Annual Meeting Remarks 1/11/06

01 / 11 / 2006

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Given the above, you can appreciate that the demand for our products, the need for our capability has been and will be influenced by a very wide range of market drivers spanning a variety of industries. Our sales growth will be affected by the emphasis on military preparedness in the developed countries, by the growth rate in commercial airplane travel, by the continued development in satellite communication, by the renewed interest in space exploration and a Space Shuttle replacement, by the need to equip new automobile production facilities all over the world, by the development of new power generation and steelmaking facilities in China, by the renewed emphasis on offshore oil exploration, by the increased demand for plastic-packaging containers, by the continued consumption of compact discs and DVDs, and by the expanded use of CT Scan machines and sleep apnea equipment. High-performance motion controls are an essential element in literally hundreds of aspects of twenty-first century civilization. As a result, our Company is able to address a diverse multi-industry customer network and a diverse set of market requirements. Not all of these markets provide consistent growth. Many are cyclical but generally the cycles are out of phase. We’re able to place our emphasis on the markets that are in a growth cycle and, thereby, maintain our steady growth pattern. This market diversity is what provides the stability in our performance record.

Beyond that, as you’ll see over the next few minutes, our ability to provide systems and components in all these different market areas opens up a similarly broad array of acquisition opportunities. Our Company is able to move in many different directions simultaneously, while at the same time working within the basic framework of highly specialized, high-performance motion controls.
Now, let us describe our three most recent acquisitions, two of which came about towards the end of fiscal ’05 and one in the early part of fiscal ’06. First, let me turn you over to Marty Berardi. Marty has presented at previous annual meetings. He is a Vice President and responsible for Industrial business in the Americas and the Pacific. Marty is also responsible for FCS Control Systems, headquartered in Amsterdam because of the acquisition’s focus on the simulator business, which business is managed out of the US. Marty is a western New Yorker, grew up in the south towns, not far from our Company. He has a degree in Physics from Canisius and an MBA from St. Bonaventure. He joined our Company 26 years ago. He has worked in many areas of our business, Aircraft, Space and Defense, and Industrial. He and his family also did a three-year tour at our German Company, but his presentation this morning will be in English. Marty is currently Chairman of the National Fluid Power Association which is the primary hydraulics industry trade association in the U. S. Here’s Marty.
Thanks Marty.

Next up, Larry Ball. Larry Ball is Vice President and General Manager of our Components Group. Larry spoke at last year’s annual meeting describing one of our major customers, Respironics. Larry was the President of the Litton Polyscientific Division of Northrop Grumman, which we acquired in September of ’03. Larry had been President since ’96 and prior to that had held a number of managerial positions within various of the Litton Divisions. Larry is a resident of Blacksburg, Virginia, home of Virginia Tech. Our Components Group is headquartered there. But, Larry grew up outside of Philadelphia, went to Westchester University and has an MBA from Villanova. Here’s Larry.

Thanks Larry.

Next up, Jay Hennig. Jay is the Vice President and General Manager of our Space and Defense Group. Jay is also a western New Yorker. He is a graduate of State University College at Buffalo with a degree in Mechanical Engineering Technology. He joined the Company in 1979 and, like Marty, has worked in many of our different businesses. He’s been part of the Aircraft Group, has worked in Industrial and is currently responsible for Space and Defense. Jay and his family spent a couple of years in California when we acquired Shaeffer Magnetics in 1998. Jay went to Los Angeles to manage that operation and begin the integration into our Space and Defense Group.

Jay is the first officer of our Company who is second generation, in that his father, Frank Hennig, spent 33 years with our Company and retired in 1988. Here’s Jay.

Thanks Jay.

Fiscal ’06 Forecast

If we look through the major segments, we can see the kind of ebbs and flows that I alluded to in my earlier remarks.

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