                                                                                                                      | **$**        | **1,405**                                                                                              |                     |               | $ | 954 |  |      | **$** | **4,510** |  |    | $ | 4,125 |  |
|                                                                                                                                                                                                                                                                                                                                                                  |              |                                                                                                        |                          |                    |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                  |              |                                                                                                        |                          |                    |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                  |              |                                                                                                        |                          |                    |  |  |  |  |
|                                                                                                                                                                                                                                                                                                                                                                  |              |                                                                                                        |                          |                    |  |  |  |  |

The effective income tax rate for the three- and nine-month periods ended April 2, 2006 was 38%. For the three- and nine-month periods ended April 3, 2005, the reported income tax rate was 24% and 34%, respectively.  Thedecrease in the tax rate for the three and nine months ended April 3, 2005 reflects the recognition of certain research and experimentation tax credits ($245,000) and an adjustment to the Company’s provision for state income taxes ($242,000).

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

***Stockholders’ Equity and Debt****(dollars in thousands)*
|                                                             | **April 2,**                                                                       | July 3,    |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------|------------|
|                                                                                                                                                                                                                                                                                                                            | **2006**                                                                           | 2005       |
|                                                                                                                                                                                                                                                                                                                                                                    |                                                                                    |            |
| Stockholders’ equity                                                                                                                                                                                                                                                                                                                                         | **$**                                                                              | **62,521** |             | $ | 53,830 |              |
| Debt                                                                                                                                                                                                                                                                                                                                                               | **             ** | **36,700** | **              ** |             | 27,916 |  |
|                                                                                                                                                                                                                                                                                                                                                                    |                                                                                    |            |

The Company’s operations used $5.5 million of net cash in the nine months ended April 2, 2006, primarily to purchase inventory required for planned shipments during the remainder of the fiscal year, and fund an increasein accounts receivable.

***Senior Lender:***The Company entered into a senior secured loan agreement with a group of banks on February 17, 2004 that was amended on February 10, 2006, increasing the revolving credit facility by $10.0 million.  The following is a summary of theagreement:
|  •                   |   | A revolving credit facility up to $30.0 million, available for direct borrowings or letters of credit.  The facility is based on a borrowing base formula equal to the sum of 85% of eligible receivables and 35% of eligibleinventories. As of April 2, 2006, outstanding loans under the revolving credit facility were $13.1 million.  Letters of credit outstanding were $1.6 million, and $15.3 million was available. This credit facility matures on February 17, 2009.                                                                                                                                                                                                                                                                                                                                                                                              |              |
|--------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------|
|       |   |                                                                                                                                                                                    |                                                                          |
|  •                   |   | A $25.0 million term loan amortized beginning May 2004, at a quarterly rate of $1.0 million, increasing to $1.25 million in May 2006 and increasing to $1.5 million in May 2007.  Final maturity is February2009.  As of April 2, 2006, the amount outstanding was $17.0 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |                                                                          |
|            |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                          |
|  •                   |        | On April 15, 2004, the Company entered into an Interest Rate Cap Agreement with a bank.  This Cap Agreement caps the Company’s exposure to increases in LIBOR at 4% for a period of three years on a notional amountbeginning at $24.0 million and amortizing on a schedule that matches amortization of the $25.0 million term loan dated February 17, 2004. As a result of this Cap Agreement, for the three- and nine-month periods ended April 2, 2006, interestexpense was reduced by $25,000 and $32,000, respectively.                                                                                                                                                                                                                                                                                                                                                   |                                                                          |
|                                |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                          |
|  •                   |        | Interest on both loans is at a percentage of prime or a stated rate over LIBOR based on certain ratios.  For the quarter ended April 2, 2006, the average rate was approximately 5.7%.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |                                                                          |
|       |   |                                                                                                                                                 |                                                                          |
|  •                   |   | Both loans are secured by substantially all the assets of the Company other than real estate.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                          |
|                           |        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                          |
|  •                   |        | Covenants and performance criteria consist of Earnings Before Interest, Taxes, Depreciation and Amortization (“EBITDA”) in relation to debt, EBITDA in relation to fixed charges and minimum net worth.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |                                                                          |
|            |   |                                                                                                                                                           |                                                                     |

***Other Long-term Debt:****Mortgage Loan:*The Company has a $6.4 million term loan secured by the Company’s headquarters building in St. Louis, Missouri.  The loan repayment schedule is based on a 25-year amortization with a final balloon payment due in October2009.  The balance at April 2, 2006 was $5.5 million.  Interest is at a percentage of prime or a stated rate over LIBOR based on certain ratios.  For the quarter ended April 2, 2006, the average rate was approximately 5.0%.

*****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 April 2, 2006 was $0.4 million.

*Capital Lease Obligations:*In October 2005, the Company entered into a capital lease agreement to fund the purchase of machinery with a fair market value of $664,000. The lease is for five years with an interest rate of 6.20%. The obligation outstanding at April 2,2006 was $616,000.

The aggregate maturities of long-term obligations are as follows:*(dollars in thousands)*
| **Fiscal Year** |
|-----------------|
|                 |
| 2006            | ............................................................... | $ | 1,383 |   |
| 2007            | ............................................................... |       | 5,791 |   |
| 2008            | ............................................................... |       | 6,553 |   |
| 2008            | ............................................................... |       | 4,936 |   |
| 2009            | ............................................................... |       | 4,861 |   |
| Thereafter      | ............................................................... |       | 51 |   |
|                 |
| Total           | ............................................................... | $ | 23,575 |   |
|                 |

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

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

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

***Revenue Recognition and Cost of Sales***Revenue is generally recognized on the percentage-of-completion method based upon the units delivered.  The percentage-of-completion method gives effect to the most recent contract value and estimates of cost at completion. Whenappropriate, contract prices are adjusted for increased scope and other changes ordered or caused by the customer.  When percentage-of-completion is not appropriate, the Company recognizes revenue when title transfers, which is usually upon shipment. On a verylimited number of contracts, at a customers’ request, the Company will recognize revenue when ownership passes. As of April 2, 2006 and July 3, 2005, the Company has recognized revenue under these arrangements of $3.3 million and $2.0 million,respectively. The Company recognizes revenue for storage and other related services when the services are provided.

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

***Inventories***Inventories, which consist of materials, labor and manufacturing overhead, are carried at the lower of cost or market value. Inventory that has been held beyond specific time limits is automatically reserved. In addition, managementregularly 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 trends and marketconditions.  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 April 2, 2006 and April 3, 2005, expense for obsolete or slow-movinginventory charged to income before income taxes was $0.3 million and $0.2 million, respectively.

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

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

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

----

**PART I**

****
| **ITEM 3.**                                                                                                                                            | **Quantitative and Qualitative Disclosures About Market Risk**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|--------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| **                        **   | **                                                                                                                                                       **                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|                                                                                                                                                        | *Foreign Currency Risk***No information has been included hereunder because the Company’s foreign sales in each of the three and nine months ended April 2, 2006 and April 3, 2005 were less than 10% of total Company revenue.  All foreign contracts arepaid in U.S. dollars and the Company is not significantly exposed to foreign currency translation.  However, if the significance of foreign sales grows, management will continue to monitor whether it would be appropriate to use foreign currency risk managementinstruments to mitigate any exposures.*Interest Rate Risk* As of April 2, 2006, the Company had $36.7 million in total debt.  Industrial revenue bonds totaling $0.4 million have a fixed rate and are not subject to interest rate risk.  The interest rate on the remaining $36.3 million is subject to fluctuation.To mitigate this risk, 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 90-day LIBOR at 4% for a period of three years on a notional amount beginning at $24.0 million andamortizing 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 $208,000 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. Based on their evaluation, Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective at the reasonable assurance level as of April 2, 2006.  The Company’s disclosurecontrols system is based upon a chain of financial and general business reporting lines that converge in the headquarters of the Company in St. Louis, Missouri.  The reporting process is designed to ensure that information required to be disclosed by the Companyin 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 third fiscal quarter of 2006, there were no changes in internal control over financial reporting identified in connection with the evaluation that have materially affected, or that are reasonably likely to materially affect, our internal control overfinancial reporting. |

****

----

**PART II**

****

****

****

****
| **Item 1.**                                                                                                                        | **Legal Proceedings**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |
|------------------------------------------------------------------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|
|                           |                                                                                                                                                     |
| **                     ** | In March 2004, the Company received notice from the Library of Congress (“LOC”) that the LOC was seeking financial restitution in the amount of $1.8 million stemming from the Company’s production ofaudiocassette machines during the period 1992 through 1996. The LOC claimed the machines were defective.  The Company disputed the LOC’s position. During the quarter ended April 2, 2006, in order to avoid future legal expenses, the Company paid $50,000 to settle all claims related to this issue, without an admission of liability.                                                                                                                                                                                                                                                                                                                                     |

****
| **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** |
|                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                      |  |  |  |  |  |  |
|                                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                            |     |  |        |                   |  |                            |  |                                    |
|                                                                                                                                                                                                                                                                             | January 2 - January 29                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                                                                                                                                                      | --- |         |  |  | --- |  |  | --- |  |  |          | --- |  |
|                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                      |  |  |  |          |                   |  |    |  |                                  |
|                                                                                                                                                                                                                                                                                            | January 30 - February 26                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                                      | --- |  |  |  | --- |  |       | --- |  |  |          | --- |  |
|                                                                                                                                                                                                                                                                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                      |  |  |  |  |  |  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                            | February 27 - April 2                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |                                                                                                                                                      | 6,300 |  |  | $ | 14.43 |  |  | 6,300 |  |  |  | 988,700 |  |
|                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                      |  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                      |  |  |  |  |  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                            |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                      |  |  |  |  |  |  |
|                                                                                                                                                                                                                                                                                  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                      |  |  |  |  |  |  |  |  |  |  |

(1)  Shares repurchased under resolution of the Board of Directors dated August 24, 2005, authorizing repurchase of up to 1,000,000 shares. Authorization expires on August 24, 2006.
| **ITEM 6.**                                                              |                 | **Exhibits**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |                                                                                                                                                                                                    |
|--------------------------------------------------------------------------|--------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|              |                           |                                                                                                                                                     |
|                                                                | 31.1                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                | Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|                                                                | 31.2                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          | Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
|                                                                     | 32.1                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                 |
|                                                                          | 32.2                           |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                 |
|                                                                |       |

**** 

SIGNATURES

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:  May 4, 2006

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