Axsys Technologies (AXYS)

Customers

        Our customers include end users, equipment integrators and OEMs that demand high-precision, high-performance products or subsystems. We sell our products primarily to customers in the aerospace and defense, space, homeland security and high-performance commercial markets.

        BAE Systems, an aerospace and defense systems supplier, represented 23.2% of our total sales during 2008, 15.8% of our total sales during 2007 and 14.6% of our total sales in 2006. We participate with BAE Systems on multiple programs, with the majority of our sales to BAE Systems relating to two armored vehicle programs and a thermal weapons sight program. Both programs are ultimately dependent on U.S. Department of Defense spending and could be canceled. However, night vision systems are a high priority for the U.S. military and, therefore, we do not foresee any weakening of demand for these products in the short term.

        Our infrared lens products, which are used in BAE Systems' remote operated weapon station programs, represented 13.0% of our total sales during 2008. No single product or class of similar product represented 10% or more of our total sales in 2007 or 2006.

        Raytheon Company, an aerospace and defense systems supplier, while not a material customer in 2008 or 2006, represented 10.9% of our total sales during 2007.

        We had aggregate sales, both military and non-military, directly to the U.S. government, including its agencies and departments, of approximately $7.0 million in 2008, $6.2 million in 2007 and $4.8 million in 2006. These sales accounted for approximately 2.8% of our sales in 2008 and 3.6% of our total sales in each of 2007 and 2006. Approximately 70.7% of our total sales in 2008, 66.4% of our total sales in 2007 and 68.9% of our total sales in 2006 were derived from subcontracts with U.S. government contractors. The majority of these contracts are subject to termination at the convenience of the U.S. government, and certain contracts are also subject to renegotiation. Currently, we are not aware of any proposed termination or renegotiation of such contracts that would have a material adverse effect on our business.

        Because a substantial part of our business is derived directly from contracts with the U.S. government, U.S. government agencies or departments or indirectly through subcontracts with U.S. government contractors, our operational results could be materially affected by changes in U.S. government expenditures for projects or programs using our products. However, we believe that the broad number and diversity of the programs with which we are involved and the breadth of our product applications may lessen our exposure to such risk. Further information regarding customers appears in Note 14 to the consolidated financial statements included elsewhere in this annual report.

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Customers

        Our customers include end users, equipment integrators and OEMs that demand high-precision,
high-performance products or subsystems. We sell our products primarily to customers in the aerospace and defense, space, homeland security and high-performance commercial
markets.

        BAE
Systems, an aerospace and defense systems supplier, represented 23.2% of our total sales during 2008, 15.8% of our total sales during 2007 and 14.6% of our total sales in 2006. We
participate with BAE Systems on multiple programs, with the majority of our sales to BAE Systems relating to two armored vehicle programs and a thermal weapons sight program. Both programs are
ultimately
dependent on U.S. Department of Defense spending and could be canceled. However, night vision systems are a high priority for the U.S. military and, therefore, we do not foresee any weakening of
demand for these products in the short term.

        Our
infrared lens products, which are used in BAE Systems' remote operated weapon station programs, represented 13.0% of our total sales during 2008. No single product or class of
similar product represented 10% or more of our total sales in 2007 or 2006.

        Raytheon
Company, an aerospace and defense systems supplier, while not a material customer in 2008 or 2006, represented 10.9% of our total sales during 2007.

        We
had aggregate sales, both military and non-military, directly to the U.S. government, including its agencies and departments, of approximately $7.0 million in 2008,
$6.2 million in 2007 and $4.8 million in 2006. These sales accounted for approximately 2.8% of our sales in 2008 and 3.6% of our total sales in each of 2007 and 2006. Approximately 70.7%
of our total sales in 2008, 66.4% of our total sales in 2007 and 68.9% of our total sales in 2006 were derived from subcontracts with U.S. government contractors. The majority of these contracts are
subject to termination at the convenience of the U.S. government, and certain contracts are also subject to renegotiation. Currently, we are not aware of any proposed termination or renegotiation of
such contracts that would have a material adverse effect on our business.

        Because
a substantial part of our business is derived directly from contracts with the U.S. government, U.S. government agencies or departments or indirectly through subcontracts with
U.S. government contractors, our operational results could be materially affected by changes in U.S. government expenditures for projects or programs using our products. However, we believe that the
broad number and diversity of the programs with which we are involved and the breadth of our product applications may lessen our exposure to such risk. Further information regarding customers appears
in Note 14 to the consolidated financial statements included elsewhere in this annual report.

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Customers

        Our customers include end-users, equipment integrators and OEMs that demand high-precision, high-performance products or subsystems. We sell our products primarily to customers in the aerospace and defense, space, homeland security and high-performance commercial markets.

        BAE Systems, an aerospace and defense systems supplier, represented 15.8% of our total sales during 2007 and 14.6% of our total sales during 2006. BAE was not a material customer during 2005. We participate with BAE Systems on multiple programs, with the majority of our sales to BAE Systems relating to two armored vehicle programs and a thermal weapons sight program. Both programs are ultimately dependent on U.S. Department of Defense spending and could be canceled. However, night vision systems are a high priority for the U.S. military and, therefore, we do not foresee any weakening of demand for these products in the short term.

        Raytheon Company, an aerospace and defense systems supplier, represented 10.9% our total sales during 2007 and 15.2% of our total sales in 2005. Raytheon was not a material customer during 2006. We participate with Raytheon on multiple programs, with the majority of our sales to Raytheon Company relating to the EKV program and a thermal weapons sight program. Both programs are ultimately dependent on U.S. Department of Defense spending and could be canceled.

        We had aggregate sales, both military and non-military, directly to the U.S. government, including its agencies and departments, of approximately $6.2 million in 2007, $4.8 million in 2006 and $4.6 million in 2005. These sales accounted for approximately 3.6% of our total sales in 2007 and 2006

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and 4.2% of our total sales in 2005. Approximately 66.4% of our total sales in 2007, 68.9% of our total sales in 2006 and 69.1% of our total sales in 2005 were derived from subcontracts with U.S. government contractors. The majority of these contracts are subject to termination at the convenience of the U.S. government, and certain contracts are also subject to renegotiation. Currently, we are not aware of any proposed termination or renegotiation of such contracts that would have a material adverse effect on our business.

        Because a substantial part of our business is derived directly from contracts with the U.S. government, U.S. government agencies or departments or indirectly through subcontracts with U.S. government contractors, our operational results could be materially affected by changes in U.S. government expenditures for projects or programs using our products. However, we believe that the broad number and diversity of the programs with which we are involved and the breadth of our product applications may lessen our exposure to such risk. Further information regarding customers appears in Note 14 to the consolidated financial statements included elsewhere in this annual report.

Customers

        Our customers include end-users, equipment integrators and OEMs that demand high-precision, high-performance products
or subsystems. We sell our products primarily to customers in the aerospace and defense, space, homeland security and high-performance commercial markets.

        BAE
Systems, an aerospace and defense systems supplier, represented 15.8% of our total sales during 2007 and 14.6% of our total sales during 2006. BAE was not a material customer during
2005. We participate with BAE Systems on multiple programs, with the majority of our sales to BAE Systems relating to two armored vehicle programs and a thermal weapons sight program. Both programs
are ultimately dependent on U.S. Department of Defense spending and could be canceled. However, night vision systems are a high priority for the U.S. military and, therefore, we do not foresee any
weakening of demand for these products in the short term.

        Raytheon
Company, an aerospace and defense systems supplier, represented 10.9% our total sales during 2007 and 15.2% of our total sales in 2005. Raytheon was not a material customer
during 2006. We participate with Raytheon on multiple programs, with the majority of our sales to Raytheon Company relating to the EKV program and a thermal weapons sight program. Both programs are
ultimately dependent on U.S. Department of Defense spending and could be canceled.

        We
had aggregate sales, both military and non-military, directly to the U.S. government, including its agencies and departments, of approximately $6.2 million in 2007,
$4.8 million in 2006 and $4.6 million in 2005. These sales accounted for approximately 3.6% of our total sales in 2007 and 2006

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and
4.2% of our total sales in 2005. Approximately 66.4% of our total sales in 2007, 68.9% of our total sales in 2006 and 69.1% of our total sales in 2005 were derived from subcontracts with U.S.
government contractors. The majority of these contracts are subject to termination at the convenience of the U.S. government, and certain contracts are also subject to renegotiation. Currently, we are
not aware of any proposed termination or renegotiation of such contracts that would have a material adverse effect on our business.

        Because
a substantial part of our business is derived directly from contracts with the U.S. government, U.S. government agencies or departments or indirectly through subcontracts with
U.S. government contractors, our operational results could be materially affected by changes in U.S. government expenditures for projects or programs using our products. However, we believe that the
broad number and diversity of the programs with which we are involved and the breadth of our product applications may lessen our exposure to such risk. Further information regarding customers appears
in Note 14 to the consolidated financial statements included elsewhere in this annual report.

Customers

Our customers include OEMs, equipment integrators and end-users that design or utilize high-precision, performance and throughput equipment. We sell our products primarily to OEM customers in the aerospace and defense, homeland security, high-end graphic art, medical imaging, semiconductor capital equipment and industrial automation markets.

BAE Systems, an aerospace and defense systems supplier, represented 12.1% of our total sales during 2006. Raytheon Company, an aerospace and defense systems supplier, represented 12.3% and 18.9% of our total sales during 2005 and 2004, respectively. Our accounts receivable from BAE Systems was $2.4 million as of December 31, 2006, and our accounts receivable from Raytheon was $1.0 million at December 31, 2005 and $4.5 million at December 31, 2004. We participate with BAE Systems on multiple programs, with the majority of our sales to BAE Systems relating to an armored vehicle program and a thermal weapons sight program. Both programs are ultimately dependent on U.S. Department of Defense spending and could be canceled. However, night vision systems are a high priority for the U.S. military and, therefore, we do not foresee any weakening of demand for these products in the short term.

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We had aggregate sales, both military and non-military, directly to the U.S. government, including its agencies and departments, of approximately $4.8 million in 2006, $4.6 million in 2005, and $2.4 million in 2004. These sales accounted for approximately 3.0% of total sales in 2006, 3.4% in 2005 and 2.3% in 2004. Approximately 57.3% of total sales in 2006, 56.3% in 2005 and 46.0% in 2004 were derived from subcontracts with U.S. government contractors. The majority of these contracts are subject to termination at the convenience of the U.S. government, and certain contracts are also subject to renegotiation. Currently, we are not aware of any proposed termination or renegotiation of such contracts that would have a material adverse effect on our business.

Because a substantial part of our business is derived directly from contracts with the U.S. government, U.S. government agencies or departments, or indirectly through subcontracts with U.S. government contractors, our operational results could be materially affected by changes in U.S. government expenditures for projects or programs using our products. However, we believe that the broad number and diversity of the programs with which we are involved and the breadth of our product applications may lessen our exposure to such risk.

Our customers include OEMs, equipment integrators and end-users that design or utilize high-precision, performance and throughput equipment. We sell our products primarily to OEM customers in the aerospace and defense, homeland security, high-end graphic art, medical imaging, semiconductor capital equipment and industrial automation markets.

Sales to Raytheon Company, an aerospace and defense systems supplier, represented 12.3% of our net sales in 2005, 18.9% in 2004, and 15.5% in 2003.  Our accounts receivable for Raytheon were $1.0 million at December 31, 2005, $4.5 million at December 31, 2004 and $696 thousand at December 31, 2003. While Raytheon, a prime contractor with the U.S. government, does constitute a significant portion of our business, our sales are diversified since we sell to 14 separate locations within five of Raytheon’s seven segments. Consequently, we do not currently believe that this is at-risk business.

We had aggregate sales, both military and non-military, directly to the U.S. government, including its agencies and departments, of approximately $4.6 million in 2005, $2.4 million in 2004 and $3.4 million in 2003. These sales accounted for approximately 3.4% of total net sales in 2005, 2.3% in 2004 and 4.0% in 2003. Approximately 56.3% of net sales in 2005, 46.0% in 2004 and 43.0% in 2003 were derived from subcontracts with U.S. government contractors. The majority of these contracts are subject to termination at the convenience of the U.S. government, and certain contracts are also subject to renegotiation. Currently, we are not aware of any proposed termination or renegotiation of such contracts that would have a material adverse effect on our business.

Because a substantial part of our business is derived directly from contracts with the U.S. government, U.S. government agencies or departments, or indirectly through subcontracts with U.S. government contractors, our operational results could be materially affected by changes in U.S. government expenditures for projects or programs using our products. However, we believe that the broad number and diversity of the programs with which we are involved and the breadth of our product applications may lessen our exposure to such risk.

Customers

Our customers include OEMs and end-users that design or utilize high-precision, performance and throughput equipment. We sell our products primarily to OEM customers in the aerospace and defense, high-end graphic art, medical imaging, semiconductor capital equipment and industrial automation markets.

Sales to Raytheon Company (“Raytheon”), an aerospace and defense systems supplier, represented 18.9% of our net sales in 2004 and 15.5% in 2003. Our accounts receivable for Raytheon at December 31, 2004 was $4.5 million and as of December 31, 2003 was $696 thousand. During 2002, we did not have a concentration of sales with any one customer. While Raytheon, a prime contractor with the U.S. government, does constitute a significant portion of our business, we do not currently believe that this is at-risk business.

We had aggregate sales, both military and non-military, directly to the U.S. government, including its agencies and departments, of approximately $2.4 million in 2004, $3.4 million in 2003 and $4.6 million in 2002. These sales accounted for approximately 2.3% of total net sales in 2004, 4.0% in 2003 and 5.7% in 2002. Approximately 46.0% of net sales in 2004, 43.0% in 2003 and 40.3% in 2002 were derived from subcontracts with U.S. government contractors. The majority of these contracts are subject to termination at the convenience of the U.S. government, and certain contracts are also subject to renegotiation. Currently, we are not aware of any proposed termination or renegotiation of such contracts that would have a material adverse effect on our business.

Because a substantial part of our business is derived directly from contracts with the U.S. government, U.S. government agencies or departments, or indirectly through subcontracts with U.S. government contractors, our operational results could be materially affected by changes in U.S. government expenditures for projects or programs using Axsys products. However, we believe that the broad number and diversity of the programs with which we are involved and the breadth of our product applications may lessen our exposure to such risk.