Sales declines in this product line will be more than offset by increased deliveries of defense control hardware, much of it on our new Future Combat Systems product. In total, we're forecasting sales of defense controls at just over $60 million or an increase of $28 million. We're also forecasting $4 million worth of new work on the Space Shuttle replacement programs, the Crew Launch Vehicle and the Crew Exploration Vehicle. And we're forecasting a $3 million increase in Naval applications.

In spite of this change in mix from some bread and butter old programs to some newer development programs we think that we'll be able to hold margins at 9%. We, of course, believe that as these newer products mature, profitability will improve.

Industrial Q3'06

Sales for the quarter of $99.5 million were up 22% from the year previous. This $18 million sales increase includes a little over $11 million generated by the FCS Controls and Flo-Tork acquisitions. Excluding that effect, organic growth was close to 8% with no help from strengthening currencies. Overall, exchange rates in the third quarter were very much the same as in the third quarter a year ago.

Plastics Controls is the only of our major markets that declined quarter over quarter. Sales of almost $17 million were down $1 million from a year ago. In Europe, we're experiencing a pause in production in disc machines for compact discs and DVDs. We think this, in part, is related to the transition in formats. In Asia, our strength is in controls for hydraulic machines. The trend there is a shift in technology towards electric controls for injection molding which begins with smaller machines. Some of the smaller electric machines are able to use controls less sophisticated than our products, but we're hoping to be a strong participant as the larger and more sophisticated equipment goes electric.

On the positive side, the motion simulator business is now our second largest market. Sales of $11.7 million in the quarter are up over $7 million from a year ago. The FCS acquisition added $5.7 million in sales, but even our legacy simulator business was up 30% reflecting increased shipments to Flight Safety and CAE.

Turbine control sales at $10.7 million were up over $2 million. This activity is with both European and Asian customers, but it's all stimulated by the development of power plants in China.

Sales of controls for metal forming machines at $8.4 million were up $2.5 million from a year ago. The European market for metal forming machinery is particularly vibrant at the moment and we continue to bring on new customers for our advanced controls.

Aftermarket sales, at just under $10 million, were up 9% from a year ago.

Industrial margins of 12.1% maintained the excellent level achieved last quarter and were up substantially from 10.1% a year ago.