The big news in the Medical Devices segment is that on March 16th we closed on the acquisition of Zevex International. Zevex is a Salt Lake City-based manufacturer of infusion pumps used primarily in enteral nutrition. This acquisition continues to broaden our product offering in infusion pumps. Zevex has additional product lines, among them optical sensors used to detect the presence of air bubbles and prevent them from moving from the pump to the patient. The company also makes a system that looks like a beer cooler but it's used to transport kidneys that will be transplanted. It uses the company's infusion pumping technology to extend the life of the kidney while it's being transported. The company also makes a line of hand pieces used in cataract surgery.

We only owned Zevex for two weeks of this quarter, but as is the case in most companies, the last two weeks of the quarter are the strongest shipping period. Zevex generated $2.4 million in sales, and an operating profit of over $450 thousand or 19% of sales. Purchase accounting adjustments reduced that profit contribution to $150 thousand. We expect for the balance of the year that Zevex will generate sales of around $23 million but subsequent purchase accounting adjustments will, for the most part, offset the operating profit earned in the back half of the year.

Turning to the Curlin product line, sales of $9.3 million were down from the $11 million of last quarter. We're learning about the seasonality in this business. We had been advised that the December-ending quarter was a strong sales period and that the March-ending quarter would not be that strong and it has turned out that way. Pump sales of $5.2 million were down from $6.7 million in the previous quarter. On the other hand, sales of administration sets of $3.1 million were at the same level. In addition, Curlin had sales of about $1 million of other accessories and equipment. Operating profit on the Curlin product line was $1.0 million or about 11% of sales after $.8 million of intangible amortization. This margin performance is down substantially from the previous quarter's 19.5%. The difference is the lost gross margin on the lower pump sales. We also incurred costs of about $160 thousand in consulting fees, moving expenses, and expedite charges, all in the interest of incorporating the McKinley products in our production operation in Huntington Beach and ensuring that the disciplines in production processes would produce a consistently reliable product.

On a year-to-date basis, sales for our new Medical Segment are $22.7 million. We believe that with the addition of the Zevex product line, sales for '07 will total $65 million and we're now projecting operating profit of the combined entity of $9.8 million or 15% of sales. This operating profit will be achieved after over $6 million in intangible amortization and purchase accounting adjustments.

Summary of '07 Guidance

So, now let me summarize the changes that we've made in our guidance for '07.

Given the strength in the commercial Aircraft business, we've moved our Aircraft forecast from $548 million to $557 million. We had been projecting Aircraft margins at 11.9%. Given our experience of the first two quarters and some of the adjustments that we've made, we've moved the projection for the year to 11.2%.

Given the strength in the commercial satellite market and some of our scientific applications, we've moved our Space and Defense forecast from $175 million to $180 million. And, given the tremendous performance we're seeing in margins, we've moved our margin expectations for the year from 9.5% to 13.1%.

All the industrial markets seem to be cooking and so we've moved the midpoint of that forecast to $425 million, up from $411 on our last projection. In addition, improved margin performance suggests an increase in our year-end projection to 13.3%, up from 12.8%.

Continued strength in the Components Group incoming order book suggests an increase of the year's forecast from $266 million to $274 million. On the other hand, more normal margin performance suggests a year-end at 15.5%, down from the 16.7% we had projected a quarter ago.