The company continues to cultivate and deepen relationships with key OEM partners—which expands market share and extends Raven's technology to a broader range of manufacturers. During the second quarter, Raven introduced SmarTrax 6, the newest version of Applied Technology's autosteering package. SmarTrax 6 continues to improve on line steering performance and simplifies calibration. Steering kits for SmarTrax 6 will work on more than 300 tractors and machine models.

Noted Rykhus, "We're committed to further product development in fiscal 2013. We recently held the Raven Innovation Summit at the Innovation Campus near Baltic, SD—our recently expanded research center dedicated to precision agriculture. In addition to sharing our latest product advances with customers, we were able to get their feedback and input. This kind of information is invaluable as we work to develop next-generation products."

Volatility Continues to Impact Aerostar Growth

Aerostar's sales in the second quarter were $26.8 million versus $23.2 million in the previous year's second quarter, a 15 percent gain. Most of the increase came from the addition of Vista Research revenues and an increase in Electronic Systems' sales. Vista Research was acquired in January 2012. Aerostat sales declined $3.3 million, reducing overall second quarter profitability for this division. The division reported 32 percent lower operating income of $2.3 million, versus $3.4 million a year earlier.

"Our Aerostar Division has breakout potential, but it also is subject to significant variability due to federal spending. That's what we saw in the first fiscal quarter, and again in the second, as lack of aerostat orders impacted potential top-line gains," said Rykhus. "We continue to manage the short-term responsibly, carefully monitoring discretionary spending, staffing levels and R&D. At the same time we're developing opportunities to add stability and mitigate volatility in the business, and ultimately drive longer-term growth.

"To that end, I'm pleased to report that we've had some recent success. At the end of the second quarter, Vista Research signed a $6 million contract with the US government to support and further explore applications of Vista's radar technology. We're also working with Vista on a number of other initiatives that would broaden our customer base. We see significant future potential with Vista, both here and overseas as we work to sell into new markets."

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