Missile defense pokes along at about $1.5 million per quarter and our tactical missile business, at $3.4 million, was down $1.6 million from the similar quarter last year. This low level of activity reflects a production break in Maverick and much reduced activity on Hellfire and VT-1.

Last quarter, we increased our forecast for the year in the Space & Defense segment to $128 million. We are hoping that the current activity in military satellites will continue through the balance of the year, and that our tactical missile revenues will recover. So, for now, we'll stay with our $128 million forecast.

The really good news in the Space & Defense segment is that we had a very strong margin performance in this quarter. Margins were 11%, a level that we haven't seen in this segment for about 3 years. Profitability was the result of some very strong performance in the mechanisms portion of the satellite business. Margins may moderate some as we move through the last half of the year but it seems safe to project that margins for the last half will be comparable to our experience in the first two quarters. So, we're now forecasting 10.4% for the year.

Industrial Q2'05

Industrial sales were up $5.7 million to just under $79 million. This is an 8% increase over last year and about 40% of that increase is the effect of stronger currencies. So, the real growth was about 5%.

The turbine control market in China continues to be a major driver for sales growth. Turbine controls were up almost $2 million to $8.4 million for the quarter. Metal forming machines were up over $1 million. Material test machinery was up 41% to $4.2 million. Material handling was up 17% to just over $3 million.

Our biggest market, plastics, held pretty solid at $16.3 million, down just a little from last year, but up about $1 million from the most recent quarter. As we said in our last conference call, the current demand in Asia for injection molding machines that produce CD's and DVD's seems to have been satisfied for the time being.

The results for our plastics product line do include about $800K in sales from a small systems engineering house in Switzerland that we just acquired. This outfit, named ProControl, provides electromechanical packages to certain machine builders. These systems use our electric motors, so, on an incremental basis, the ProControl sales added only about $400K to our revenues for the quarter. Over the whole fiscal year, though, the ProControl acquisition should add about $2 million to our sales, so we're increasing our '05 forecast for Industrial to $308 million. Incidentally, we paid $2.1 million for this bolt-on acquisition which we expect will add about $3 million in sales on an annual basis and more than that in the next up-cycle in plastics.

Industrial margins were 9.2% in the quarter, up slightly from 9% last year. Our forecast for the entire year was 9% and we're hopeful that, with continued improvement over the rest of the year, that goal is still within reach. Two more quarters at 9.2%, though, would result in an 8.7% average margin for the year, so we'll use 8.7% for our new forecast.

Components Q2'05

Our Components had another very strong quarter. Sales were up 11%, or $3.7 million, to a new total of $36.6 million. Of the $3.7 million growth increment, over $2 million came in medical equipment. We continue to accelerate deliveries of fiber-optic slip rings to Philips Medical for use in CT scan machines. Also, our delivery of electric motors to Respironics continues to climb. Respironics, you'll remember, is a manufacturer of sleep apnea equipment. In addition, we had an increase of close to $2 million in the Space & Defense business, a combination of componentry used on military satellites and equipment for the Bradley fighting vehicle.