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 June 30, 2008 (unaudited) and September 30,
2007
|
3
|
|
Consolidated
Statements of Operations (unaudited) for the three and nine months
ended
June 30, 2008 and 2007
|
4
|
Consolidated
Statement of Shareholders’ Equity (unaudited) for the nine months ended
June 30, 2008
|
5
|
|
|
Consolidated
Statements of Cash Flows (unaudited) for the nine months ended
June 30,
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
|
|
June
30,
2008
|
September 30,
2007
|
|||||
ASSETS
|
(Unaudited)
|
|
|||||
Current
assets:
|
|
|
|||||
Cash
and cash equivalents
|
$
|
15,787
|
$
|
13,687
|
|||
Short-term
investments
|
450
|
7,690
|
|||||
Accounts
receivable, net of allowances of $106 and $133
|
10,616
|
10,678
|
|||||
Inventories
|
6,533
|
6,072
|
|||||
Refundable
income taxes
|
1,216
|
27
|
|||||
Deferred
income taxes
|
229
|
229
|
|||||
Other
current assets
|
1,537
|
1,587
|
|||||
Total
current assets
|
36,368
|
39,970
|
|||||
Property,
equipment and improvements, net
|
1,034
|
1,044
|
|||||
Other
assets:
|
|||||||
Long
term investments
|
4,800
|
−
|
|||||
Goodwill
|
2,779
|
2,779
|
|||||
Deferred
income taxes
|
280
|
254
|
|||||
Cash
surrender value of life insurance
|
2,248
|
2,045
|
|||||
Other
assets
|
296
|
349
|
|||||
Total
other assets
|
10,403
|
5,427
|
|||||
Total
assets
|
$
|
47,805
|
$
|
46,441
|
|||
LIABILITIES
AND SHAREHOLDERS’ EQUITY
|
|||||||
Current
liabilities:
|
|||||||
Accounts
payable and accrued expenses
|
$
|
9,819
|
$
|
9,073
|
|||
Deferred
revenue
|
2,449
|
3,461
|
|||||
Pension
and retirement plans
|
472
|
495
|
|||||
Income
taxes payable
|
1,055
|
552
|
|||||
Deferred
income taxes
|
280
|
279
|
|||||
Total
current liabilities
|
14,075
|
13,860
|
|||||
Pension
and retirement plans
|
7,288
|
6,859
|
|||||
Deferred
income taxes
|
449
|
388
|
|||||
Other
non current liabilities
|
260
|
−
|
|||||
Total
liabilities
|
22,072
|
21,107
|
|||||
Commitments
and contingencies
|
|||||||
Shareholders’
equity:
|
|||||||
Common
stock, $.01 par; 7,500 shares authorized, 3,764 and 3,812 shares
issued
and outstanding , respectively
|
38
|
39
|
|||||
Additional
paid-in capital
|
11,522
|
11,707
|
|||||
Retained
earnings
|
15,714
|
15,236
|
|||||
Accumulated
other comprehensive loss
|
(1,541
|
)
|
(1,648
|
)
|
|||
Total
shareholders’ equity
|
25,733
|
25,334
|
|||||
Total
liabilities and shareholders’ equity
|
$
|
47,805
|
$
|
46,441
|
For the three months ended
|
For the nine months ended
|
||||||||||||
June 30,
2008
|
June 30,
2007
|
June 30,
2008
|
June 30,
2007
|
||||||||||
Sales:
|
|||||||||||||
Product
|
$
|
14,730
|
$
|
21,871
|
$
|
46,254
|
$
|
54,929
|
|||||
Services
|
4,425
|
4,073
|
12,455
|
10,964
|
|||||||||
Total
sales
|
19,155
|
25,944
|
58,709
|
65,893
|
|||||||||
|
|||||||||||||
Cost
of sales:
|
|||||||||||||
Product
|
12,339
|
16,837
|
38,246
|
42,217
|
|||||||||
Services
|
3,385
|
3,405
|
9,520
|
8,131
|
|||||||||
Total
cost of sales
|
15,724
|
20,242
|
47,766
|
50,348
|
|||||||||
Gross
profit
|
3,431
|
5,702
|
10,943
|
15,545
|
|||||||||
Operating
expenses:
|
|||||||||||||
Engineering
and development
|
471
|
665
|
1,650
|
1,838
|
|||||||||
Selling,
general and administrative
|
3,113
|
3,762
|
9,875
|
10,317
|
|||||||||
Total
operating expenses
|
3,584
|
4,427
|
11,525
|
12,155
|
|||||||||
Operating
income (loss)
|
(153
|
)
|
1,275
|
(582
|
)
|
3,390
|
|||||||
|
|||||||||||||
Other
income (expense):
|
|||||||||||||
Foreign
exchange gain (loss)
|
5
|
(1
|
)
|
28
|
(1
|
)
|
|||||||
Other
income, net
|
118
|
333
|
436
|
503
|
|||||||||
Total
other income, net
|
123
|
332
|
464
|
502
|
|||||||||
Income
(loss) before income taxes
|
(30
|
)
|
1,607
|
(118
|
)
|
3,892
|
|||||||
Income
tax expense (benefit)
|
(22
|
)
|
725
|
(40
|
)
|
1,777
|
|||||||
Net
income (loss)
|
$
|
(8
|
)
|
$
|
882
|
$
|
(78
|
)
|
$
|
2,115
|
|||
Net
income (loss) per share – basic
|
$
|
-
|
$
|
0.23
|
$
|
(0.02
|
)
|
$
|
0.56
|
||||
Weighted
average shares outstanding – basic
|
3,778
|
3,810
|
3,790
|
3,761
|
|||||||||
Net
income (loss) per share – diluted
|
$
|
-
|
$
|
0.22
|
$
|
(0.02
|
)
|
$
|
0.54
|
||||
Weighted
average shares outstanding – diluted
|
3,778
|
3,967
|
3,790
|
3,926
|
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
|
—
|
—
|
—
|
(78
|
)
|
—
|
(78
|
)
|
$
|
(78
|
)
|
|||||||||||
Other
comprehensive income
|
||||||||||||||||||||||
Effect
of foreign currency translation
|
—
|
—
|
—
|
—
|
45
|
45
|
45
|
|||||||||||||||
Minimum
pension liability
|
—
|
—
|
—
|
—
|
62
|
62
|
62
|
|||||||||||||||
Total
Comprehensive income
|
—
|
—
|
—
|
—
|
—
|
—
|
$
|
29
|
||||||||||||||
Exercise
of stock options
|
27
|
—
|
112
|
—
|
—
|
112
|
||||||||||||||||
Stock-based
compensation
|
230
|
—
|
—
|
230
|
||||||||||||||||||
Issuance
of shares under employee stock purchase plan
|
29
|
—
|
170
|
—
|
—
|
170
|
||||||||||||||||
Purchase
of treasury stock
|
(104
|
)
|
(1
|
)
|
(697
|
)
|
—
|
—
|
(698
|
)
|
||||||||||||
Cumulative
impact from adoption of FIN 48
|
—
|
—
|
—
|
556
|
—
|
556
|
||||||||||||||||
Balance
as of June 30, 2008
|
3,764
|
$
|
38
|
$
|
11,522
|
$
|
15,714
|
$
|
(1,541
|
)
|
$
|
25,733
|
For the nine months ended
|
|||||||
June 30,
2008
|
June 30,
2007
|
||||||
Cash
flows from operating activities:
|
|
|
|||||
Net
income (loss)
|
$
|
(78
|
)
|
$
|
2,115
|
||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
|||||||
Depreciation
|
428
|
486
|
|||||
Insurance
settlement gain
|
—
|
(240
|
)
|
||||
Loss
on disposal of fixed assets, net
|
4
|
1
|
|||||
Non-cash
changes in accounts receivable
|
1
|
96
|
|||||
Non-cash
compensation expense related to stock options
|
230
|
257
|
|||||
Deferred
income taxes
|
47
|
994
|
|||||
Increase
in cash surrender value of life insurance
|
(58
|
)
|
—
|
||||
Changes
in operating assets and liabilities:
|
|||||||
Decrease
(increase) in accounts receivable
|
577
|
(1,823
|
)
|
||||
Increase
in inventories
|
(453
|
)
|
(1,945
|
)
|
|||
Increase
in refundable income taxes
|
(1,181
|
)
|
(60
|
)
|
|||
Decrease
in other current assets
|
140
|
145
|
|||||
Decrease
in other assets
|
54
|
54
|
|||||
Increase
in accounts payable and accrued expenses
|
411
|
1,254
|
|||||
(Decrease)
increase in deferred revenue
|
(1,132
|
)
|
375
|
||||
Increase
in pension and retirement plans
|
134
|
247
|
|||||
Increase
in income taxes payable
|
1,272
|
730
|
|||||
Net
cash provided by operating activities
|
396
|
2,686
|
|||||
Cash
flows from investing activities:
|
|||||||
Purchases
of held-to-maturity securities
|
(16,550
|
)
|
(3,786
|
)
|
|||
Maturities
of held-to-maturity securities
|
18,990
|
2,589
|
|||||
Premiums
paid on officer life insurance
|
(144
|
)
|
—
|
||||
Change
in cash surrender value of officer life insurance
|
—
|
(48
|
)
|
||||
Purchases
of property, equipment and improvements
|
(396
|
)
|
(406
|
)
|
|||
Net
cash provided by (used in) investing activities
|
1,900
|
(1,651
|
)
|
||||
|
|||||||
Cash
flows from financing activities:
|
|||||||
Proceeds
from stock issued from the exercise of options
|
112
|
363
|
|||||
Proceeds
from issuance of stock under employee stock purchase plan
|
170
|
193
|
|||||
(Purchase)
issuance of common stock
|
(698
|
)
|
7
|
||||
Net
cash provided by (used in) financing activities
|
(416
|
)
|
563
|
||||
Effects
of exchange rate changes on cash
|
220
|
396
|
|||||
Net
increase in cash and cash equivalents
|
2,100
|
1,994
|
|||||
Cash
and cash equivalents, beginning of period
|
13,687
|
8,683
|
|||||
Cash
and cash equivalents, end of period
|
$
|
15,787
|
$
|
10,677
|
|||
Supplementary
Cash flow information:
|
|||||||
Cash
paid for income taxes
|
$
|
214
|
$
|
104
|
|||
Cash
paid for interest
|
$
|
89
|
$
|
97
|
|
|
For the Three Months Ended
|
|
For the Nine Months Ended
|
|
||||||||
|
|
June 30,
2008
|
|
June 30,
2007
|
|
June 30,
2008
|
|
June 30,
2007
|
|
||||
|
|
(Amounts in thousands, except per share data)
|
|
||||||||||
Net
income (loss)
|
$
|
(8
|
)
|
$
|
882
|
$
|
(78
|
)
|
$
|
2,115
|
|||
Weighted
average number of shares outstanding – basic
|
3,778
|
3,810
|
3,790
|
3,761
|
|||||||||
Incremental
shares from the assumed exercise of stock options
|
—
|
157
|
—
|
165
|
|||||||||
Weighted
average number of shares outstanding – diluted
|
3,778
|
3,967
|
3,790
|
3,926
|
|||||||||
Net
income (loss) per share – basic
|
$
|
—
|
$
|
0.
23
|
$
|
(0.02
|
)
|
$
|
0.56
|
||||
Net
income (loss) per share - diluted
|
$
|
—
|
$
|
0.
22
|
$
|
(0.02
|
)
|
$
|
0.54
|
|
June 30,
2008
|
September 30,
2007
|
|||||
(Amounts in thousands)
|
|||||||
Raw
materials
|
$
|
1,603
|
$
|
1,716
|
|||
Work-in-progress
|
366
|
351
|
|||||
Finished
goods
|
4,564
|
4,005
|
|||||
Total
|
$
|
6,533
|
$
|
6,072
|
For the Three Months Ended
|
For the Nine Months Ended
|
||||||||||||
June 30,
2008
|
June 30,
2007
|
June 30,
2008
|
June 30,
2007
|
||||||||||
(Amounts in thousands, except per share data)
|
|||||||||||||
Net income (loss)
|
$
|
(8
|
)
|
$
|
882
|
$
|
(78
|
)
|
$
|
2,115
|
|||
Effect
of foreign currency translation
|
(11
|
)
|
62
|
45
|
290
|
||||||||
Minimum
pension liability
|
10
|
−
|
62
|
−
|
|||||||||
Comprehensive
income (loss)
|
$
|
(9
|
)
|
$
|
944
|
$
|
29
|
$
|
2,405
|
June 30,
2008
|
September 30,
2007
|
||||||
(Amounts in thousands)
|
|||||||
Cumulative
effect of foreign currency translation
|
$
|
(662
|
)
|
$
|
(707
|
)
|
|
Additional
minimum pension liability
|
(879
|
)
|
(941
|
)
|
|||
Accumulated
Comprehensive loss
|
$
|
(1,541
|
)
|
$
|
(1,648
|
)
|
For the Three Months Ended June 30
|
|||||||||||||||||||
2008
|
2007
|
||||||||||||||||||
Foreign
|
U.S.
|
Total
|
Foreign
|
U.S.
|
Total
|
||||||||||||||
(Amounts in thousands)
|
|||||||||||||||||||
Pension:
|
|
|
|
|
|
|
|||||||||||||
Service
cost
|
$
|
21
|
$
|
2
|
$
|
23
|
$
|
30
|
$
|
2
|
$
|
32
|
|||||||
Interest
cost
|
183
|
35
|
218
|
166
|
35
|
201
|
|||||||||||||
Expected
return on plan assets
|
(125
|
)
|
—
|
(125
|
)
|
(122
|
)
|
—
|
(122
|
)
|
|||||||||
Amortization
of:
|
|||||||||||||||||||
Prior
service costs
|
8
|
5
|
13
|
11
|
12
|
23
|
|||||||||||||
Net
transition asset
|
(2
|
)
|
—
|
(2
|
)
|
(1
|
)
|
—
|
(1
|
)
|
|||||||||
Net
periodic benefit cost
|
$
|
85
|
$
|
42
|
$
|
127
|
$
|
84
|
$
|
49
|
$
|
133
|
For the Three Months Ended June 30
|
|||||||||||||||||||
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 Nine Months Ended June 30
|
||||||||||||||||||
2008
|
2007
|
||||||||||||||||||
Foreign
|
U.S.
|
Total
|
Foreign
|
U.S.
|
Total
|
||||||||||||||
(Amounts in thousands)
|
|||||||||||||||||||
Pension:
|
|
|
|
|
|
|
|||||||||||||
Service
cost
|
$
|
64
|
$
|
6
|
$
|
70
|
$
|
89
|
$
|
5
|
$
|
94
|
|||||||
Interest
cost
|
553
|
104
|
657
|
495
|
107
|
602
|
|||||||||||||
Expected
return on plan assets
|
(375
|
)
|
-
|
(375
|
)
|
(362
|
)
|
—
|
(362
|
)
|
|||||||||
Amortization
of:
|
|||||||||||||||||||
Prior
service costs
|
25
|
14
|
39
|
33
|
35
|
68
|
|||||||||||||
Net
transition asset
|
(5
|
)
|
-
|
(5
|
)
|
(4
|
)
|
—
|
(4
|
)
|
|||||||||
Net
periodic benefit cost
|
$
|
262
|
$
|
124
|
$
|
386
|
$
|
251
|
$
|
147
|
$
|
398
|
|||||||
|
|||||||||||||||||||
Post
Retirement:
|
|||||||||||||||||||
Service
cost
|
$
|
—
|
$
|
48
|
$
|
48
|
$
|
—
|
$
|
42
|
$
|
42
|
|||||||
Interest
cost
|
—
|
39
|
39
|
—
|
30
|
30
|
|||||||||||||
Amortization
of:
|
|||||||||||||||||||
Prior
service costs
|
—
|
1
|
1
|
—
|
22
|
22
|
|||||||||||||
Net
periodic benefit cost
|
$
|
—
|
$
|
88
|
$
|
88
|
$
|
—
|
$
|
94
|
$
|
94
|
|
Systems
|
|
Service and
System
Integration
|
|
Consolidated
Total
|
|||||
Three
Months Ended June 30, 2008
|
|
|
|
|||||||
Sales:
|
|
|
|
|||||||
Product
|
$
|
1,193
|
$
|
13,537
|
$
|
14,730
|
||||
Service
|
102
|
4,323
|
4,425
|
|||||||
Total
sales
|
$
|
1,295
|
$
|
17,860
|
$
|
19,155
|
||||
Operating
Income (loss)
|
$
|
(615
|
)
|
$
|
462
|
$
|
(153
|
)
|
||
Total
assets
|
$
|
16,621
|
$
|
31,184
|
$
|
47,805
|
||||
Capital
expenditures
|
$
|
17
|
$
|
109
|
$
|
126
|
||||
Depreciation
|
$
|
55
|
$
|
89
|
$
|
144
|
||||
Three
Months Ended June 30, 2007
|
||||||||||
Sales:
|
||||||||||
Product
|
$
|
5,241
|
$
|
16,630
|
$
|
21,871
|
||||
Service
|
106
|
3,967
|
4,073
|
|||||||
Total
sales
|
$
|
5,347
|
$
|
20,597
|
$
|
25,944
|
||||
Operating
Income
|
$
|
1,230
|
$
|
45
|
$
|
1,275
|
||||
Total
assets
|
$
|
19,302
|
$
|
26,312
|
$
|
45,614
|
||||
Capital
expenditures
|
$
|
72
|
$
|
50
|
$
|
122
|
||||
Depreciation
|
$
|
64
|
$
|
99
|
$
|
163
|
||||
Nine
Months Ended June 30, 2008
|
||||||||||
Sales:
|
||||||||||
Product
|
$
|
3,248
|
$
|
43,006
|
$
|
46,254
|
||||
Service
|
231
|
12,224
|
12,455
|
|||||||
Total
sales
|
$
|
3,479
|
$
|
55,230
|
$
|
58,709
|
||||
Operating
Income (loss)
|
$
|
(2,826
|
)
|
$
|
2,244
|
$
|
(582
|
)
|
||
Total
assets
|
$
|
16,621
|
$
|
31,184
|
$
|
47,805
|
||||
Capital
expenditures
|
$
|
101
|
$
|
295
|
$
|
396
|
||||
Depreciation
|
$
|
168
|
$
|
260
|
$
|
428
|
||||
Nine
Months Ended June 30, 2007
|
||||||||||
Sales:
|
||||||||||
Product
|
$
|
12,551
|
$
|
42,378
|
$
|
54,929
|
||||
Service
|
796
|
10,168
|
10,964
|
|||||||
Total
sales
|
$
|
13,347
|
$
|
52,546
|
$
|
65,893
|
||||
Operating
Income
|
$
|
2,637
|
$
|
753
|
$
|
3,390
|
||||
Total
assets
|
$
|
19,302
|
$
|
26,312
|
$
|
45,614
|
||||
Capital
expenditures
|
$
|
258
|
$
|
148
|
$
|
406
|
||||
Depreciation
|
$
|
199
|
$
|
287
|
$
|
486
|
For
the Three Months Ended
|
For
the Nine Months Ended
|
||||||||||||||||||||||||
June
30,
2008
|
June
30,
2007
|
June
30,
2008
|
June
30,
2007
|
||||||||||||||||||||||
Amount
|
%
of Revenues
|
Amount
|
%
of Revenues
|
Amount
|
%
of Revenues
|
Amount
|
%
of Revenues
|
||||||||||||||||||
(Amounts
in millions)
|
|||||||||||||||||||||||||
Raytheon
Corporation
|
$
|
-
|
* |
-
|
%
|
$
|
4.4
|
17
|
%
|
$
|
-*
|
-
|
%
|
$
|
9.5
|
14
|
%
|
||||||||
Atos
Origin GmbH
|
$
|
2.5
|
13
|
%
|
$
|
3.5
|
14
|
%
|
$
|
7.0
|
12
|
%
|
$
|
8.6
|
13
|
%
|
|||||||||
Kabel
Deutschland
|
$
|
0.3
|
2
|
%
|
$
|
4.4
|
17
|
%
|
$
|
4.4
|
7
|
%
|
$
|
6.9
|
10
|
%
|
• |
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 $7.2 million, or 11%, to $58.7 million
for the
nine months ended June 30, 2008 versus $65.9 million for the nine
months
ended June 30, 2007.
|
• |
The
operating loss for the nine months ended June 30, 2008 was $582
thousand
versus operating income of $3.4 million for the nine months ended
June 30,
2007, for a decrease of approximately $4.0 million, or
117%.
|
• |
The
net loss for the nine months ended June 30, 2008 was $78 thousand
versus
net income of $2.1 million for the nine months ended June 30, 2007,
for a
decrease of approximately $2.2 million, or
104%.
|
• |
Net
cash provided by operating activities was approximately $396 thousand
for
the nine months ended June 30, 2008 compared to net cash provided
by
operating activities of $2.7 million for the comparable period
of 2007.
|
|
June 30,
2008
|
|
%
of sales
|
|
June 30,
2007
|
|
%
of sales
|
||||||
Sales
|
$
|
58,709
|
100
|
%
|
$
|
65,893
|
100
|
%
|
|||||
Costs
and expenses:
|
|||||||||||||
Cost
of sales
|
47,766
|
81
|
%
|
50,348
|
76
|
%
|
|||||||
Engineering
and development
|
1,650
|
3
|
%
|
1,838
|
3
|
%
|
|||||||
Selling,
general and administrative
|
9,875
|
17
|
%
|
10,317
|
16
|
%
|
|||||||
Total
costs and expenses
|
59,291
|
101
|
%
|
62,503
|
95
|
%
|
|||||||
|
|||||||||||||
Operating
income (loss)
|
(582
|
)
|
(1
|
)%
|
3,390
|
5
|
%
|
||||||
Other
income
|
464
|
1
|
%
|
502
|
1
|
%
|
|||||||
Income
(loss) before income taxes
|
(118
|
)
|
-
|
%
|
3,892
|
6
|
%
|
||||||
Provision
for income taxes
|
(40
|
)
|
-
|
%
|
1,777
|
3
|
%
|
||||||
Net
income (loss)
|
$
|
(78
|
)
|
-
|
%
|
$
|
2,115
|
3
|
%
|
|
Systems
|
|
Service and
System
Integration
|
|
Total
|
|
% of
Total
|
||||||
For
the nine months ended June 30, 2008:
|
|
|
|
|
|||||||||
Product
|
$
|
3,248
|
$
|
43,006
|
$
|
46,254
|
79
|
%
|
|||||
Services
|
231
|
12,224
|
12,455
|
21
|
%
|
||||||||
Total
|
$
|
3,479
|
$
|
55,230
|
$
|
58,709
|
100
|
%
|
|||||
%
of Total
|
6
|
%
|
94
|
%
|
100
|
%
|
|||||||
|
Systems
|
Service and
System
Integration
|
Total
|
% of
Total
|
|||||||||
For
the nine months ended June 30, 2007:
|
|||||||||||||
Product
|
$
|
12,551
|
$
|
42,378
|
$
|
54,929
|
83
|
%
|
|||||
Services
|
796
|
10,168
|
10,964
|
17
|
%
|
||||||||
Total
|
$
|
13,347
|
$
|
52,546
|
$
|
65,893
|
100
|
%
|
|||||
%
of Total
|
20
|
%
|
80
|
%
|
100
|
%
|
|||||||
|
|
|
Systems
|
|
|
Service and
System
Integration
|
|
|
Total
|
|
|
%
increase
(decrease)
|
|
Increase (Decrease)
|
|||||||||||||
Product
|
$
|
(9,303
|
)
|
$
|
628
|
$
|
(8,675
|
)
|
(16
|
)%
|
|||
Services
|
(565
|
)
|
2,056
|
1,491
|
14
|
%
|
|||||||
Total
|
$
|
(9,868
|
)
|
$
|
2,684
|
$
|
(7,184
|
)
|
(11
|
)%
|
|||
%
increase (decrease)
|
(74
|
)%
|
5
|
%
|
(11
|
)%
|
For
the Nine Months Ended
|
|||||||||||||||||||
(Amounts
in thousands)
|
|
||||||||||||||||||
June
30,
2008
|
%
|
June
30,
2007
|
%
|
$
Increase/
(Decrease)
|
%
Increase/
(Decrease)
|
||||||||||||||
North
America
|
$
|
27,246
|
46
|
%
|
$
|
34,460
|
52
|
%
|
$
|
(7,214
|
)
|
(21
|
)%
|
||||||
Europe
|
28,210
|
48
|
%
|
28,666
|
44
|
%
|
$
|
(456
|
)
|
(2
|
)%
|
||||||||
Asia
Pacific
|
3,253
|
6
|
%
|
2,767
|
4
|
%
|
$
|
486
|
18
|
%
|
|||||||||
Totals
|
$
|
58,709
|
100
|
%
|
$
|
65,893
|
100
|
%
|
$
|
(7,184
|
)
|
|
Systems
|
Service and
Systems
Integration
|
Total
|
% of
Total
|
|||||||||
For
the nine months ended June 30, 2008:
|
|
|
|
|
|||||||||
Product
|
$
|
1,956
|
$
|
36,290
|
$
|
38,246
|
80
|
%
|
|||||
Services
|
91
|
9,429
|
9,520
|
20
|
%
|
||||||||
Total
|
$
|
2,047
|
$
|
45,719
|
$
|
47,766
|
100
|
%
|
|||||
%
of Total
|
4
|
%
|
96
|
%
|
100
|
%
|
|||||||
%
of Sales
|
59
|
%
|
83
|
%
|
81
|
%
|
|||||||
Gross
Margins:
|
|||||||||||||
Product
|
40
|
%
|
16
|
%
|
17
|
%
|
|||||||
Services
|
61
|
%
|
23
|
%
|
24
|
%
|
|||||||
Total
|
41
|
%
|
17
|
%
|
19
|
%
|
|||||||
|
Systems
|
|
|
Service and
Systems
Integration
|
|
|
Total
|
|
|
% of
Total
|
|||
For the nine months ended
June 30, 2007:
|
|||||||||||||
Product
|
$
|
4,965
|
$
|
37,252
|
$
|
42,217
|
84
|
%
|
|||||
Services
|
190
|
7,941
|
8,131
|
16
|
%
|
||||||||
Total
|
$
|
5,155
|
$
|
45,193
|
$
|
50,348
|
100
|
%
|
|||||
%
of Total
|
10
|
%
|
90
|
%
|
100
|
%
|
|||||||
%
of Sales
|
39
|
%
|
86
|
%
|
76
|
%
|
|||||||
Gross
Margins:
|
|||||||||||||
Product
|
60
|
%
|
12
|
%
|
23
|
%
|
|||||||
Services
|
76
|
%
|
22
|
%
|
26
|
%
|
|||||||
Total
|
61
|
%
|
14
|
%
|
24
|
%
|
|||||||
|
Systems
|
Service and
Systems
Integration
|
Total
|
% increase
(decrease)
|
|
||||||||
Increase
(decrease)
|
|||||||||||||
Product
|
$
|
(3,009
|
)
|
$
|
(962
|
)
|
$
|
(3,971
|
)
|
(9
|
)%
|
||
Services
|
(99
|
)
|
1,488
|
1,389
|
17
|
%
|
|||||||
Total
|
$
|
(3,108
|
)
|
$
|
526
|
$
|
(2,582
|
)
|
(5
|
)%
|
|||
%
Increase
|
(60
|
)%
|
1
|
%
|
(5
|
)%
|
|||||||
%
of Sales
|
20
|
%
|
(3
|
)%
|
5
|
%
|
|||||||
Gross
Margins:
|
|||||||||||||
Product
|
(20
|
)%
|
4
|
%
|
(6
|
)%
|
|||||||
Services
|
(15
|
)%
|
1
|
%
|
(2
|
)%
|
|||||||
Total
|
(20
|
)%
|
3
|
%
|
(5
|
)%
|
For the Nine Months Ended
|
|
|
|||||||||||||||||
June 30,
2008
|
% of
Total
|
June 30,
2007
|
% of
Total
|
$
(Decrease)
|
%
(Decrease)
|
||||||||||||||
(Amounts in thousands)
|
|||||||||||||||||||
By
Operating Segment:
|
|
|
|
|
|
||||||||||||||
Systems
|
$
|
1,650
|
100
|
%
|
$
|
1,767
|
96
|
%
|
$
|
(117
|
)
|
(7
|
)%
|
||||||
Service
and System Integration
|
-
|
-
|
%
|
71
|
4
|
%
|
(71
|
)
|
(100
|
)%
|
|||||||||
Total
|
$
|
1,650
|
100
|
%
|
$
|
1,838
|
100
|
%
|
$
|
(188
|
)
|
(10
|
)%
|
For
the Nine Months Ended
|
|||||||||||||||||||
June
30,
2008
|
%
of
Total
|
June
30,
2007
|
%
of
Total
|
$ Increase/
(Decrease)
|
% Increase/
(Decrease)
|
||||||||||||||
(Amounts
in thousands)
|
|||||||||||||||||||
By
Operating Segment:
|
|
|
|
|
|
|
|||||||||||||
Systems
|
$
|
2,608
|
26
|
%
|
$
|
3,788
|
37
|
%
|
$
|
(1,180
|
)
|
(31
|
)%
|
||||||
Service
and System Integration
|
7,267
|
74
|
%
|
6,529
|
63
|
%
|
$
|
738
|
11
|
%
|
|||||||||
Total
|
$
|
9,875
|
100
|
%
|
$
|
10,317
|
100
|
%
|
$
|
(442
|
)
|
(4
|
)%
|
For
the Nine Months Ended
|
||||||||||
June
30,
2008
|
June
30,
2007
|
$ Increase
(Decrease)
|
||||||||
(Amounts
in thousands)
|
||||||||||
Interest
expense
|
$
|
(68
|
)
|
$
|
(72
|
)
|
$
|
4
|
||
Interest
income
|
519
|
357
|
162
|
|||||||
Foreign
exchange gain (loss)
|
28
|
(1
|
)
|
29
|
||||||
Insurance
settlement gain ent gain
|
-
|
240
|
(240
|
)
|
||||||
Other
expense, net
|
(15
|
)
|
(22
|
)
|
7
|
|||||
Total
other income, net
|
$
|
464
|
$
|
502
|
$
|
(38
|
)
|
• |
Revenue
decreased by approximately $6.8 million, or 26%, to $19.2 million
for the
quarter ended June 30, 2008 versus $25.9 million for the quarter
ended
June 30, 2007.
|
• |
Operating
income decreased by approximately $1.4 million, or 112%, to an
operating
loss of $153 thousand for the quarter ended June 30, 2008 versus
operating
income of $1.3 million for the quarter ended June 30, 2007.
|
• |
Net
income decreased by $890 thousand, or 101%, to a net loss of $8
thousand
for the quarter ended June 30, 2008 versus net income of $882 thousand
for
the quarter ended June 30, 2007.
|
|
June
30,
2008
|
|
%
of sales
|
|
June
30,
2007
|
|
%
of sales
|
||||||
Sales
|
$
|
19,155
|
100
|
%
|
$
|
25,944
|
100
|
%
|
|||||
Costs
and expenses:
|
|||||||||||||
Cost
of sales
|
15,724
|
82
|
%
|
20,242
|
78
|
%
|
|||||||
Engineering
and development
|
471
|
3
|
%
|
665
|
3
|
%
|
|||||||
Selling,
general and administrative
|
3,113
|
16
|
%
|
3,762
|
14
|
%
|
|||||||
Total
costs and expenses
|
19,308
|
101
|
%
|
24,669
|
95
|
%
|
|||||||
Operating
income
|
(153
|
)
|
(1
|
)%
|
1,275
|
5
|
%
|
||||||
Other
income
|
123
|
1
|
%
|
332
|
1
|
%
|
|||||||
|
|||||||||||||
Income
before income taxes
|
(30
|
)
|
-
|
%
|
1,607
|
6
|
%
|
||||||
Provision
for income taxes
|
(22
|
)
|
-
|
%
|
725
|
3
|
%
|
||||||
Net
income
|
$
|
(8
|
)
|
-
|
%
|
$
|
882
|
3
|
%
|
|
Systems
|
Service and
System
Integration
|
Total
|
%
of
Total
|
|||||||||
For
the three months ended June 30, 2008:
|
|
|
|
|
|||||||||
Product
|
$
|
1,193
|
$
|
13,537
|
$
|
14,730
|
77
|
%
|
|||||
Services
|
102
|
4,323
|
4,425
|
23
|
%
|
||||||||
Total
|
$
|
1,295
|
$
|
17,860
|
$
|
19,155
|
100
|
%
|
|||||
%
of Total
|
7
|
%
|
93
|
%
|
100
|
%
|
|||||||
|
Systems
|
Service
and
Systems
Integration
|
|
|
Total
|
|
|
%
of
Total
|
|||||
For
the three months ended June 30, 2007:
|
|||||||||||||
Product
|
$
|
5,241
|
$
|
16,630
|
$
|
21,871
|
84
|
%
|
|||||
Services
|
106
|
3,967
|
4,073
|
16
|
%
|
||||||||
Total
|
$
|
5,347
|
$
|
20,597
|
$
|
25,944
|
100
|
%
|
|||||
%
of Total
|
21
|
%
|
79
|
%
|
100
|
%
|
|||||||
|
Systems
|
Service
and
System
Integration
|
Total
|
%
increase
|
|||||||||
Increase
(Decrease)
|
|||||||||||||
Product
|
$
|
(4,048
|
)
|
$
|
(3,093
|
)
|
$
|
(7,141
|
)
|
(33
|
)%
|
||
Services
|
(4
|
)
|
356
|
352
|
9
|
%
|
|||||||
Total
|
$
|
(4,052
|
)
|
$
|
(2,737
|
)
|
$
|
(6,789
|
)
|
(26
|
)%
|
||
%
increase (decrease)
|
(76
|
)%
|
(13
|
)%
|
(26
|
)%
|
For
the Three Months Ended
|
|||||||||||||||||||
(Amounts
in thousands)
|
|||||||||||||||||||
June
30,
2008
|
% |
June
30,
2007
|
% |
$ Increase/
(Decrease)
|
% Increase(Decrease)
|
||||||||||||||
North
America
|
$
|
8,026
|
42
|
%
|
$
|
12,654
|
49
|
%
|
$
|
(4,628
|
)
|
(37
|
)%
|
||||||
Europe
|
8,867
|
46
|
%
|
12,706
|
49
|
%
|
(3,839
|
)
|
(30
|
)%
|
|||||||||
Asia
Pacific
|
2,262
|
12
|
%
|
584
|
2
|
%
|
1,678
|
287
|
%
|
||||||||||
Totals
|
$
|
19,155
|
100
|
%
|
$
|
25,944
|
100
|
%
|
$
|
(6,789
|
)
|
(26
|
)%
|
|
Systems
|
Service and
System
Integration
|
Total
|
%
of
Total
|
|||||||||
For
the three months ended June 30, 2008:
|
|
|
|
|
|||||||||
Product
|
$
|
629
|
$
|
11,710
|
$
|
12,339
|
78
|
%
|
|||||
Services
|
20
|
3,365
|
3,385
|
22
|
%
|
||||||||
Total
|
$
|
649
|
$
|
15,075
|
$
|
15,724
|
100
|
%
|
|||||
%
of Total
|
4
|
%
|
96
|
%
|
100
|
%
|
|||||||
%
of Sales
|
50
|
%
|
84
|
%
|
82
|
%
|
|||||||
Gross
Margins:
|
|||||||||||||
Product
|
47
|
%
|
13
|
%
|
16
|
%
|
|||||||
Services
|
80
|
%
|
22
|
%
|
24
|
%
|
|||||||
Total
|
50
|
%
|
16
|
%
|
18
|
%
|
|||||||
|
Systems
|
|
|
Service
and
System
Integration
|
|
|
Total
|
|
|
%
of
Total
|
|||
For
the three months ended June 30, 2007:
|
|||||||||||||
Product
|
$
|
2,083
|
$
|
14,753
|
$
|
16,836
|
83
|
%
|
|||||
Services
|
18
|
3,388
|
3,406
|
17
|
%
|
||||||||
Total
|
$
|
2,101
|
$
|
18,141
|
$
|
20,242
|
100
|
%
|
Systems
|
Service and
System Integration |
Total
|
%
of
Total |
||||||||||
%
of Total
|
10
|
%
|
90
|
%
|
100
|
%
|
|||||||
%
of Sales
|
39
|
%
|
88
|
%
|
78
|
%
|
|||||||
Gross
Margins:
|
|||||||||||||
Product
|
60
|
%
|
11
|
%
|
23
|
%
|
|||||||
Services
|
84
|
%
|
15
|
%
|
16
|
%
|
|||||||
Total
|
61
|
%
|
12
|
%
|
22
|
%
|
|||||||
Systems
|
Service and
System Integration |
Total
|
%
of
Total |
||||||||||
Increase
(Decrease)
|
|||||||||||||
Product
|
$
|
(1,454
|
)
|
$
|
(3,043
|
)
|
$
|
(4,497
|
)
|
(27
|
)%
|
||
Services
|
2
|
(23
|
)
|
(21
|
)
|
(1
|
)%
|
||||||
Total
|
$
|
(1,452
|
)
|
$
|
(3,066
|
)
|
$
|
(4,518
|
)
|
(22
|
)%
|
||
|
|||||||||||||
%
Increase (decrease)
|
(69
|
)%
|
(17
|
)%
|
(22
|
)%
|
|||||||
%
of Sales
|
11
|
%
|
(4
|
)%
|
4
|
%
|
|||||||
Gross
Margins:
|
|||||||||||||
Product
|
(13
|
)%
|
2
|
%
|
(7
|
)%
|
|||||||
Services
|
(4
|
)%
|
7
|
%
|
8
|
%
|
|||||||
Total
|
(11
|
)%
|
4
|
%
|
(4
|
)%
|
For
the Three Months Ended
|
|||||||||||||||||||
June
30,
2008
|
%
of
Total
|
June
30,
2007
|
%
of
Total
|
$
Decrease
|
%
Decrease
|
||||||||||||||
(Amounts
in thousands)
|
|||||||||||||||||||
By
Operating Segment:
|
|
|
|
|
|
|
|||||||||||||
Systems
|
$
|
470
|
100
|
%
|
$
|
625
|
94
|
%
|
$
|
(155
|
)
|
(25
|
)%
|
||||||
Service
and System Integration
|
-
|
-
|
%
|
40
|
6
|
%
|
|
(40
|
)
|
(100
|
)%
|
||||||||
Total
|
$
|
470
|
100
|
%
|
$
|
665
|
100
|
%
|
$
|
(195
|
)
|
(29
|
)%
|
For
the Three Months Ended
|
|||||||||||||||||||
June
30,
2008
|
%
of
Total
|
June
30,
2007
|
%
of
Total
|
$
(Decrease)
|
%
(Decrease)
|
||||||||||||||
(Amounts
in thousands)
|
|||||||||||||||||||
By
Operating Segment:
|
|
|
|
|
|
||||||||||||||
Systems
|
$
|
790
|
25
|
%
|
$
|
1,391
|
37
|
%
|
$
|
(601
|
)
|
(43
|
)%
|
||||||
Service
and System Integration
|
|
2,323
|
75
|
%
|
2,371
|
63
|
%
|
|
(48
|
)
|
(2
|
)%
|
|||||||
Total
|
$
|
3,113
|
100
|
%
|
$
|
3,762
|
100
|
%
|
$
|
(649
|
)
|
(17
|
)%
|
|
|
For the Three Months Ended
|
|
|
|
|||||
|
|
June 30,
2008
|
|
June 30,
2007
|
|
$ Increase/
(Decrease)
|
|
|||
|
|
(Amounts in thousands)
|
||||||||
Interest
expense
|
$
|
(22
|
)
|
$
|
(24
|
)
|
2
|
|||
Interest
income
|
134
|
117
|
17
|
|||||||
Foreign
exchange gain (loss)
|
5
|
(2
|
)
|
7
|
||||||
Insurance
settlement gain
|
−
|
240
|
(240
|
)
|
||||||
Other
income, net
|
6
|
1
|
5
|
|||||||
Total
other income, net
|
$
|
123
|
$
|
332
|
(209
|
)
|
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:
August 14, 2008
|
By:
|
/s/
Alexander R. Lupinetti
|
|
|
Alexander
R. Lupinetti
|
|
|
Chief
Executive Officer,
|
|
|
President
and Chairman
|
Date:
August 14, 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
|