x |
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
¨ |
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
Massachusetts
|
04-2441294
|
(State
of incorporation)
|
(I.R.S.
Employer Identification
No.)
|
|
|
Page
|
PART I.
FINANCIAL INFORMATION
|
|
|
Item 1.
|
Financial
Statements
|
|
|
Consolidated
Balance Sheets as of March 31, 2008 (unaudited) and September 30,
2007
|
3
|
|
Consolidated
Statements of Operations (unaudited) for the three and six months
ended
March 31, 2008 and 2007
|
4
|
Consolidated
Statement of Shareholders’ Equity (unaudited) for the six months ended
March 31, 2008
|
5
|
|
|
Consolidated
Statements of Cash Flows (unaudited) for the six months ended March
31,
2008 and 2007
|
6
|
|
Notes
to Consolidated Financial Statements (unaudited)
|
7-12
|
Item 2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
13-24
|
Item 3.
|
Quantitative
and Qualitative Disclosures about Market Risk
|
24
|
Item 4.
|
Controls
and Procedures
|
25
|
PART II.
OTHER INFORMATION
|
|
|
Item
1A.
|
Risk
Factors
|
26
|
Item 6.
|
Exhibits
|
27
|
|
March 31,
2008
|
September 30,
2007
|
|||||
ASSETS
|
(Unaudited)
|
|
|||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
9,080
|
$
|
13,687
|
|||
Short-term
investments
|
2,072
|
7,690
|
|||||
Accounts
receivable, net of allowances of $100 and $133
|
16,861
|
10,678
|
|||||
Inventories
|
5,983
|
6,072
|
|||||
Refundable
income taxes
|
163
|
27
|
|||||
Deferred
income taxes
|
229
|
229
|
|||||
Other
current assets
|
1,807
|
1,587
|
|||||
Total
current assets
|
36,195
|
39,970
|
|||||
Property,
equipment and improvements, net
|
1,051
|
1,044
|
|||||
Other
assets:
|
|||||||
Long
term investments
|
4,800
|
−
|
|||||
Goodwill
|
2,779
|
2,779
|
|||||
Deferred
income taxes
|
281
|
254
|
|||||
Cash
surrender value of life insurance
|
2,172
|
2,045
|
|||||
Other
assets
|
296
|
349
|
|||||
Total
other assets
|
10,328
|
5,427
|
|||||
Total
assets
|
$
|
47,574
|
$
|
46,441
|
|||
LIABILITIES
AND SHAREHOLDERS’ EQUITY
|
|||||||
Current
liabilities:
|
|||||||
Accounts
payable and accrued expenses
|
$
|
9,812
|
$
|
9,073
|
|||
Deferred
revenue
|
3,338
|
3,461
|
|||||
Pension
and retirement plans
|
490
|
495
|
|||||
Income
taxes payable
|
−
|
552
|
|||||
Deferred
income taxes
|
279
|
279
|
|||||
Total
current liabilities
|
13,919
|
13,860
|
|||||
Pension
and retirement plans
|
7,231
|
6,859
|
|||||
Deferred
income taxes
|
432
|
388
|
|||||
Other
non current liabilities
|
260
|
−
|
|||||
Total
liabilities
|
21,842
|
21,107
|
|||||
Commitments
and contingencies
|
|||||||
Shareholders’
equity:
|
|||||||
Common
stock, $.01 par; 7,500 shares authorized,
|
|||||||
3,776
and 3,812 shares issued and outstanding , respectively
|
38
|
39
|
|||||
Additional
paid-in capital
|
11,512
|
11,707
|
|||||
Retained
earnings
|
15,722
|
15,236
|
|||||
Accumulated
other comprehensive loss
|
(1,540
|
)
|
(1,648
|
)
|
|||
Total
shareholders’ equity
|
25,732
|
25,334
|
|||||
Total
liabilities and shareholders’ equity
|
$
|
47,574
|
$
|
46,441
|
For the three months ended
|
For the six months ended
|
||||||||||||
|
March 31,
2008
|
March 31,
2007
|
March 31,
2008
|
March 31,
2007
|
|||||||||
Sales:
|
|||||||||||||
Product
|
$
|
17,294
|
$
|
15,422
|
$
|
31,524
|
$
|
33,058
|
|||||
Services
|
4,321
|
3,396
|
8,030
|
6,891
|
|||||||||
Total
sales
|
21,615
|
18,818
|
39,554
|
39,949
|
|||||||||
Cost
of sales:
|
|||||||||||||
Product
|
14,144
|
12,219
|
25,907
|
25,380
|
|||||||||
Services
|
3,333
|
2,439
|
6,135
|
4,726
|
|||||||||
Total
cost of sales
|
17,477
|
14,658
|
32,042
|
30,106
|
|||||||||
Gross
profit
|
4,138
|
4,160
|
7,512
|
9,843
|
|||||||||
Operating
expenses:
|
|||||||||||||
Engineering
and development
|
538
|
628
|
1,179
|
1,173
|
|||||||||
Selling,
general and administrative
|
3,500
|
3,173
|
6,762
|
6,555
|
|||||||||
Total
operating expenses
|
4,038
|
3,801
|
7,941
|
7,728
|
|||||||||
Operating
income (loss)
|
100
|
359
|
(429
|
)
|
2,115
|
||||||||
Other
income:
|
|||||||||||||
Foreign
exchange gain
|
21
|
7
|
23
|
1
|
|||||||||
Other
income, net
|
190
|
94
|
319
|
169
|
|||||||||
Total
other income, net
|
211
|
101
|
342
|
170
|
|||||||||
Income
(loss) before income taxes
|
311
|
460
|
(87
|
)
|
2,285
|
||||||||
Income
tax expense (benefit)
|
122
|
205
|
(17
|
)
|
1,052
|
||||||||
Net
income (loss)
|
$
|
189
|
$
|
255
|
$
|
(70
|
)
|
$
|
1,233
|
||||
Net
income (loss) per share – basic
|
$
|
0.05
|
$
|
0.07
|
$
|
(0.02
|
)
|
$
|
0.33
|
||||
Weighted
average shares outstanding – basic
|
3,792
|
3,748
|
3,797
|
3,737
|
|||||||||
Net
income (loss) per share – diluted
|
$
|
0.05
|
$
|
0.07
|
$
|
(0.02
|
)
|
$
|
0.32
|
||||
Weighted
average shares outstanding – diluted
|
3,847
|
3,917
|
3,797
|
3,905
|
Shares
|
Amount
|
Additional
Paid-in
Capital
|
Retained Earnings
|
Accumulated
other
comprehensive
income (loss)
|
Total
Shareholders’
Equity
|
Comprehensive
income (loss)
|
||||||||||||||||
Balance
as of September 30, 2007
|
3,812
|
$
|
39
|
$
|
11,707
|
$
|
15,236
|
$
|
(1,648
|
)
|
$
|
25,334
|
||||||||||
Comprehensive
income:
|
||||||||||||||||||||||
Net
loss
|
—
|
—
|
—
|
(70
|
)
|
—
|
(70
|
)
|
$
|
(70
|
)
|
|||||||||||
Other
comprehensive income (loss)
|
||||||||||||||||||||||
Effect
of foreign currency translation
|
—
|
—
|
—
|
—
|
56
|
56
|
56
|
|||||||||||||||
Minimum
pension liability
|
52
|
52
|
52
|
|||||||||||||||||||
Total
Comprehensive income
|
—
|
—
|
—
|
—
|
—
|
—
|
$
|
38
|
||||||||||||||
Exercise
of stock options
|
25
|
—
|
109
|
—
|
—
|
109
|
||||||||||||||||
Stock-based
compensation
|
—
|
—
|
147
|
—
|
—
|
147
|
||||||||||||||||
Issuance
of shares under employee stock purchase plan
|
14
|
—
|
87
|
—
|
—
|
87
|
||||||||||||||||
Purchase
of treasury stock
|
(75
|
)
|
(1
|
)
|
(538
|
)
|
—
|
—
|
(539
|
)
|
||||||||||||
Cumulative
impact from adoption of FIN 48
|
—
|
—
|
—
|
556
|
—
|
556
|
||||||||||||||||
Balance
as of March 31, 2008
|
3,776
|
$
|
38
|
$
|
11,512
|
$
|
15,722
|
$
|
(1,540
|
)
|
$
|
25,732
|
|
|
For
the six months ended
|
|
||||
|
|
March 31,
2008
|
|
March 31,
2007
|
|||
Cash
flows from operating activities:
|
|||||||
Net
income (loss)
|
$
|
(70
|
)
|
$
|
1,233
|
||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
|||||||
Depreciation
|
285
|
323
|
|||||
Loss
on disposal of fixed assets, net
|
3
|
1
|
|||||
Non-cash
changes in accounts receivable
|
18
|
11
|
|||||
Non-cash
compensation expense related to stock options
|
147
|
164
|
|||||
Deferred
income taxes
|
35
|
824
|
|||||
Increase
in cash surrender value of life insurance
|
−
|
(21
|
)
|
||||
Changes
in operating assets and liabilities:
|
|||||||
Increase
in accounts receivable
|
(5,323
|
)
|
(315
|
)
|
|||
Decrease
(increase) in inventories
|
100
|
(1,833
|
)
|
||||
Increase
in refundable income taxes
|
(70
|
)
|
(51
|
)
|
|||
Increase
in other current assets
|
(217
|
)
|
(155
|
)
|
|||
Decrease
in other assets
|
54
|
54
|
|||||
Increase
(decrease) in accounts payable and accrued expenses
|
448
|
(96
|
)
|
||||
Increase
(decrease) in deferred revenue
|
(291
|
)
|
1,058
|
||||
Increase
in pension and retirement plans
|
91
|
163
|
|||||
Increase
in income taxes payable
|
139
|
267
|
|||||
Net
cash provided by (used in) operating activities
|
(4,651
|
)
|
1,627
|
||||
Cash
flows from investing activities:
|
|||||||
Purchases
of held-to-maturity securities
|
(16,550
|
)
|
(3,236
|
)
|
|||
Maturities
of held-to-maturity securities
|
17,368
|
2,513
|
|||||
Change
in cash surrender value of officer life insurance
|
(127
|
)
|
(17
|
)
|
|||
Purchases
of property, equipment and improvements
|
(270
|
)
|
(284
|
)
|
|||
Net
cash provided by (used in) investing activities
|
421
|
(1,024
|
)
|
||||
Cash
flows from financing activities:
|
|||||||
Proceeds
from stock issued from the exercise of options
|
109
|
363
|
|||||
Proceeds
from issuance of stock under employee stock purchase plan
|
87
|
96
|
|||||
Purchase
of treasury stock
|
(539
|
)
|
—
|
||||
Net
cash provided by (used in) financing activities
|
(343
|
)
|
459
|
||||
Effects
of exchange rate changes on cash
|
(34
|
)
|
328
|
||||
Net
increase (decrease) in cash and cash equivalents
|
(4,607
|
)
|
1,390
|
||||
Cash
and cash equivalents, beginning of period
|
13,687
|
8,683
|
|||||
Cash
and cash equivalents, end of period
|
$
|
9,080
|
$
|
10,073
|
|||
Supplementary
Cash flow information:
|
|||||||
Cash
paid for income taxes
|
$
|
107
|
$
|
58
|
|||
Cash
paid for interest
|
$
|
89
|
$
|
97
|
|
For
the Three Months Ended
|
For
the Six Months Ended
|
|||||||||||
|
March 31,
2008
|
March 31,
2007
|
March 31,
2008
|
March 31,
2007
|
|||||||||
|
(Amounts
in thousands, except per share data)
|
||||||||||||
Net
income (loss)
|
$
|
189
|
$
|
255
|
$
|
(70
|
)
|
$
|
1,233
|
||||
Weighted
average number of shares outstanding – basic
|
3,792
|
3,748
|
3,797
|
3,737
|
|||||||||
Incremental
shares from the assumed exercise of stock options
|
55
|
169
|
−
|
168
|
|||||||||
Weighted
average number of shares outstanding – diluted
|
3,847
|
3,917
|
3,797
|
3,905
|
|||||||||
Net
income (loss) per share – basic
|
$
|
0.05
|
$
|
0.
07
|
$
|
(0.02
|
)
|
$
|
0.33
|
||||
Net
income (loss) per share - diluted
|
$
|
0.05
|
$
|
0.
07
|
$
|
(0.02
|
)
|
$
|
0.32
|
March 31,
2008
|
September 30,
2007
|
||||||
(Amounts in thousands)
|
|||||||
Raw
materials
|
$
|
1,109
|
$
|
1,716
|
|||
Work-in-progress
|
605
|
351
|
|||||
Finished
goods
|
4,269
|
4,005
|
|||||
Total
|
$
|
5,983
|
$
|
6,072
|
|
|
For
the Three Months Ended
|
|
For
the Six Months Ended
|
|
||||||||
|
|
March 31,
2008
|
|
March 31,
2007
|
|
March 31,
2008
|
|
March 31,
2007
|
|
||||
|
|
(Amounts
in thousands, except per share data)
|
|||||||||||
Net
income (loss)
|
$
|
189
|
$
|
255
|
$
|
(70
|
)
|
$
|
1,233
|
||||
Effect
of foreign currency translation
|
173
|
27
|
56
|
228
|
|||||||||
Minimum
pension liability
|
17
|
−
|
52
|
−
|
|||||||||
Comprehensive
income
|
$
|
379
|
$
|
282
|
$
|
38
|
$
|
1,461
|
March 31,
2008
|
September 30,
2007
|
||||||
(Amounts
in thousands)
|
|||||||
Cumulative
effect of foreign currency translation
|
$
|
(651
|
)
|
$
|
(707
|
)
|
|
Additional
minimum pension liability
|
(889
|
)
|
(941
|
)
|
|||
Accumulated
Comprehensive loss
|
$
|
(1,540
|
)
|
$
|
(1,648
|
)
|
For
the Three Months Ended March 31
|
|||||||||||||||||||
|
2008
|
2007
|
|||||||||||||||||
|
Foreign
|
U.S.
|
Total
|
Foreign
|
U.S.
|
Total
|
|||||||||||||
|
(Amounts
in thousands)
|
||||||||||||||||||
Pension:
|
|||||||||||||||||||
Service
cost
|
$
|
22
|
$
|
2
|
$
|
24
|
$
|
29
|
$
|
2
|
$
|
31
|
|||||||
Interest
cost
|
185
|
34
|
219
|
165
|
36
|
201
|
|||||||||||||
Expected
return on plan assets
|
(124
|
)
|
—
|
(124
|
)
|
(121
|
)
|
—
|
(121
|
)
|
|||||||||
Amortization
of:
|
|||||||||||||||||||
Prior
service costs
|
7
|
5
|
12
|
8
|
11
|
19
|
|||||||||||||
Net
transition asset
|
(1
|
)
|
—
|
(1
|
)
|
2
|
—
|
2
|
|||||||||||
Net
periodic benefit cost
|
$
|
89
|
$
|
41
|
$
|
130
|
$
|
83
|
$
|
49
|
$
|
132
|
For
the Three Months Ended March 31
|
|||||||||||||||||||
2008
|
2007
|
||||||||||||||||||
Foreign
|
U.S.
|
Total
|
Foreign
|
U.S.
|
Total
|
||||||||||||||
(Amounts
in thousands)
|
|||||||||||||||||||
Post
Retirement:
|
|||||||||||||||||||
Service
cost
|
$
|
—
|
$
|
16
|
$
|
16
|
$
|
—
|
$
|
14
|
$
|
14
|
|||||||
Interest
cost
|
—
|
13
|
13
|
—
|
10
|
10
|
|||||||||||||
Amortization
of:
|
|||||||||||||||||||
Prior
service costs
|
—
|
—
|
—
|
—
|
7
|
7
|
|||||||||||||
Net
periodic benefit cost
|
$
|
—
|
$
|
29
|
$
|
29
|
$
|
—
|
$
|
31
|
$
|
31
|
|
For
the Six Months Ended March 31
|
||||||||||||||||||
2008
|
2007
|
||||||||||||||||||
Foreign
|
U.S.
|
Total
|
Foreign
|
U.S.
|
Total
|
||||||||||||||
(Amounts
in thousands)
|
|||||||||||||||||||
Pension:
|
|||||||||||||||||||
Service
cost
|
$
|
43
|
$
|
3
|
$
|
46
|
$
|
59
|
$
|
4
|
$
|
63
|
|||||||
Interest
cost
|
370
|
69
|
439
|
329
|
71
|
400
|
|||||||||||||
Expected
return on plan assets
|
(251
|
)
|
—
|
(251
|
)
|
(240
|
)
|
—
|
(240
|
)
|
|||||||||
Amortization
of:
|
|||||||||||||||||||
Prior
service costs
|
(3
|
)
|
—
|
(3
|
)
|
16
|
23
|
39
|
|||||||||||
Net
transition asset
|
14
|
9
|
23
|
—
|
—
|
—
|
|||||||||||||
Net
periodic benefit cost
|
$
|
173
|
$
|
81
|
$
|
254
|
$
|
164
|
$
|
98
|
$
|
262
|
|||||||
Post
Retirement:
|
|||||||||||||||||||
Service
cost
|
$
|
—
|
$
|
32
|
$
|
32
|
$
|
—
|
$
|
28
|
$
|
28
|
|||||||
Interest
cost
|
—
|
26
|
26
|
—
|
20
|
20
|
|||||||||||||
Amortization
of:
|
|||||||||||||||||||
Prior
service costs
|
—
|
1
|
1
|
—
|
15
|
15
|
|||||||||||||
Net
periodic benefit cost
|
$
|
—
|
$
|
59
|
$
|
59
|
$
|
—
|
$
|
63
|
$
|
63
|
|
Systems
|
Service and
System
Integration
|
Consolidated
Total
|
|||||||
Three
Months Ended March 31, 2008
|
||||||||||
Sales:
|
||||||||||
Product
|
$
|
1,237
|
$
|
16,057
|
$
|
17,294
|
||||
Service
|
66
|
4,255
|
4,321
|
|||||||
Total
sales
|
$
|
1,303
|
$
|
20,312
|
$
|
21,615
|
||||
Operating
Income (loss)
|
$
|
(844
|
)
|
$
|
944
|
$
|
100
|
|||
Total
assets
|
$
|
16,183
|
$
|
31,391
|
$
|
47,574
|
||||
Capital
expenditures
|
$
|
8
|
$
|
85
|
$
|
93
|
||||
Depreciation
|
$
|
60
|
$
|
85
|
$
|
145
|
||||
Three
Months Ended March 31, 2007
|
||||||||||
Sales:
|
||||||||||
Product
|
$
|
2,161
|
$
|
13,261
|
$
|
15,422
|
||||
Service
|
296
|
3,100
|
3,396
|
|||||||
Total
sales
|
$
|
2,457
|
$
|
16,361
|
$
|
18,818
|
||||
Operating
Income
|
$
|
98
|
$
|
261
|
$
|
359
|
||||
Total
assets
|
$
|
17,235
|
$
|
25,724
|
$
|
42,959
|
||||
Capital
expenditures
|
$
|
53
|
$
|
53
|
$
|
106
|
||||
Depreciation
|
$
|
64
|
$
|
94
|
$
|
158
|
||||
Six
Months Ended March 31, 2008
|
||||||||||
Sales:
|
||||||||||
Product
|
$
|
2,055
|
$
|
29,469
|
$
|
31,524
|
||||
Service
|
129
|
7,901
|
8,030
|
|||||||
Total
sales
|
$
|
2,184
|
$
|
37,370
|
$
|
39,554
|
||||
Operating
Income (loss)
|
$
|
(2,211
|
)
|
$
|
1,782
|
$
|
(429
|
)
|
||
Total
assets
|
$
|
16,183
|
$
|
31,391
|
$
|
47,574
|
||||
Capital
expenditures
|
$
|
84
|
$
|
186
|
$
|
270
|
||||
Depreciation
|
$
|
116
|
$
|
169
|
$
|
285
|
||||
Six
Months Ended March 31, 2007
|
||||||||||
Sales:
|
||||||||||
Product
|
$
|
7,310
|
$
|
25,748
|
$
|
33,058
|
||||
Service
|
690
|
6,201
|
6,891
|
|||||||
Total
sales
|
$
|
8,000
|
$
|
31,949
|
$
|
39,949
|
||||
Operating
Income
|
$
|
1,406
|
$
|
709
|
$
|
2,115
|
||||
Total
assets
|
$
|
17,235
|
$
|
25,724
|
$
|
42,959
|
||||
Capital
expenditures
|
$
|
186
|
$
|
98
|
$
|
284
|
||||
Depreciation
|
$
|
135
|
$
|
188
|
$
|
323
|
For
the Three Months Ended
|
For
the Six Months Ended
|
|||||||||||||||||||||||||||
March 31,
2008
|
March 31,
2007
|
March 31,
2008
|
March 31,
2007
|
|||||||||||||||||||||||||
|
Amount
|
%
of
Revenues
|
Amount
|
%
of
Revenues
|
Amount
|
%
of
Revenues
|
Amount
|
%
of
Revenues
|
||||||||||||||||||||
(Amounts
in millions)
|
||||||||||||||||||||||||||||
Raytheon
Corporation
|
$
|
−*
|
−
|
%
|
$
|
−*
|
−
|
%
|
$
|
−*
|
−
|
%
|
$
|
5.1
|
13
|
%
|
||||||||||||
Atos
Origin GmbH
|
$
|
2.4
|
11
|
%
|
$
|
2.2
|
12
|
%
|
$
|
4.5
|
11
|
%
|
$
|
5.1
|
13
|
%
|
||||||||||||
Kabel
Deutschland
|
$
|
2.9
|
13
|
%
|
$
|
2.2
|
12
|
%
|
$
|
4.1
|
10
|
%
|
$
|
2.5
|
6
|
%
|
• |
Systems
- the Systems segment consists of our MultiComputer division which
designs, develops and manufactures signal processing computer platforms
which are used primarily in military applications and the process
control
and data acquisition hardware business of our Modcomp division.
|
• |
Service
and System Integration - the Service and System Integration segment
includes the computer systems’ maintenance and integration services and
third-party computer hardware and software products businesses of
our
Modcomp subsidiary.
|
• |
Revenue
decreased by approximately $400 thousand, or 1%, to $39.6 million
for the
six months ended March 31, 2008 versus $39.9 million for the six
months
ended March 31, 2007.
|
• |
The
operating loss for the six months ended March 31, 2008 was $429
thousand versus operating income of $2.1 million for the six months
ended
March 31, 2007, for a decrease of approximately $2.5 million, or
120%.
|
• |
The
net loss for the six months ended March 31, 2008 was $70 thousand
versus net income of $1.2 million for the six months ended March
31, 2007,
for a decrease of approximately $1.3 million, or
106%.
|
• |
Net
cash used by operations was approximately $4.7 million for the six
months
ended March 31, 2008 compared to net cash provided by operations of
$1.6 million for the comparable period of 2007.
|
|
March 31,
2008
|
%
of sales
|
March 31,
2007
|
%
of sales
|
|||||||||
Sales
|
$
|
39,554
|
100
|
%
|
$
|
39,949
|
100
|
%
|
|||||
Costs
and expenses:
|
|||||||||||||
Cost
of sales
|
32,042
|
81
|
%
|
30,106
|
75
|
%
|
|||||||
Engineering
and development
|
1,179
|
3
|
%
|
1,173
|
3
|
%
|
|||||||
Selling,
general and administrative
|
6,762
|
17
|
%
|
6,555
|
17
|
%
|
|||||||
Total
costs and expenses
|
39,983
|
101
|
%
|
37,834
|
95
|
%
|
|||||||
Operating
income (loss)
|
(429
|
)
|
(1)%
|
2,115
|
5
|
%
|
|||||||
Other
income
|
342
|
1
|
%
|
170
|
1
|
%
|
|||||||
Income
(loss) before income taxes
|
(87
|
)
|
−
|
%
|
2,285
|
6
|
%
|
||||||
Provision
for income taxes
|
(17
|
)
|
−
|
%
|
1,052
|
3
|
%
|
||||||
Net
income (loss)
|
$
|
(70
|
)
|
−
|
%
|
$
|
1,233
|
3
|
%
|
|
Systems
|
Service and
System
Integration
|
Total
|
%
of
Total
|
|||||||||
For
the six months ended March 31, 2008:
|
|||||||||||||
Product
|
$
|
2,055
|
$
|
29,469
|
$
|
31,524
|
80
|
%
|
|||||
Services
|
129
|
7,901
|
8,030
|
20
|
%
|
||||||||
Total
|
$
|
2,184
|
$
|
37,370
|
$
|
39,554
|
100
|
%
|
|||||
%
of Total
|
6
|
%
|
94
|
%
|
100
|
%
|
|||||||
|
Systems
|
Service
and
System
Integration
|
|
|
Total
|
|
|
%
of
Total
|
|||||
For
the six months ended March 31, 2007:
|
|||||||||||||
Product
|
$
|
7,310
|
$
|
25,748
|
$
|
33,058
|
83
|
%
|
|||||
Services
|
690
|
6,201
|
6,891
|
17
|
%
|
||||||||
Total
|
$
|
8,000
|
$
|
31,949
|
$
|
39,949
|
100
|
%
|
|||||
%
of Total
|
20
|
%
|
80
|
%
|
100
|
%
|
|||||||
|
Systems
|
Service
and
System
Integration
|
|
|
Total
|
|
|
%
increase
(decrease)
|
|
||||
Increase
(Decrease)
|
|||||||||||||
Product
|
$
|
(5,255
|
)
|
$
|
3,721
|
$
|
(1,534
|
)
|
(5
|
)%
|
|||
Services
|
(
561
|
)
|
1,700
|
1,139
|
17
|
%
|
|||||||
Total
|
$
|
(5,816
|
)
|
$
|
5,421
|
$
|
(
395
|
)
|
(1
|
)%
|
|||
%
increase (decrease)
|
(73
|
)%
|
17
|
%
|
(1
|
)%
|
|
For
the Six Months Ended
|
||||||||||||||||||||
(Amounts
in thousands)
|
|||||||||||||||||||||
March
31, 2008
|
%
|
March 31,
2007
|
%
|
$ Increase/
(Decrease)
|
% Increase
(Decrease)
|
||||||||||||||||
North
America
|
$
|
19,220
|
49
|
%
|
$
|
21,806
|
55
|
%
|
$
|
(2,586
|
)
|
(12
|
)%
|
||||||||
Europe
|
19,344
|
49
|
%
|
15,960
|
40
|
%
|
3,384
|
21
|
%
|
||||||||||||
Asia
|
990
|
2
|
%
|
2,183
|
5
|
%
|
(1,193
|
)
|
(55
|
)%
|
|||||||||||
Totals
|
$
|
39,554
|
100
|
%
|
$
|
39,949
|
100
|
%
|
$
|
(
395
|
)
|
(1
|
)%
|
|
Systems
|
Service and
Systems
Integration
|
Total
|
%
of
Total
|
|||||||||
For
the six months ended March 31, 2008:
|
|||||||||||||
Product
|
$
|
1,327
|
$
|
24,580
|
$
|
25,907
|
81
|
%
|
|||||
Services
|
71
|
6,064
|
6,135
|
19
|
%
|
||||||||
Total
|
$
|
1,398
|
$
|
30,644
|
$
|
32,042
|
100
|
%
|
|||||
%
of Total
|
4
|
%
|
96
|
%
|
100
|
%
|
|||||||
%
of Sales
|
64
|
%
|
82
|
%
|
81
|
%
|
|||||||
Gross
Margins:
|
|||||||||||||
Product
|
35
|
%
|
17
|
%
|
18
|
%
|
|||||||
Services
|
45
|
%
|
23
|
%
|
24
|
%
|
|||||||
Total
|
36
|
%
|
18
|
%
|
19
|
%
|
|||||||
|
Systems
|
|
|
Service
and
Systems
Integration
|
|
|
Total
|
|
|
%
of
Total
|
|||
For
the six months ended March 31, 2007:
|
|||||||||||||
Product
|
$
|
2,882
|
$
|
22,499
|
$
|
25,381
|
84
|
%
|
|||||
Services
|
172
|
4,553
|
4,725
|
16
|
%
|
||||||||
Total
|
$
|
3,054
|
$
|
27,052
|
$
|
30,106
|
100
|
%
|
|||||
%
of Total
|
10
|
%
|
90
|
%
|
100
|
%
|
|||||||
%
of Sales
|
38
|
%
|
85
|
%
|
75
|
%
|
|||||||
Gross
Margins:
|
|||||||||||||
Product
|
61
|
%
|
13
|
%
|
23
|
%
|
|||||||
Services
|
75
|
%
|
27
|
%
|
31
|
%
|
|||||||
Total
|
62
|
%
|
15
|
%
|
25
|
%
|
|||||||
|
Systems
|
|
|
Service
and
Systems
Integration
|
|
|
Total
|
|
|
%
increase
(decrease)
|
|
||
Increase
(decrease)
|
|||||||||||||
Product
|
$
|
(1,555
|
)
|
$
|
2,081
|
$
|
526
|
2
|
%
|
||||
Services
|
(
101
|
)
|
1,511
|
1,410
|
30
|
%
|
|||||||
Total
|
$
|
(1,656
|
)
|
$
|
3,592
|
$
|
1,936
|
6
|
%
|
||||
%
Increase
|
(54)%
|
13
|
%
|
6
|
%
|
||||||||
%
of Sales
|
26
|
%
|
(3
|
)%
|
6
|
%
|
|||||||
Gross
Margins:
|
|||||||||||||
Product
|
(26
|
)%
|
4
|
%
|
(5
|
)%
|
|||||||
Services
|
(30
|
)%
|
(4
|
)%
|
(7
|
)%
|
|||||||
Total
|
(26
|
)%
|
3
|
%
|
(6
|
)%
|
|
For
the Six Months Ended
|
||||||||||||||||||||
March 31,
2008
|
%
of
Total
|
March 31,
2007
|
%
of
Total
|
$ Increase
(Decrease)
|
% Increase
(Decrease)
|
||||||||||||||||
(Amounts
in thousands)
|
|||||||||||||||||||||
By
Operating Segment:
|
|||||||||||||||||||||
Systems
|
$
|
1,179
|
100
|
%
|
$
|
1,143
|
97
|
%
|
$
|
36
|
3
|
%
|
|||||||||
Service
and System Integration
|
−
|
−
|
%
|
30
|
3
|
%
|
(30
|
)
|
(100
|
)%
|
|||||||||||
Total
|
$
|
1,179
|
100
|
%
|
$
|
1,173
|
100
|
%
|
$
|
6
|
1
|
%
|
|
For
the Six Months Ended
|
|
|||||||||||||||||||
|
|
March 31,
2008
|
|
%
of
Total
|
|
March 31,
2007
|
|
%
of
Total
|
|
$ Increase
|
|
% Increase
|
|
||||||||
|
|
(Amounts
in thousands)
|
|
||||||||||||||||||
By
Operating Segment:
|
|||||||||||||||||||||
Systems
|
$
|
1,818
|
27
|
%
|
$
|
2,397
|
37
|
%
|
$
|
(579
|
)
|
(24
|
)%
|
||||||||
Service
and System Integration
|
4,944
|
73
|
%
|
4,158
|
63
|
%
|
786
|
19
|
%
|
||||||||||||
Total
|
$
|
6,762
|
100
|
%
|
$
|
6,555
|
100
|
%
|
$
|
207
|
3
|
%
|
|
For
the Six Months Ended
|
|
|
|
||||||
|
|
March 31,
2008
|
|
March 31,
2007
|
|
$ Increase
(Decrease)
|
|
|||
|
|
(Amounts
in thousands)
|
||||||||
Interest
expense
|
$
|
(
46
|
)
|
$
|
(48
|
)
|
$
|
2
|
||
Interest
income
|
385
|
240
|
145
|
|||||||
Foreign
exchange gain
|
23
|
1
|
22
|
|||||||
Other
expense, net
|
(20
|
)
|
(23
|
)
|
3
|
|||||
Total
other income, net
|
$
|
342
|
$
|
170
|
$
|
172
|
• |
Revenue
increased by approximately $2.8 million, or 15%, to $21.6 million
for the
quarter ended March 31, 2008 versus $18.8 million for the quarter
ended
March 31, 2007.
|
• |
Operating
income decreased by approximately $259 thousand, or 72%, to $100
thousand
for the quarter ended March 31, 2008 versus $359 thousand for the
quarter ended March 31, 2007.
|
• |
Net
income decreased by $66 thousand, or 26%, to $189 thousand for the
quarter
ended March 31, 2008 versus $255 thousand for the quarter ended March
31, 2007.
|
|
March 31,
2008
|
%
of sales
|
March 31,
2007
|
%
of sales
|
|||||||||
Sales
|
$
|
21,615
|
100
|
%
|
$
|
18,818
|
100
|
%
|
|||||
Costs
and expenses:
|
|||||||||||||
Cost
of sales
|
17,477
|
81
|
%
|
14,658
|
78
|
%
|
|||||||
Engineering
and development
|
538
|
3
|
%
|
628
|
3
|
%
|
|||||||
Selling,
general and administrative
|
3,500
|
16
|
%
|
3,173
|
17
|
%
|
|||||||
Total
costs and expenses
|
21,515
|
100
|
%
|
18,459
|
98
|
%
|
|||||||
Operating
income
|
100
|
–
|
%
|
359
|
2
|
%
|
|||||||
Other
income
|
211
|
1
|
%
|
101
|
−
|
%
|
|||||||
Income
before income taxes
|
311
|
1
|
%
|
460
|
2
|
%
|
|||||||
Provision
for income taxes
|
122
|
–
|
%
|
205
|
1
|
%
|
|||||||
Net
income
|
$
|
189
|
1
|
%
|
$
|
255
|
1
|
%
|
|
Systems
|
|
Service and
System
Integration
|
|
Total
|
|
%
of
Total
|
||||||
For
the three months ended March 31, 2008:
|
|||||||||||||
Product
|
$
|
1,237
|
$
|
16,057
|
$
|
17,294
|
80
|
%
|
|||||
Services
|
66
|
4,255
|
4,321
|
20
|
%
|
||||||||
Total
|
$
|
1,303
|
$
|
20,312
|
$
|
21,615
|
100
|
%
|
|||||
%
of Total
|
6
|
%
|
94
|
%
|
100
|
%
|
|||||||
|
Systems
|
|
|
Service
and
Systems
Integration
|
|
|
Total
|
|
|
%
of
Total
|
|||
For
the three months ended March 31, 2007:
|
|||||||||||||
Product
|
$
|
2,161
|
$
|
13,261
|
$
|
15,422
|
82
|
%
|
|||||
Services
|
296
|
3,100
|
3,396
|
18
|
%
|
||||||||
Total
|
$
|
2,457
|
$
|
16,361
|
$
|
18,818
|
100
|
%
|
|||||
%
of Total
|
13
|
%
|
87
|
%
|
100
|
%
|
|||||||
|
|
|
Systems
|
|
|
Service
and
System
Integration
|
|
|
Total
|
|
|
%
increase
|
|
Increase
(Decrease)
|
|||||||||||||
Product
|
$
|
(924
|
)
|
$
|
2,796
|
$
|
1,872
|
12
|
%
|
||||
Services
|
(230
|
)
|
1,155
|
925
|
27
|
%
|
|||||||
Total
|
$
|
(1,154
|
)
|
$
|
3,951
|
$
|
2,797
|
15
|
%
|
||||
%
increase (decrease)
|
(47)
|
%
|
24
|
%
|
15
|
%
|
For
the Three Months Ended
|
|||||||||||||||||||||
(Amounts
in thousands)
|
|||||||||||||||||||||
March 31,
2008
|
%
|
March 31,
2007
|
%
|
$ Increase/
(Decrease)
|
% Increase
(Decrease)
|
||||||||||||||||
North
America
|
$
|
9,631
|
44
|
%
|
$
|
8,503
|
45
|
%
|
$
|
1,128
|
13
|
%
|
|||||||||
Europe
|
11,419
|
53
|
%
|
8,248
|
44
|
%
|
3,171
|
38
|
%
|
||||||||||||
Asia
|
565
|
3
|
%
|
2,067
|
11
|
%
|
(1,502
|
)
|
(73
|
)%
|
|||||||||||
Totals
|
$
|
21,615
|
100
|
%
|
$
|
18,818
|
100
|
%
|
$
|
2,797
|
15
|
%
|
|
Systems
|
Service and
System
Integration
|
Total
|
%
of
Total
|
|||||||||
For
the three months ended March 31, 2008:
|
|||||||||||||
Product
|
$
|
684
|
$
|
13,460
|
$
|
14,144
|
81
|
%
|
|||||
Services
|
20
|
3,313
|
3,333
|
19
|
%
|
||||||||
Total
|
$
|
704
|
$
|
16,773
|
$
|
17,477
|
100
|
%
|
|||||
%
of Total
|
4
|
%
|
96
|
%
|
100
|
%
|
|||||||
%
of Sales
|
54
|
%
|
83
|
%
|
81
|
%
|
|||||||
Gross
Margins:
|
|||||||||||||
Product
|
45
|
%
|
16
|
%
|
18
|
%
|
|||||||
Services
|
70
|
%
|
22
|
%
|
23
|
%
|
|||||||
Total
|
46
|
%
|
17
|
%
|
19
|
%
|
|
Systems
|
Service and
System
Integration
|
Total
|
%
of
Total
|
|||||||||
For
the three months ended March 31, 2007:
|
|||||||||||||
Product
|
$
|
701
|
$
|
11,519
|
$
|
12,220
|
83
|
%
|
|||||
Services
|
5
|
2,433
|
2,438
|
17
|
%
|
||||||||
Total
|
$
|
706
|
$
|
13,952
|
$
|
14,658
|
100
|
%
|
|||||
%
of Total
|
5
|
%
|
95
|
%
|
100
|
%
|
|||||||
%
of Sales
|
29
|
%
|
85
|
%
|
78
|
%
|
|||||||
Gross
Margins:
|
Systems
|
Service and
System
Integration
|
Total
|
%
of
Total
|
||||||||||
Product
|
68
|
%
|
13
|
%
|
21
|
%
|
|||||||
Services
|
98
|
%
|
22
|
%
|
28
|
%
|
|||||||
Total
|
71
|
%
|
15
|
%
|
22
|
%
|
|||||||
Increase
(Decrease)
|
|||||||||||||
Product
|
$
|
(
17
|
)
|
$
|
1,941
|
$
|
1924
|
16
|
%
|
||||
Services
|
15
|
880
|
895
|
37
|
%
|
||||||||
Total
|
$
|
(2
|
)
|
$
|
2,821
|
$
|
2,819
|
19
|
%
|
||||
%
Increase (decrease)
|
−
|
%
|
20
|
%
|
19
|
%
|
|||||||
%
of Sales
|
25
|
%
|
(2
|
)%
|
3
|
%
|
|||||||
Gross
Margins:
|
|||||||||||||
Product
|
(23
|
)%
|
3
|
%
|
(3
|
)%
|
|||||||
Services
|
(28
|
)%
|
−
|
%
|
(5
|
)%
|
|||||||
Total
|
(25
|
)%
|
2
|
%
|
(3
|
)%
|
For
the Three Months Ended
|
|||||||||||||||||||||
March 31,
2008
|
%
of
Total
|
March 31,
2007
|
%
of
Total
|
$
Decrease
|
%
(Decrease)
|
||||||||||||||||
(Amounts
in thousands)
|
|||||||||||||||||||||
By
Operating Segment:
|
|||||||||||||||||||||
Systems
|
$
|
538
|
100
|
%
|
$
|
606
|
97
|
%
|
$
|
(68
|
)
|
(11
|
)%
|
||||||||
Service
and System Integration
|
–
|
|
– |
22
|
3
|
|
(22
|
)
|
(100)
|
|
|||||||||||
|
|
|
|
|
|
||||||||||||||||
Total
|
$
|
538
|
100
|
%
|
$
|
628
|
100
|
%
|
$
|
(90
|
)
|
(14
|
)%
|
For
the Three Months Ended
|
|||||||||||||||||||||
March 31,
2008
|
%
of
Total
|
March 31,
2007
|
%
of
Total
|
$ Increase
(Descrease)
|
% Increase
(Descrease)
|
||||||||||||||||
(Amounts
in thousands)
|
|||||||||||||||||||||
By
Operating Segment:
|
|||||||||||||||||||||
Systems
|
$
|
905
|
26
|
%
|
$
|
1,046
|
33
|
%
|
$
|
(141
|
)
|
(13
|
)%
|
||||||||
Service
and System Integration
|
2,595
|
74
|
%
|
2,127
|
67
|
%
|
468
|
22
|
%
|
||||||||||||
Total
|
$
|
3,500
|
100
|
%
|
$
|
3,173
|
100
|
%
|
$
|
327
|
10
|
%
|
For the Three Months Ended
|
||||||||||
March 31,
2008
|
March 31,
2007
|
$ Increase
|
||||||||
(Amounts
in thousands)
|
||||||||||
Interest
expense
|
$
|
(22
|
)
|
$
|
(25
|
)
|
$
|
3
|
||
Interest
income
|
215
|
132
|
83
|
|||||||
Foreign
exchange gain
|
21
|
7
|
14
|
|||||||
Other
expense, net
|
(3
|
)
|
(13
|
)
|
10
|
|||||
Total
other income, net
|
$
|
211
|
$
|
101
|
$
|
110
|
Number
|
Description
|
|
3.1
|
Articles
of Organization and amendments thereto (incorporated by reference
to
Exhibit 3.1 to our Form 10-K for the year ended September 30,
2007)
|
|
|
||
3.2
|
By-Laws,
as amended (incorporated by reference to Exhibit 3.2 to our Form
10-K for
the year ended September 30, 2007)
|
|
|
||
31.1
|
Certification
of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
|
|
|
||
31.2
|
Certification
of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
|
|
|
||
32.1
|
Certification
of Chief Executive Officer and Chief Financial Officer Pursuant to
Section
906 of the Sarbanes-Oxley Act of
2002
|
|
CSP
INC.
|
|
Date:
May 9, 2008
|
By:
|
/s/
Alexander R. Lupinetti
|
|
|
Alexander
R. Lupinetti
|
|
|
Chief
Executive Officer,
|
|
|
President
and Chairman
|
Date:
May 9, 2008
|
By:
|
/s/
Gary W. Levine
|
|
|
Gary
W. Levine
|
|
|
Chief
Financial Officer
|
Number
|
Description
|
|
3.1
|
Articles
of Organization and amendments thereto (incorporated by reference
to
Exhibit 3.1 to our Form 10-K for the year ended September 30,
2007)
|
|
|
||
3.2
|
By-Laws,
as amended (incorporated by reference to Exhibit 3.2 to our Form
10-K for
the year ended September 30, 2007)
|
|
|
||
31.1
|
Certification
of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
|
|
|
||
31.2
|
Certification
of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002
|
|
|
||
32.1
|
Certification
of Chief Executive Officer and Chief Financial Officer Pursuant
to Section
906 of the Sarbanes-Oxley Act of
2002
|