KVH Industries (KVHI)

Net Sales

Product sales for the three months ended March 31, 2009 decreased $5.6 million, or 27%, to $15.6 million from $21.2 million for the three months ended March 31, 2008. The weakening of the recreational vehicle market commencing in the second quarter of 2008 due in part to increased fuel prices, and the crisis of consumer confidence in the general economy during the second half of the year, caused declines in demand for our land mobile products and our marine consumer products. Sales of our marine consumer products, principally our TracVision M-series satellite television products and Inmarsat-compatible TracPhone products, decreased by $4.5 million, or 37%, compared with the three months ended March 31, 2008. In addition, sales of our land mobile products decreased by $3.5 million, or 77%, compared to the three months ended March 31, 2008. Mobile communications product sales originating from our Danish subsidiary decreased $2.7 million, or 49%, from the three months ended March 31, 2008 to the three months ended March 31, 2009. Contributing to this decrease in sales originating from our European location were unfavorable currency rate fluctuations between the Euro and the U.S. dollar. Mobile communications product sales originating from North America decreased $5.3 million, or 47%, from the three months ended March 31, 2008 to the three months ended March 31, 2009.

Sales of our guidance and stabilization products increased by $2.4 million, or 54%, from the three months ended March 31, 2008 to the three months ended March 31, 2009. Specifically, sales of our FOG products increased $2.3 million, or 95%, driven largely by increased sales in support of remotely operated weapons station programs.

Service sales for the three months ended March 31, 2009 increased $0.8 million, or 44%, to $2.7 million from $1.9 million for the three months ended March 31, 2008. The primary reason for the increase was a $0.9 million increase in airtime sales for our mini-VSAT Broadband service that we launched in the fourth quarter of 2007, which was partially offset by a decline in service repair sales and contracted engineering service sales of $0.1 million.

Net Sales

Product sales decreased in 2008 by $3.6 million, or 5%, to $69.9 million from $73.5 million in 2007. The primary reason for the decrease was a decrease in sales of our land mobile products of $8.2 million, or 46%, driven by decreased recreational vehicle sales, resulting from increased fuel prices and challenging consumer credit markets. Partially offsetting the decrease was an increase in sales of our marine products of $4.0 million, or 11%, driven primarily by demand for our TracPhone V7 product that we launched in the fourth quarter of 2007 and to a lesser extent sales of Inmarsat-compatible TracPhone products. Mobile communications product sales originating from our Danish subsidiary increased $2.6 million, or 17%, from 2007 to 2008. Contributing to the sales increase were favorable currency rate fluctuations between the Euro and the U.S. dollar. Mobile communications product sales originating from North America decreased $6.8 million, or 17%, from 2007 to 2008.

Sales of our guidance and stabilization products increased in 2008 by $0.6 million, or 4%, to $18.6 million from $18.0 million in 2007. Specifically, sales related to our TACNAV defense and legacy navigation products increased by $1.7 million, driven primarily by a $1.4 million TACNAV sale to a Turkish contractor for use by the Malaysian government. Partially offsetting the increase was a decrease in sales of our FOG products of $0.9 million, or 9%, driven largely by decreased sales in support of the U.S. Navy’s MK54 torpedo program, and

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to a lesser extent decreased sales in support of the U.S. Army’s remotely operated weapons station program due to delays in product qualification.

Service sales increased in 2008 by $5.1 million, or 69%, to $12.5 million from $7.4 million in 2007. The primary reason for the increase was a $3.6 million increase in airtime service sales, specifically in relation to our mini-VSAT Broadband service that we launched in the fourth quarter of 2007. Also contributing to the increase was a $1.1 million increase in service repair sales and contracted engineering service and grant revenue under development contracts.

Net Sales

Product sales decreased in 2008 by $3.6 million, or 5%, to $69.9 million from $73.5 million in 2007. The primary reason for the decrease was a decrease in sales of our land mobile products of $8.2 million, or 46%, driven by decreased recreational vehicle sales, resulting from increased fuel prices and challenging consumer credit markets. Partially offsetting the decrease was an increase in sales of our marine products of $4.0 million, or 11%, driven primarily by demand for our TracPhone V7 product that we launched in the fourth quarter of 2007 and to a lesser extent sales of Inmarsat-compatible TracPhone products. Mobile communications product sales originating from our Danish subsidiary increased $2.6 million, or 17%, from 2007 to 2008. Contributing to the sales increase were favorable currency rate fluctuations between the Euro and the U.S. dollar. Mobile communications product sales originating from North America decreased $6.8 million, or 17%, from 2007 to 2008.

Sales of our guidance and stabilization products increased in 2008 by $0.6 million, or 4%, to $18.6 million from $18.0 million in 2007. Specifically, sales related to our TACNAV defense and legacy navigation products increased by $1.7 million, driven primarily by a $1.4 million TACNAV sale to a Turkish contractor for use by the Malaysian government. Partially offsetting the increase was a decrease in sales of our FOG products of $0.9 million, or 9%, driven largely by decreased sales in support of the U.S. Navy’s MK54 torpedo program, and

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to a lesser extent decreased sales in support of the U.S. Army’s remotely operated weapons station program due to delays in product qualification.

Service sales increased in 2008 by $5.1 million, or 69%, to $12.5 million from $7.4 million in 2007. The primary reason for the increase was a $3.6 million increase in airtime service sales, specifically in relation to our mini-VSAT Broadband service that we launched in the fourth quarter of 2007. Also contributing to the increase was a $1.1 million increase in service repair sales and contracted engineering service and grant revenue under development contracts.

Net Sales

Product sales decreased in 2008 by $3.6 million, or 5%, to $69.9 million from $73.5 million in 2007. The primary reason for the decrease was a decrease in sales of our land mobile products of $8.2 million, or 46%, driven by decreased recreational vehicle sales, resulting from increased fuel prices and challenging consumer credit markets. Partially offsetting the decrease was an increase in sales of our marine products of $4.0 million, or 11%, driven primarily by demand for our TracPhone V7 product that we launched in the fourth quarter of 2007 and to a lesser extent sales of Inmarsat-compatible TracPhone products. Mobile communications product sales originating from our Danish subsidiary increased $2.6 million, or 17%, from 2007 to 2008. Contributing to the sales increase were favorable currency rate fluctuations between the Euro and the U.S. dollar. Mobile communications product sales originating from North America decreased $6.8 million, or 17%, from 2007 to 2008.

Sales of our guidance and stabilization products increased in 2008 by $0.6 million, or 4%, to $18.6 million from $18.0 million in 2007. Specifically, sales related to our TACNAV defense and legacy navigation products increased by $1.7 million, driven primarily by a $1.4 million TACNAV sale to a Turkish contractor for use by the Malaysian government. Partially offsetting the increase was a decrease in sales of our FOG products of $0.9 million, or 9%, driven largely by decreased sales in support of the U.S. Navy’s MK54 torpedo program, and

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to a lesser extent decreased sales in support of the U.S. Army’s remotely operated weapons station program due to delays in product qualification.

Service sales increased in 2008 by $5.1 million, or 69%, to $12.5 million from $7.4 million in 2007. The primary reason for the increase was a $3.6 million increase in airtime service sales, specifically in relation to our mini-VSAT Broadband service that we launched in the fourth quarter of 2007. Also contributing to the increase was a $1.1 million increase in service repair sales and contracted engineering service and grant revenue under development contracts.

Net Sales

Net sales for 2007 increased $1.9 million, or 2%, to $80.9 million from $79.0 million in 2006. Net sales in 2007 of our mobile communications products were the primary reason for the modest improvement as they increased $4.5 million, or 8%, to $60.7 million from $56.2 million in 2006. The increase in mobile communications products was due primarily to increased sales of our marine products and services in 2007, which increased by $5.2 million, or 14%, to $41.0 million from $35.8 million in 2006. This increase was primarily a result of demand for our new TracVision M-series satellite television products that were launched in the first quarter of 2007. The improvement in mobile communications sales, including both land and marine, was concentrated largely outside the United States and Canada. Sales of mobile communications products and services outside the United States and Canada increased by approximately $3.4 million, or 25%, between 2006 and 2007 while sales in the United States and Canada increased by approximately $1.1 million, or 3%, between those periods.

Net sales of our guidance and stabilization products in 2007 decreased by $2.5 million, or 11%, to $20.3 million from $22.8 million in 2006. Specifically, sales of our military navigation products decreased $2.6

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million, or 29%, driven largely by decreased demand and sales volume related to our TACNAV products, due in part to the rescheduling of some tactical navigation orders to fiscal 2008. Also contributing to the decrease was a $1.4 million net decrease in revenue from contract engineering, repair services work and legacy navigation products. Offsetting the decrease was an increase in sales of our fiber optic gyro products of $1.2 million, or 13%, driven primarily by increased sales in support of the U.S. Navy’s MK54 torpedo program, along with a $1.1 million order for a U.S. military training simulator.

Net Sales

Net sales for 2007 increased $1.9 million, or 2%, to $80.9 million from $79.0 million in 2006. Net sales in 2007 of our mobile communications products were the primary reason for the modest improvement as they increased $4.5 million, or 8%, to $60.7 million from $56.2 million in 2006. The increase in mobile communications products was due primarily to increased sales of our marine products and services in 2007, which increased by $5.2 million, or 14%, to $41.0 million from $35.8 million in 2006. This increase was primarily a result of demand for our new TracVision M-series satellite television products that were launched in the first quarter of 2007. The improvement in mobile communications sales, including both land and marine, was concentrated largely outside the United States and Canada. Sales of mobile communications products and services outside the United States and Canada increased by approximately $3.4 million, or 25%, between 2006 and 2007 while sales in the United States and Canada increased by approximately $1.1 million, or 3%, between those periods.

Net sales of our guidance and stabilization products in 2007 decreased by $2.5 million, or 11%, to $20.3 million from $22.8 million in 2006. Specifically, sales of our military navigation products decreased $2.6

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million, or 29%, driven largely by decreased demand and sales volume related to our TACNAV products, due in part to the rescheduling of some tactical navigation orders to fiscal 2008. Also contributing to the decrease was a $1.4 million net decrease in revenue from contract engineering, repair services work and legacy navigation products. Offsetting the decrease was an increase in sales of our fiber optic gyro products of $1.2 million, or 13%, driven primarily by increased sales in support of the U.S. Navy’s MK54 torpedo program, along with a $1.1 million order for a U.S. military training simulator.

Net Sales

Net sales for 2007 increased $1.9 million, or 2%, to $80.9 million from $79.0 million in 2006. Net sales in 2007 of our mobile communications products were the primary reason for the modest improvement as they increased $4.5 million, or 8%, to $60.7 million from $56.2 million in 2006. The increase in mobile communications products was due primarily to increased sales of our marine products and services in 2007, which increased by $5.2 million, or 14%, to $41.0 million from $35.8 million in 2006. This increase was primarily a result of demand for our new TracVision M-series satellite television products that were launched in the first quarter of 2007. The improvement in mobile communications sales, including both land and marine, was concentrated largely outside the United States and Canada. Sales of mobile communications products and services outside the United States and Canada increased by approximately $3.4 million, or 25%, between 2006 and 2007 while sales in the United States and Canada increased by approximately $1.1 million, or 3%, between those periods.

Net sales of our guidance and stabilization products in 2007 decreased by $2.5 million, or 11%, to $20.3 million from $22.8 million in 2006. Specifically, sales of our military navigation products decreased $2.6

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million, or 29%, driven largely by decreased demand and sales volume related to our TACNAV products, due in part to the rescheduling of some tactical navigation orders to fiscal 2008. Also contributing to the decrease was a $1.4 million net decrease in revenue from contract engineering, repair services work and legacy navigation products. Offsetting the decrease was an increase in sales of our fiber optic gyro products of $1.2 million, or 13%, driven primarily by increased sales in support of the U.S. Navy’s MK54 torpedo program, along with a $1.1 million order for a U.S. military training simulator.

Net
Sales

Product sales decreased in 2008 by $3.6
million, or 5%, to $69.9 million from $73.5 million in 2007. The primary reason for the decrease was a decrease in sales of our land mobile products of $8.2 million, or 46%, driven by decreased recreational vehicle sales, resulting from increased
fuel prices and challenging consumer credit markets. Partially offsetting the decrease was an increase in sales of our marine products of $4.0 million, or 11%, driven primarily by demand for our TracPhone V7 product that we launched in the fourth
quarter of 2007 and to a lesser extent sales of Inmarsat-compatible TracPhone products. Mobile communications product sales originating from our Danish subsidiary increased $2.6 million, or 17%, from 2007 to 2008. Contributing to the sales increase
were favorable currency rate fluctuations between the Euro and the U.S. dollar. Mobile communications product sales originating from North America decreased $6.8 million, or 17%, from 2007 to 2008.

Net
Sales

Product sales decreased in 2008 by $3.6
million, or 5%, to $69.9 million from $73.5 million in 2007. The primary reason for the decrease was a decrease in sales of our land mobile products of $8.2 million, or 46%, driven by decreased recreational vehicle sales, resulting from increased
fuel prices and challenging consumer credit markets. Partially offsetting the decrease was an increase in sales of our marine products of $4.0 million, or 11%, driven primarily by demand for our TracPhone V7 product that we launched in the fourth
quarter of 2007 and to a lesser extent sales of Inmarsat-compatible TracPhone products. Mobile communications product sales originating from our Danish subsidiary increased $2.6 million, or 17%, from 2007 to 2008. Contributing to the sales increase
were favorable currency rate fluctuations between the Euro and the U.S. dollar. Mobile communications product sales originating from North America decreased $6.8 million, or 17%, from 2007 to 2008.

Net
Sales

Product sales decreased in 2008 by $3.6
million, or 5%, to $69.9 million from $73.5 million in 2007. The primary reason for the decrease was a decrease in sales of our land mobile products of $8.2 million, or 46%, driven by decreased recreational vehicle sales, resulting from increased
fuel prices and challenging consumer credit markets. Partially offsetting the decrease was an increase in sales of our marine products of $4.0 million, or 11%, driven primarily by demand for our TracPhone V7 product that we launched in the fourth
quarter of 2007 and to a lesser extent sales of Inmarsat-compatible TracPhone products. Mobile communications product sales originating from our Danish subsidiary increased $2.6 million, or 17%, from 2007 to 2008. Contributing to the sales increase
were favorable currency rate fluctuations between the Euro and the U.S. dollar. Mobile communications product sales originating from North America decreased $6.8 million, or 17%, from 2007 to 2008.

Net Sales

Net Sales

Net Sales

Net Sales

Product sales for the six months ended June 30, 2008 increased $0.4 million, or 1%, to $40.4 million from $40.0 million for the six months ended June 30, 2007. The primary reason for the increase was an increase in sales of our mobile communications products of $1.8 million, or 6%, from the six months ended June 30, 2007 to the six months ended June 30, 2008. Specifically, for the six months ended June 30, 2008, sales of our marine products increased $4.4 million, or 21%, driven primarily by demand for our TracPhone V7 product that we launched in the fourth quarter of 2007 and to a lesser extent by sales of Inmarsat compatible TracPhone products. Partially offsetting the increase was a decrease in sales of our land mobile products of $2.6 million, or 27%, driven by decreased recreational vehicle sales, resulting from increased fuel prices and challenging consumer credit markets. The improvement in mobile communications product sales was driven by a $2.4 million or 26% increase in sales originating from our Danish subsidiary from the six months ended June 30, 2007 to the six months ended June 30, 2008. Contributing to the sales increase were favorable currency rate fluctuations between the Euro and the U.S. dollar. Mobile communications product sales originating from North America decreased $0.6 million, or 2%, from the six months ended June 30, 2007 to the six months ended June 30, 2008.

Sales of our defense-related products decreased $1.5 million, or 16%, from the six months ended June 30, 2007 to the six months ended June 30, 2008. Specifically, sales of our FOG products decreased $1.5 million, or 29%, driven largely by decreased sales in support of the U.S. Army’s remotely operated weapons station program.

Service sales for the six months ended June 30, 2008 increased $1.4 million, or 39%, to $5.0 million from $3.6 million for the six months ended June 30, 2007. The primary reason for the increase was an increase in airtime service sales, specifically in relation to our mini-VSAT Broadband service that we launched in the fourth quarter of 2007. Also contributing the increase was an increase in commission payments from DIRECTV for television receiver activations, $0.2 million of which were billed and paid during the second quarter that related to certain prior period activations, as well as an increase in service repair sales.

Net Sales

Net sales for the three months ended March 31, 2008 increased $2.7 million, or 13%, to $23.1 million from $20.4 million for the three months ended March 31, 2007. The primary reason for the improvement was an increase in sales of our satellite mobile communications products of $2.0 million, or 13%, to $18.1 million. Specifically, sales of our marine products increased $2.5 million, or 23%, to $13.3 million in the three months ended March 31, 2008 from $10.8 million in the three months ended March 31, 2007. This increase was the result of demand for our new TracPhone V7 and our mini-VSAT Broadband service that we launched in the fourth quarter of 2007. The improvement in mobile communications sales was largely concentrated outside the United States. Sales of mobile communications products outside the United States increased by approximately $2.0 million, or 41%, while sales in the United States increased by $0.1 million, or 1%. These increases were partially offset by a decrease in revenues from our land mobile communications products of $0.5 million, or 9%.

Net sales of our guidance and stabilization products increased by $0.7 million, or 17%, to $5.1 million for the three months ended March 31, 2008 from $4.4 million for the three months ended March 31, 2007. Specifically, sales of our military navigation products increased $0.9 million, or 134%, driven largely by a $1.2 million in TACNAV product orders from one customer. Partially offsetting the increase was a decrease in sales of our fiber optic gyro products of $0.1 million, or 4%, driven primarily by decreased sales in support of the U.S. Army’s remotely operated weapon station program, which was partially offset by increased sales in support of the U.S. Navy’s MK54 torpedo program.

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Net
Sales

Net sales for 2007 increased $1.9 million, or
2%, to $80.9 million from $79.0 million in 2006. Net sales in 2007 of our mobile communications products were the primary reason for the modest improvement as they increased $4.5 million, or 8%, to $60.7 million from $56.2 million in 2006. The
increase in mobile communications products was due primarily to increased sales of our marine products and services in 2007, which increased by $5.2 million, or 14%, to $41.0 million from $35.8 million in 2006. This increase was primarily a result
of demand for our new TracVision M-series satellite television products that were launched in the first quarter of 2007. The improvement in mobile communications sales, including both land and marine, was concentrated largely outside the United
States and Canada. Sales of mobile communications products and services outside the United States and Canada increased by approximately $3.4 million, or 25%, between 2006 and 2007 while sales in the United States and Canada increased by
approximately $1.1 million, or 3%, between those periods.

Net
sales of our guidance and stabilization products in 2007 decreased by $2.5 million, or 11%, to $20.3 million from $22.8 million in 2006. Specifically, sales of our military navigation products decreased $2.6 million, or 29%, driven largely by
decreased demand and sales volume related to our TACNAV products, due in part to the rescheduling of some tactical navigation orders to fiscal 2008. Also contributing to the decrease was a $1.4 million net decrease in revenue from contract
engineering, repair services work and legacy navigation products. Offsetting the decrease was an increase in sales of our fiber optic gyro products of $1.2 million, or 13%, driven primarily by increased sales in support of the U.S. Navy’s MK54
torpedo program, along with a $1.1 million order for a U.S. military training simulator.

FACE="Times New Roman" SIZE="2">Cost of Sales

SIZE="2">Our cost of sales consist of direct labor, materials and manufacturing overhead used to produce our products as well as engineering and related direct costs associated with customer-funded research and development. Our total cost of sales
for 2007 increased by $1.3 million, or 3%, to $48.4 million from $47.2 million in 2006. The primary reason for the increase in cost of sales is related to the overall increase in net sales of our relatively lower margin mobile communications
products, coupled with an increase in manufacturing overhead in 2007 of approximately $0.9 million. The increase in manufacturing overhead was driven primarily by increased personnel and related costs of approximately $0.5 million and increased
incoming freight costs of $0.3 million. These increases were partially offset by a decrease in cost of sales associated with our relatively higher margin defense-related product sales, a $1.4 million decrease in cost of sales incurred from
customer-funded research and development activities, as well as our ability to source components and sub-assemblies with lower-cost suppliers in 2007.

Net Sales

Net sales for 2006 increased $7.7 million, or 11%, to $79.0 million from $71.3 million in 2005. Net sales in 2006 of our mobile communications products were the primary reason for the improvement as they increased $7.1 million, or 15%, to $56.2 million from $49.1 million in 2005. The increase in mobile communications products was due primarily to increased sales of our marine products and services in 2006, which increased by $6.6 million, or 23%, to $35.8 million from $29.2 million in 2005. The increase in net sales of our marine products and services was driven by increased sales in 2006 related to our TracVision M3 satellite TV antenna, which was introduced in late 2005, supplemented by a net increase in sales of our other core marine products, driven largely by increased net sales internationally from our wholly owned subsidiary in Denmark. The increase in net sales of our marine products and services in 2006 also included a $0.6 million, or 27% increase in revenue related to our re-selling of data and voice airtime services to marine vessels. Also contributing to the increase in mobile communications products and services, albeit to a lesser extent, was an increase in 2006 of net sales of our land mobile products of $0.5 million, to $20.4 million from $19.9 million in 2005.

Net sales of our guidance and stabilization products in 2006 increased by $0.6 million, or 3%, to $22.8 million from $22.2 million in 2005. The modest increase in 2006 was due primarily to an increase in sales of our

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fiber optic gyro products of $2.9 million, or 47%, to $9.0 million from $6.2 million in 2005. This increase was driven primarily by increased sales in support of the U.S. Navy’s MK54 torpedo program and the U.S. Army’s remotely operated weapons station program. Also contributing to the improvement, to a much lesser extent, was an increase in contract engineering revenue, and product repair service revenue, driven largely by increased revenue related to a product service program with a single customer. Offsetting these increases, to a large extent, was a decrease in net sales in 2006 of our military navigation products of $3.2 million, or 27%, to $8.8 million from $12.0 million in 2005. This decrease was primarily a result of decreased volume related to the sale of our TACNAV products.

Net Sales

Net sales for the nine months ended September 30, 2007 decreased $0.3 million, or 1%, to $61.2 million from $61.5 million for the nine months ended September 30, 2006. The primary reason for the decrease was a decrease in sales of our defense-related products of $2.9 million, or 16%, to $14.6 million. Specifically, sales of our military navigation products decreased $3.0 million, or 43%, driven largely by decreased demand and sales volume related to our TACNAV products, due in part to the rescheduling of some tactical navigation orders to fiscal 2008. Also contributing to the decrease was a $0.8 million net decrease in revenue from contract engineering, repair services work and legacy navigation products. Offsetting the decrease was an increase in sales of our fiber optic gyro products of $0.9 million, or 14%, driven primarily by increased sales in support of the U.S. Navy’s MK54 torpedo program and the U.S. Army’s remotely operated weapons station program, along with a large order for a U.S. military training simulator.

Sales of our mobile communications products increased by $2.6 million, or 6%, to $46.6 million for the nine months ended September 30, 2007 from $44.0 million for the nine months ended September 30, 2006. Specifically, for the nine months ended September 30, 2007, sales of our marine products and services increased $2.7 million, or 10%, to $31.5 million from $28.8 million in the nine months ended September 30, 2006. This increase was primarily a result of demand for our new TracVision (M) series satellite television products that were launched in the first quarter of 2007. The improvement in mobile communications sales was concentrated largely outside the United States and Canada. Sales of mobile communications products and services outside the United States and Canada increased by approximately $2.1 million, or 18%, between the first nine months of 2006 and the first nine months of 2007 while sales in the United States and Canada increased by approximately $0.5 million, or 2%, between those periods.

Net Sales

Net sales for the six months ended June 30, 2007 increased $1.4 million, or 3%, to $43.7 million from $42.3 million for the six months ended June 30, 2006. The primary reason for the improvement was an increase in sales of our mobile communications products of $2.4 million, or 8%, to $33.6 million. Specifically, for the six months ended June 30, 2007, sales of our marine products increased $2.3 million, or 11%, to $23.1 million. This increase was primarily a result of demand for our new TracVision (M) series satellite television products that were launched in the first quarter of 2007.

Sales of our defense-related products decreased by $1.0 million, or 9%, to $10.1 million. Specifically, sales of our military navigation products decreased $2.1 million, or 43%, driven largely by decreased demand and sales volume related to our TACNAV products. Also contributing to the decrease was a $0.5 million net decrease in contract engineering, repair service work and legacy navigation products. Offsetting the decreases was an increase in sales of our fiber optic gyro products of $1.5 million, or 41%, driven primarily by increased sales in support of the U.S. Navy’s MK54 torpedo program and the U.S. Army’s remotely operated weapons station program, along with a large order for a U.S. military training simulator.

Net Sales

Net sales for the three months ended March 31, 2007 increased $0.1 million, or 1%, to $20.4 million from $20.3 million for the three months ended March 31, 2006. The primary reason for the improvement was an increase in sales of our mobile communications products of $1.7 million, or 12%, to $16.1 million. Specifically, for the three months ended March 31, 2007,

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sales of our marine products increased $1.0 million, or 10%, to $10.8 million. This increase was a result of demand for our new TracVision M3 DX satellite TV system that was launched in the first quarter of 2007. Also contributing to the improvement was an increase in sales of our land mobile communications products of $0.7 million, or 16%. The improvement in mobile communications sales was concentrated largely outside the United States and Canada. Sales of mobile communications products outside the United States and Canada increased by approximately $1.0 million, or 29%, while sales in the United States and Canada increased by approximately $0.7 million, or 6%.

Sales of our defense-related products decreased by $1.6 million, or 27%, to $5.9 million. Specifically, sales of our military navigation products decreased $2.7 million, or 80%, driven largely by decreased demand and sales volume related to our TACNAV products. Offsetting the decrease was an increase in sales of our fiber optic gyro products of $0.9 million, or 53%, driven primarily by increased sales in support of the U.S. Navy’s MK54 torpedo program and the U.S. Army’s remotely operated weapons station program. Also contributing to the improvement was an increase in contract engineering revenue, repair work and legacy navigation products of $0.2 million.

Net Sales

Net sales for 2005 increased $9.0 million, or 14%, to $71.3 million from $62.3 million in 2004. Sales of our defense-related products were the primary reason for the improvement as they increased $8.4 million, or 61%, to $22.2 million in 2005. The increase in sales of defense products was primarily attributable to significant unit volume increases related to both our military navigation products and our fiber optic gyro products.

Net sales of our mobile satellite communications products increased $0.6 million, or 1%, to $49.1 million in 2005. The slight increase in net sales was primarily attributable to a 17% increase in net sales of marine satellite communications products, largely offset by a 13% decrease in net sales of land mobile satellite communications products. The decrease in net sales of our land mobile satellite communications products resulted from a significant unit volume decrease in sales of our recreational vehicle products to OEMs and in the aftermarket.

Net Sales

Net sales for the nine months ended September 30, 2006 increased $8.1 million, or 15%, to $61.5 million from $53.4 million for the nine months ended September 30, 2005. The primary reasons for the improvement was an increase in sales of our mobile communications products of approximately $5.2 million, or 13%, to approximately $44.0 million. Specifically, for the nine months ended September 30, 2006, sales of our marine products increased approximately $6.0 million, or 26%, to approximately $28.8 million. This was a result of increased demand for our new TracVision M3 satellite TV system that was launched in the fourth quarter of 2006, supplemented by incremental sales of our core marine products. Offsetting the increases in revenue from marine products was a decrease in sales of our land mobile communications products of approximately $0.7 million, or 4%, to $15.3 million. The decline in land mobile communications products was driven primarily by a decrease in the sale of our products to the recreational vehicle market. Year to date sales decreases within our recreational vehicle product are consistent with a general decrease in end-user demand in both the U.S. luxury coach markets as well as the U.S. recreational vehicle accessory aftermarket in 2006.

Sales of our defense-related products increased by approximately $2.9 million, or 20% to approximately $17.5 million. Specifically, sales of our fiber optic gyro products increased approximately $2.3 million, or 53%, driven primarily by increased sales in support of the U.S. Navy’s MK54 torpedo program and the U.S. Army’s remotely operated weapons station program. Also contributing to the improvement was an increase in contract engineering revenue, service revenue and revenue from legacy navigation products of approximately $1.0 million. Offsetting these increases was a decrease in military navigation products of approximately $0.4 million, or 5%, driven largely by decreased sales volume related to our TACNAV products.

Net Sales

Net sales for the six months ended June 30, 2006 increased $5.6 million, or 15%, to $42.3 million from $36.7 million for the six months ended June 30, 2005. The primary reasons for the improvement was an increase in sales of our mobile communications products of approximately $3.2 million, or 12%, to approximately $31.1 million, along with an increase in defense-related product sales of approximately $2.3 million, or 26%, to approximately $11.1 million. Specifically, for the six months ended June 30, 2006, sales of our marine products increased approximately $4.7 million, or 29%, to approximately $20.8 million. This increase was a result of year-over-year unit volume increases throughout most of our marine products, supplemented largely by incremental sales related to our new TracVision M3 satellite TV system that was launched in the fourth quarter of 2005. Offsetting the increases in revenue from marine products was a decrease in sales of our land mobile communications products of approximately $1.4 million, or 12%, to $10.4 million. The decline in land mobile communications products was driven primarily by a decrease in the sale of our products to the recreational vehicle market. Year to date sales decreases within our recreational vehicle product are consistent with a general decrease in end-user demand in both the U.S. luxury coach markets as well as the U.S. recreational vehicle accessory aftermarket.

In our defense-related product category, sales of our fiber optic gyro products increased approximately $1.1 million, or 40%, driven primarily by increased sales in support of the U.S. Navy’s MK54 torpedo program and the U.S. Army’s remotely operated weapons station program. Also contributing to the improvement was an increase in sales within our TACNAV navigational system product lines as a result of replenishment and expansion orders from existing customers.

Net Sales

Net sales for the three months ended March 31, 2006 increased $2.4 million, or 13%, to $20.3 million from $17.9 million for the three months ended March 31, 2005. The primary reason for the improvement was an increase in sales of our defense-related products of approximately $2.2 million, or 57%, to approximately $5.9 million. Specifically, sales of our military navigation products increased approximately $1.8 million, or 108%, driven largely by increased sales volume related to our tactical navigation products. Also contributing to the improvement was an increase in sales of our fiber optic gyro products of approximately $0.5 million, or 42%, driven primarily by increased sales in support of the U.S. Navy’s MK54 torpedo program and the U.S. Army’s remotely operated weapons station program. Partially offsetting the increases in revenue from sales of military navigation and fiber optic gyro products was a decrease in contract engineering revenue of approximately $0.2 million.

Sales of our mobile communications products increased by approximately $0.2 million, or 2%, to approximately $14.3 million for the three months ended March 31, 2006. The modest overall increase reflects a continued growth in sales of our U.S. and European marine products substantially offset by a continued decline in sales of our land mobile communications products. Specifically, for the three months ended March 31, 2006, sales of our marine products increased approximately $2.3 million, or 31%, to approximately $9.7 million. This increase was a result of continued demand for our core marine products, supplemented largely by incremental sales related to our new TracVision M3 satellite TV system that was launched in the fourth quarter of 2005. Offsetting the growth in sales of our marine products was a decline in sales of our land mobile communications products of approximately $2.0 million, or 32%, to $4.3 million. The decline in land mobile communications products was driven primarily by a continued decline in the sale of our products to the recreational vehicle market; coupled with flat sales to the automotive market.

Net Sales

Net sales for 2004 increased by $5.6 million, or 9.9%, to $62.3 million from $56.7 million in 2003. Sales of our mobile satellite communications products, which included our TracVision A5, continued to show strong growth, increasing 24% to $48.5 million in 2004 from $39.2 million in 2003 (including certain legacy products). This increase was primarily attributable to unit volume increases in our marine and land mobile satellite communications products, both in the U.S. and in Europe. Sales results reflected our expansion within the mobile satellite communication markets, our introduction of new products, including the TracVision A5 for the automotive market and the TracVision G8 for the marine market, and increased sales to major distributors, large account retailers and marine and recreational vehicle original equipment manufacturers.

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Sales of our defense products decreased by $3.7 million, or 21%, to $13.8 million in 2004 from $17.5 million in 2003 (including certain legacy products). A decline in sales of our TACNAV tactical navigation systems represented the entire decline in defense sales, and was attributable to a shift in U.S. government procurement priorities. Partially offsetting the decline of TACNAV product sales within the defense markets was an $0.8 million increase in sales of our fiber optic gyro products and a $0.5 million increase in contracted engineering and product modification services. The increase in our fiber optic gyro sales was primarily the result of new product offerings, including the DSP-4000 and the DSP-3000 fiber optic gyros and the TG-6000, our fiber optic gyro-based inertial measurement unit.

Net Sales

Sales of our mobile satellite communications products, particularly in our marine product lines, continued to show growth, increasing 4% between the first nine months of 2004 and the first nine months of 2005. This increase was primarily attributable to year-over-year unit volume increases throughout most of our marine mobile satellite communications product lines, particularly the TracVision and Fleet product offerings in both North America and Europe. In total, 2005 nine-month period marine sales increased approximately 17% from the same period in 2004. Except for a substantial decline in our RV-specific product offerings, total mobile satellite communications sales of $38.8 million reflect increased market penetration of our newer products, including the TracVision A5, our general expansion within the global marine satellite communications markets, and increased sales to large distributors and manufacturers, particularly in Europe. We believe sales decreases within our RV product lines are consistent with a recent general decrease in end-user demand in both the new U.S. luxury coach markets as well as the U.S. RV accessory aftermarket. As previously mentioned, we believe the decline in the RV markets is associated with higher fuel prices compounded with rising new-vehicle financing rates. Furthermore, we believe the effects of new competing product offerings and pricing pressure have also impacted RV sales.

Sales of our defense products increased by $5.7 million, or 63.1%, from the first nine months of 2004 to the first nine months of 2005. Increases within our TACNAV navigational system product lines were the largest contributor to the overall defense sales growth and came as a result of a combination of sales to new customers as well as replenishment and expansion orders from existing customers. The continued market acceptance and expansion of our new DSP-3000 and the DSP-4000 fiber optic gyros and the TG-6000, our fiber optic gyro-based inertial measurement unit and additional contracted project engineering service revenue, also contributed to the year-over-year defense sales growth.

Net Sales

Six-month period net sales increased by $4.2 million, or 13%, to $36.7 million in 2005 from $32.5 million in 2004. Sales of our mobile satellite communications products, particularly in our marine product lines, continued to show growth, increasing 4% to $27.9 million in the six months ended June 30, 2005 from $26.8 million in the same period in 2004. This increase was primarily attributable to year-over-year unit volume increases throughout most of our marine and land mobile satellite communications product lines. Except for some declines in our RV-specific product offerings, total satellite communications sales reflect increased market penetration of our newer products, including the TracVision A5, our general expansion within the global marine satellite communications markets, and increased sales to large account retailers and marine manufacturers. Sales decreases within our RV product lines are consistent with a general decrease in end-user demand in both the new U.S. luxury coach markets as well as the U.S. RV accessory aftermarkets.

Sales of our defense products increased by $3.1 million, or 54%, to $8.8 million in the six-month ended June 30, 2005 from $5.7 million in the same six-month period of 2004. Increases within our TACNAV navigational system product lines were the largest contributor to the overall defense sales growth and came as a result of a combination of sales to new customers as well as replenishment and expansion orders from existing customers. The continued market acceptance our new DSP-3000 and the DSP-4000 fiber optic gyros and the TG-6000, our fiber optic gyro-based inertial measurement unit along with additional contracted project engineering service revenue, also helped to produce the year-over-year growth.

Net Sales

Net sales decreased by $0.1 million, or 0.6%, to $17.9 million in the first quarter of 2005 from $18.0 million in the first quarter of 2004. Sales of our mobile satellite communications products, which include our TracVision family of satellite antenna systems, decreased 1.5% to $14.1 million in the 2005 period from $14.3 million in the 2004 period. This decrease was primarily attributable to unit volume decreases in our U.S. land mobile satellite communications products. Partially offsetting the overall land mobile satellite communication products decrease was continued year-over-year sales growth in our U.S. and European marine products. Total satellite communication sales results reflect increased market penetration of our newer products, including the TracVision A5, our general expansion within the marine satellite communication markets, and increased sales to large account retailers and marine manufacturers. Decreased sales within the land mobile market was primarily attributable to one of our largest recreational vehicle customers purchasing a significantly higher volume of products in the first quarter of 2004. Please refer to Note 9 of the Notes to the Condensed Consolidated Financial Statements for more information regarding our sales to significant customers.

Sales of our defense products increased by $0.1 million, or 3.0%, to $3.8 million in the first quarter of 2005 from $3.7 million in the first quarter of 2004. The continued improvement in our sales of fiber optic gyro products, or FOGs, represented the majority of the increase in defense sales, and primarily resulted from our newer product offerings, including the DSP-4000 and the DSP-3000 fiber optic gyros and the TG-6000, our fiber optic gyro-based inertial measurement unit. Also affecting our defense sales was an increase in compass and sensor sales for OEM applications. Partially offsetting the increase in FOG and sensor product sales was a $0.6 million decrease in sales of our TACNAV military navigation products and a modest decrease in contract engineering and product modification services. The decrease in sales of our TACNAV products primarily reflects the inherently uneven ordering patterns of our defense customers.

Net Sales

Net sales increased by $9.0 million, or 18.8%, to $56.7 million in 2003 from $47.7 million in 2002. The increase was primarily attributable to a 47.0% increase in sales volume of mobile satellite communications products and services, including our recently introduced TracVision A5 automotive antenna. Growth in our marine and land mobile satellite communication products primarily reflected our focus on the continued development and expansion of sales to major distributors, large account retailers and original equipment manufacturers.

Defense sales decreased by $2.7 million, or 14.4%, to $16.2 million in 2003 from $19.0 million in 2002. Sales of tactical navigation systems, including engineering services, were $12.5 million, a decrease of $2.9 million compared to 2002. The decrease in 2003 primarily reflected a reduction in demand compared to 2002 when the U.S. military was preparing for conflicts in Afghanistan and Iraq. Fiber optic component sales increased by $122,000, or 3.4%, to $3.8 million in 2003 from $3.6 million in 2002.

Legacy marine and OEM sensor shipments declined by $444,000, or 15.7%, to $2.4 million in 2003 from $2.8 million in 2002. The decline in our legacy product sales is consistent with the long-term trend line for these non-strategic products.