7.

Luther Corporation

Consolidated Income Statement

Year ended December 31 (in $millions)

	2006	2005
Total sales	610.1	552.5
Cost of sales	(500.2)	(390.9)
Gross profit	109.9	161.6
Selling, general, and administrative expenses	(40.5)	(39.5)
Research and development	(24.6)	(20.1)
Depreciation and amortization	(3.6)	(3.3)
Operating income	41.2	98.7
Other income	minus minus	minus minus
Earnings before interest and taxes (EBIT)	41.2	98.7
Interest income (expense)	(25.1)	(15.9)
Pretax income	16.1	82.8
Taxes	(5.5)	(28.98)
Net income	10.6	53.82
Price per share	$16	$15
Sharing outstanding (millions)	10.2	8.0
Stock options outstanding (millions)	0.3	0.2
Stockholders' Equity	126.6	63.6
Total Liabilities and Stockholders' Equity	533.1	386.7

Refer to the income statement above. Luther's operating margin for the year ending December 31, 2005 is closest to: