Annual Meeting Remarks by Robert T. Brady, Chairman and CEO, 1/9/2008

01 / 09 / 2008

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In the Space and Defense segment, we're looking for another big sales increase, 23% to a total of $228 million. In '08, the big increases will be in the Constellation program, which will provide sales of nearly $20 million, up from only $2 million in '07, and in the Homeland Defense product line, primarily the result of the QuickSet acquisition.

In our Industrial segment, we're projecting a 13% increase to $493 million. The simulator market, that Dave Fijas described, will be a major driver of the sales growth. We'll also see growth in plastics controls, turbine controls and test equipment.

In the Components Group, we're projecting a 13% sales increase to $321 million. We're expecting increases in all of the major markets with the possible exception of the marine market, which grew at an extraordinary rate in fiscal '07.

More specifically, we're looking for a Components Group sales increase of about $38 million. Much of that increase will come in increased deliveries on the Guardian system. This is a system designed by Northrop Grumman to protect aircraft from shoulder-fired missiles. We'll also see increased deliveries for a targeting system for the Predator Unmanned Reconnaissance Vehicle. In the defense market, we're expecting increases on deliveries for Future Combat Systems, for the Bradley Fighting Vehicle and the Stryker Mobile Gun system. The Medical market will see increased deliveries to Respironics and to a number of CAT scan customers. And, in our Industrial business, we're anticipating organic growth in slip rings sold in the wind energy market. Also, we'll have the benefit of the acquisitions of Thermal Control products, a manufacturer of industrial blower assemblies; Techtron, a producer of slip rings for the CCTV market; and Prizm, a manufacturer of fiber-optic multiplexers.

In the Medical Devices segment, we'll see a 50% increase to a sales level of $102 million. Most of this increase comes about because we have the Zevex product line for the entire year of '08 as opposed to only two quarters in fiscal '07.

So, when you put all those forecasts together, they add to $1.8 billion, which we hope will generate earnings of around $117 million or $2.69 a share. We'll be updating this guidance in our first quarter conference call on January 25th.

I think you know how proud we are in the Company of our consistent record of growth in earnings per share. We attribute that consistent performance, of course, to the dedicated work of our now 8,300 employees who work within a framework which targets a diverse, multi-industry revenue base. Each of our segments attempts to develop a coherent strategy to take advantage of the opportunities in that multi-industry base. We attempt to be effective in the application of our technology, high-performance motion control and fluid flow, and we continue to elaborate our international network so that we can access market opportunities all around the globe. Last, but by no means least, we continue our effort to maintain and develop a Company culture that motivates our employees, unifies their effort and supports our customers in an extraordinary fashion. This overall approach has worked well for us for many years now and we're optimistic that, with a little luck, fiscal '08 will be another year of double-digit growth in sales, earnings, and earnings per share.

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