Satellite communication is a critical element of the U.S. Department of Defense\\\'s (‘‘DoD’’) plans to transform military communications to supply real time, high data-rate communications, intelligence and battlefield information to the front-line soldier. The U.S. Government currently has over 30 large defense-related satellite communications programs in various stages of development and production as part of its military satellite communications, Global Information Grid and Transformational Communication Systems initiatives.

DoD investments in military satellite communications are expected to be more than $30 billion through 2024. The specific initiatives include WIN-T, MUOS, TSAT, AEHF and WGF among others. In addition to satellite communications, the military is also expanding its use of over-the-horizon, microwave-based communication systems that enable the transmission of voice, video and data over hundreds of miles without the use of a satellite, making these systems an efficient alternative to satellite-based communications and providing significantly enhanced coverage over traditional line-of-sight communications. These new military initiatives all demand high power, high frequency systems to transmit increasingly large quantities of video and data to an expanding variety of user interfaces, at the highest possible data rates.

Klystron amplifiers are linear beam devices in which the interaction structure is comprised of a series of resonant cavities linked by a beam tunnel. Klystrons are typically high power, narrow bandwidth devices, with power output ranges from hundreds of watts to megawatts and frequencies from 500 kilohertz to over 30 GHz. The Company produces and manufactures klystrons for a variety of radar, communications, medical, industrial and scientific applications.

Helix TWTs are linear beam devices, where the interaction of the electron beam with a helix-shaped coil in the device enables very wide bandwidth operation at relatively moderate output power levels (tens to hundreds of watts). These characteristics make the Helix TWT ideal for communications applications and electronic countermeasures. In the communications market, the Company’s products are used in medium power satellite communications amplifiers.

Coupled cavity TWTs are linear beam amplifiers consisting of a series of coupled cavities that have the power generating capability of a klystron with some of the increased bandwidth properties of a Helix TWT. These amplifiers are characterized as medium bandwidth, high power devices, since power output levels can be as high as 1 megawatt.

Magnetron products are cross-field oscillators capable of generating high power output. Power levels are as high as 20 megawatts and magnetrons cover frequencies up to the 40 GHz range. The Company designs and manufactures magnetrons for radar, electronic warfare and missile seeker programs within the defense market. Shipboard platforms include search and air traffic control radar on most aircraft carriers, cruisers and destroyers of NATO country naval fleets.

Gross profit of $104.7 million for the year ended September 30, 2005 was $19.9 million higher than the prior year\\\'s level of $84.8 million.

Research and development expenses of $7.2 million, or 2.3% of sales, for the year ended September 30, 2005 were $0.3 million lower than fiscal year ended September 30, 2004.

Interest expense, net of $20.3 million for the year ended September 30, 2005 was $0.9 million higher than the $19.4 million for the year ended September 30, 2004.