As we went through our review of our Industrial Systems business for this quarter, there was no mention of recession. In the market areas that are important for us --flight training simulators, metal-forming presses, power generation, gauge controls for steel mills, controls for plastics machinery, we have not yet seen any signs of weakness. So far, these markets are vibrant. Our incoming orders have been strong reflecting our diverse markets and global coverage. We're forecasting a second half for '08 that will be $10 million higher than the first half and $10 million higher than our previous guidance. So, we're now projecting Industrial sales for '08 in a range centered around $516 million.

Industrial Margins

Industrial margins of 14.0% were up nicely from 13.3% of a year ago. Last quarter, we were projecting 13.7% for the year. We're well ahead of that for the first six months and we now expect that the product mix in the back half of the year will support a repeat of the first half, so we're currently projecting 14.3% for the year.

Components Group Q2 '08

Last quarter, I described our Components Group as a juggernaut that continues to steam ahead. It has not slowed down. Sales of $84.2 million were up 21% from a year ago. Of the $14.8 million increase, $3.3 million was generated by the recent acquisitions of Thermal Control Products, Techtron and Prizm. Nevertheless, organic growth was still an impressive 17%. Once again, sales were up in every market area.

Sales of aircraft products of $26.6 million were up 13% from a year ago. The increase was primarily the Guardian program at Northrop. This program was not in production a year ago and, in this most recent quarter, sales were $3.8 million. Guardian, as you may know, is a system designed to protect military and commercial aircraft from shoulder-fired missiles.

Sales of equipment on the Blackhawk Helicopter continued strong at $2 million in the quarter. We sold well over a $1 million worth of avionics equipment to Rockwell-Collins. The Arrowhead target acquisition system, for Lockheed, increased by over a third to $1.2 million.

Sales of products used in the Space and Defense markets at $16.8 million were up 29% in the quarter. The Commander's Independent Viewer for the Bradley continues to be the largest program. Sales in the quarter were $3.8 million and were up 35% from a year ago. Sales of turret slip rings used on both the Bradley and the Abrams continued strong in the quarter. Aftermarket sales in the defense market increased by a third to $2 million.

In 2007, our sales in the Marine market grew by 32%. We weren't inclined to simply extrapolate this growth rate when we put together the '08 plan. But sales in this quarter of $11.4 million are up 73% from a year ago and year-to-date sales are up 58%, so clearly the growth continues, helped by the continually increasing price of oil.

Sales in the Medical market of $14.9 million were up only 4% from a year ago. This quarter the increase was driven by higher slip ring sales to customers for CT scanners, primarily to Philips Medical and Hitachi.