##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-Q
 þ
   EMS TECHNOLOGIES, INC.
  Georgia
    
    58-1035424(State or other jurisdiction of
incorporation or organization)
    
    (IRS Employer ID Number)
 660 Engineering Drive
Norcross, Georgia
    
    30092(Address of principal executive offices)
    
    (Zip Code)
 (770) 263-9200
 
  þ  ̈
 þ  ̈
  Class
    
    Number of SharesCommon Stock, $.10 par Value
    
    11,165,496
 AVAILABLE INFORMATION
 www.ems-t.com




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TABLE OF CONTENTS
  
 PART I  FINANCIAL INFORMATION
    
    
    2ITEM 1. Financial Statements
    
    
    2Consolidated Statements of Operations
    
    
    2Consolidated Balance Sheets
    
    
    3Consolidated Statements of Cash Flows
    
    
    5Notes to Consolidated Financial Statements
    
    
    6ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    14ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    25ITEM 4. Controls and Procedures
    
    
    26PART II  OTHER INFORMATION
    
    
    27ITEM 4. Submission of Matters to a Vote of Security Holders
    
    
    27ITEM 6. Exhibits
    
    
    27SIGNATURES
    
    
    28EX-31.1 SECTION 302 CERIFICATION OF CEOEX-31.2 SECTION 302 CERTIFICATION OF CFOEX-32 SECTION 906 CERTIFICATION OF CEO & CFO




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PART I
 FINANCIAL INFORMATION
 
 ITEM 1. Financial Statements
 
 EMS Technologies, Inc. and Subsidiaries
Consolidated Statements of Operations (Unaudited)
(in thousands, except per share data)
 Quarters Ended
    
    
    Six Months EndedJuly 2
    
    
    July 3
    
    
    July 2
    
    
    July 32005
    
    
    2004
    
    
    2005
    
    
    2004Net sales
    
    $
    81,559
    
    
    
    62,073
    
    
    
    141,743
    
    
    
    122,099Cost of sales
    
    
    54,442
    
    
    
    40,535
    
    
    
    95,185
    
    
    
    78,628Selling, general and administrative expenses
    
    
    16,097
    
    
    
    14,606
    
    
    
    32,150
    
    
    
    29,151Research and development expenses
    
    
    4,058
    
    
    
    3,874
    
    
    
    7,677
    
    
    
    8,752Operating income
    
    
    6,962
    
    
    
    3,058
    
    
    
    6,731
    
    
    
    5,568Non-operating income, net
    
    
    90
    
    
    
    216
    
    
    
    158
    
    
    
    1,082Foreign exchange loss
    
    
    (81
    )
    
    
    (256
    )
    
    
    (74
    )
    
    
    (117
    )Interest expense
    
    
    (1,054
    )
    
    
    (504
    )
    
    
    (1,952
    )
    
    
    (1,046
    )Earnings from continuing operations before income taxes
    
    
    5,917
    
    
    
    2,514
    
    
    
    4,863
    
    
    
    5,487Income tax expense
    
    
    (2,012
    )
    
    
    (754
    )
    
    
    (1,654
    )
    
    
    (1,646
    )Earnings from continuing operations
    
    
    3,905
    
    
    
    1,760
    
    
    
    3,209
    
    
    
    3,841Discontinued operations (note 2):Loss from discontinued operations
    
    
    (9,515
    )
    
    
    (2,402
    )
    
    
    (9,401
    )
    
    
    (2,186
    )Income tax benefit (expense)
    
    
    (36
    )
    
    
    420
    
    
    
    242
    
    
    
    341Loss from discontinued operations
    
    
    (9,551
    )
    
    
    (1,982
    )
    
    
    (9,159
    )
    
    
    (1,845
    )Net earnings (loss)
    
    $
    (5,646
    )
    
    
    (222
    )
    
    
    (5,950
    )
    
    
    1,996Earnings (loss) per share (note 4):Basic:Earnings from continuing operations
    
    $
    0.35
    
    
    
    0.16
    
    
    
    0.29
    
    
    
    0.35Loss from discontinued operations
    
    
    (0.86
    )
    
    
    (0.18
    )
    
    
    (0.82
    )
    
    
    (0.17
    )Net earnings (loss)
    
    $
    (0.51
    )
    
    
    (0.02
    )
    
    
    (0.53
    )
    
    
    0.18Diluted:Earnings from continuing operations
    
    $
    0.35
    
    
    
    0.16
    
    
    
    0.29
    
    
    
    0.34Loss from discontinued operations
    
    
    (0.85
    )
    
    
    (0.18
    )
    
    
    (0.82
    )
    
    
    (0.16
    )Net earnings (loss)
    
    $
    (0.50
    )
    
    
    (0.02
    )
    
    
    (0.53
    )
    
    
    0.18Weighted average number of shares (note 4):Common
    
    
    11,165
    
    
    
    11,090
    
    
    
    11,164
    
    
    
    11,060Common and dilutive common equivalent
    
    
    11,186
    
    
    
    11,263
    
    
    
    11,199
    
    
    
    11,264
  2




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EMS Technologies, Inc. and Subsidiaries
Consolidated Balance Sheets (Unaudited)
(in thousands)
 July 2
    
    
    Dec 312005
    
    
    2004ASSETSCurrent assets:Cash and cash equivalents
    
    $
    13,008
    
    
    
    14,553Restricted cash
    
    
    2,555
    
    
    
    4,715Trade accounts receivable, net (note 6)
    
    
    88,594
    
    
    
    75,370Inventories (note 7)
    
    
    32,925
    
    
    
    33,408Deferred income taxes, net
    
    
    1,362
    
    
    
    1,362Assets held for sale (note 2)
    
    
    59,269
    
    
    
    64,710Total current assets
    
    
    197,713
    
    
    
    194,118Property, plant and equipment:Land
    
    
    1,150
    
    
    
    1,150Building and leasehold improvements
    
    
    15,196
    
    
    
    15,166Machinery and equipment
    
    
    74,428
    
    
    
    70,160Furniture and fixtures
    
    
    7,968
    
    
    
    8,061Total property, plant and equipment
    
    
    98,742
    
    
    
    94,537Less accumulated depreciation and amortization
    
    
    66,250
    
    
    
    63,068Net property, plant and equipment
    
    
    32,492
    
    
    
    31,469Deferred income taxes, net  non-current
    
    
    4,604
    
    
    
    4,604Intangible assets, net
    
    
    3,374
    
    
    
    3,990Goodwill
    
    
    13,526
    
    
    
    13,526Other assets
    
    
    8,213
    
    
    
    7,371$
    259,922
    
    
    
    255,078
  3




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EMS Technologies, Inc. and Subsidiaries
Consolidated Balance Sheets (Unaudited), continued
(in thousands, except share data)
 July 2
    
    
    Dec 312005
    
    
    2004LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Current installments of long-term debt
    
    $
    18,816
    
    
    
    3,462Accounts payable
    
    
    27,153
    
    
    
    23,840Income taxes payable
    
    
    2,010
    
    
    
    1,726Accrued compensation costs
    
    
    6,100
    
    
    
    6,232Accrued retirement costs
    
    
    1,402
    
    
    
    2,453Deferred service revenue
    
    
    6,778
    
    
    
    5,214Liabilities related to assets held for sale (note 2)
    
    
    21,415
    
    
    
    24,095Other current liabilities
    
    
    3,362
    
    
    
    4,043Total current liabilities
    
    
    87,036
    
    
    
    71,065Long-term debt, excluding current installments
    
    
    52,025
    
    
    
    57,992Total liabilities
    
    
    139,061
    
    
    
    129,057Stockholders equity:Preferred stock of $1.00 par value per share.
Authorized 10,000,000 shares; none issued
    
    
    
    
    
    
    Common stock of $.10 par value per share.
Authorized 75,000,000 shares; issued and outstanding 11,165,000 in 2005 and
11,164,000 in 2004
    
    
    1,117
    
    
    
    1,116Additional paid-in capital
    
    
    69,069
    
    
    
    69,058Accumulated other comprehensive income-foreign currency translation adjustment
    
    
    3,952
    
    
    
    3,174Retained earnings
    
    
    46,723
    
    
    
    52,673Total stockholders equity
    
    
    120,861
    
    
    
    126,021$
    259,922
    
    
    
    255,078
  4




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EMS Technologies, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
 Six Months EndedJuly 2
    
    
    July 32005
    
    
    2004Cash flows from operating activities:Net earnings (loss)
    
    $
    (5,950
    )
    
    
    1,996Adjustments
to reconcile net earnings (loss) to net cash (used in) provided by operating activities:Depreciation and amortization
    
    
    4,749
    
    
    
    4,247Loss from discontinued operations
    
    
    9,159
    
    
    
    1,845Gain on sale of assets
    
    
    
    
    
    
    (969
    )Changes in operating assets and liabilities:Trade accounts receivable, net
    
    
    (16,343
    )
    
    
    (1,351
    )Inventories
    
    
    332
    
    
    
    (2,234
    )Accounts payable
    
    
    4,437
    
    
    
    861Income taxes payable
    
    
    362
    
    
    
    1,592Accrued costs, deferred service revenue and other current liabilities
    
    
    1,088
    
    
    
    (1,582
    )Other
    
    
    (1,876
    )
    
    
    14Net cash (used in) provided by operating activities
    
    
    (4,042
    )
    
    
    4,419Cash flows from investing activities:Purchase of property, plant and equipment
    
    
    (4,682
    )
    
    
    (2,526
    )Payments for asset acquisitions
    
    
    
    
    
    
    (133
    )Proceeds from sale of assets
    
    
    364
    
    
    
    722Net cash used in investing activities
    
    
    (4,318
    )
    
    
    (1,937
    )Cash flows from financing activities:Net increase (decrease) in revolving debt
    
    
    10,207
    
    
    
    (1,114
    )Repayment of term debt
    
    
    (662
    )
    
    
    (1,701
    )Restricted cash
    
    
    2,160
    
    
    
    Deferred financing fees paid
    
    
    (73
    )
    
    
    Proceeds from exercise of stock options, net of withholding taxes paid
    
    
    12
    
    
    
    2,957Net cash provided by financing activities
    
    
    11,644
    
    
    
    142Operating cash used in discontinued operations
    
    
    (6,398
    )
    
    
    (6,387
    )Net change in cash and cash equivalents
    
    
    (3,114
    )
    
    
    (3,763
    )Effect of exchange rates on cash
    
    
    1,569
    
    
    
    (1,041
    )Cash and cash equivalents at beginning of period
    
    
    14,553
    
    
    
    14,180Cash and cash equivalents at end of period
    
    $
    13,008
    
    
    
    9,376
  5




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EMS Technologies, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
July 2, 2005 and July 3, 2004
 1. Basis of Presentation
   Managements Use of Estimates
  Stock Option Plans
  6




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Quarters Ended
    
    
    Six Months EndedJuly 2
    
    
    July 3
    
    
    July 2
    
    
    July 32005
    
    
    2004
    
    
    2005
    
    
    2004Net earnings (loss):As reported (1)
    
    $
    (5,646
    )
    
    
    (222
    )
    
    
    (5,950
    )
    
    
    1,996Less: Stock-based employee compensation expense determined
under the fair value method, net of tax
    
    
    (221
    )
    
    
    (445
    )
    
    
    (538
    )
    
    
    (960
    )Pro forma
    
    $
    (5,867
    )
    
    
    (667
    )
    
    
    (6,488
    )
    
    
    1,036Basic net earnings (loss) per share:As reported
    
    $
    (0.51
    )
    
    
    (0.02
    )
    
    
    (0.53
    )
    
    
    0.18Pro forma
    
    
    (0.53
    )
    
    
    (0.06
    )
    
    
    (0.58
    )
    
    
    0.09Diluted net earnings (loss) per share:As reported
    
    $
    (0.50
    )
    
    
    (0.02
    )
    
    
    (0.53
    )
    
    
    0.18Pro forma
    
    
    (0.52
    )
    
    
    (0.06
    )
    
    
    (0.58
    )
    
    
    0.09
 
 (1)
    
    Stock compensation expense has not been recognized in net earnings (loss). Effect of New Accounting Pronouncements
       7




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2. Discontinued Operations
   Quarters Ended
    
    
    Six Months EndedJuly 2
    
    
    July 3
    
    
    July 2
    
    
    July 32005
    
    
    2004
    
    
    2005
    
    
    2004Net sales
    
    $
    17,430
    
    
    
    15,664
    
    
    
    37,010
    
    
    
    34,491Costs and expenses
    
    
    16,945
    
    
    
    18,066
    
    
    
    36,411
    
    
    
    36,677Impairment charge
    
    
    10,000
    
    
    
    
    
    
    
    10,000
    
    
    
    Loss before income taxes
    
    
    (9,515
    )
    
    
    (2,402
    )
    
    
    (9,401
    )
    
    
    (2,186
    )Income tax (expense) benefit
    
    
    (36
    )
    
    
    420
    
    
    
    242
    
    
    
    341Net loss
    
    $
    (9,551
    )
    
    
    (1,982
    )
    
    
    (9,159
    )
    
    
    (1,845
    )
  July 2
    
    
    Dec 312005
    
    
    2004Accounts receivable, net
    
    $
    21,650
    
    
    
    18,879Inventories
    
    
    8,467
    
    
    
    8,022Investments
    
    
    
    
    
    
    2,709Property, plant and equipment, net
    
    
    16,555
    
    
    
    24,298Non-current accounts receivable, net
    
    
    8,123
    
    
    
    6,516Accrued pension assets
    
    
    2,990
    
    
    
    3,255Other assets
    
    
    1,484
    
    
    
    1,031Total assets held for sale
    
    $
    59,269
    
    
    
    64,710Accounts payable
    
    $
    13,633
    
    
    
    15,185Long-term debt
    
    
    2,951
    
    
    
    2,783Post retirement obligations
    
    
    4,590
    
    
    
    4,481Other current liabilities
    
    
    241
    
    
    
    1,646Total liabilities related to assets held for sale
    
    $
    21,415
    
    
    
    24,095
 3. Derivative Financial Instruments
  8




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Quarters Ended
    
    
    Six Months EndedJuly 2
    
    
    July 3
    
    
    July 2
    
    
    July 32005
    
    
    2004
    
    
    2005
    
    
    2004Beginning net asset (liability) for derivatives
    
    $
    (58
    )
    
    
    73
    
    
    
    (128
    )
    
    
    99Sales:Loss in value of embedded derivatives
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    (2
    )Foreign exchange gain (loss) on derivative instruments:Gain (loss) in value of derivative instruments that
do not qualify as hedging instruments
    
    
    153
    
    
    
    (47
    )
    
    
    172
    
    
    
    27Matured foreign exchange contracts
    
    
    3
    
    
    
    (59
    )
    
    
    55
    
    
    
    (157
    )Net consolidated statements of operations gain
(loss) from changes
in value of derivative instruments
    
    
    156
    
    
    
    (106
    )
    
    
    226
    
    
    
    (132
    )Ending net asset (liability) for derivatives
    
    $
    98
    
    
    
    (33
    )
    
    
    98
    
    
    
    (33
    )
   4. Earnings (Loss) Per Share
   July 2
    
    
    July 32005
    
    
    2004Dilutive stock options, included in earnings (loss) per share calculations:Shares
    
    
    391
    
    
    
    1,218Average exercise price per share
    
    $
    12.37
    
    
    
    15.09Anti-dilutive stock options and warrants, excluded from per share calculations:Shares
    
    
    1,288
    
    
    
    461Average exercise price per share
    
    $
    18.61
    
    
    
    22.53
 9




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Quarters Ended
    
    
    Six Months EndedJuly 2
    
    
    July 3
    
    
    July 2
    
    
    July 32005
    
    
    2004
    
    
    2005
    
    
    2004Basic-weighted average common shares outstanding
    
    
    11,165
    
    
    
    11,090
    
    
    
    11,164
    
    
    
    11,060Common equivalent shares from stock options
    
    
    21
    
    
    
    173
    
    
    
    35
    
    
    
    204Diluted-weighted average common and common
equivalent shares outstanding
    
    
    11,186
    
    
    
    11,263
    
    
    
    11,199
    
    
    
    11,264
 5. Comprehensive Income (Loss)
  Quarters Ended
    
    
    Six Months EndedJuly 2
    
    
    July 3
    
    
    July 2
    
    
    July 32005
    
    
    2004
    
    
    2005
    
    
    2004Net income (loss)
    
    $
    (5,646
    )
    
    
    (222
    )
    
    
    (5,950
    )
    
    
    1,996Other comprehensive loss:Foreign currency translation adjustment
    
    
    1,283
    
    
    
    (640
    )
    
    
    778
    
    
    
    (1,474
    )Comprehensive income (loss)
    
    $
    (4,363
    )
    
    
    (862
    )
    
    
    (5,172
    )
    
    
    522
 6. Trade Accounts Receivable
  July 2
    
    
    Dec 312005
    
    
    2004Amounts billed
    
    $
    68,752
    
    
    
    57,010Unbilled revenues under long-term contracts
    
    
    24,787
    
    
    
    21,241Customer advanced payments
    
    
    (3,937
    )
    
    
    (1,875
    )Allowance for doubtful accounts
    
    
    (1,008
    )
    
    
    (1,006
    )Trade accounts receivable, net
    
    $
    88,594
    
    
    
    75,370
 7. Inventories
  July 2
    
    
    Dec 312005
    
    
    2004Parts and materials
    
    $
    22,285
    
    
    
    23,789Work in process
    
    
    4,430
    
    
    
    3,605Finished goods
    
    
    6,210
    
    
    
    6,014Inventories
    
    $
    32,925
    
    
    
    33,408
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8. Interim Segment Disclosures
       Quarters Ended
    
    
    Six Months EndedJuly 2
    
    
    July 3
    
    
    July 2
    
    
    July 32005
    
    
    2004
    
    
    2005
    
    
    2004Net sales:LXE
    
    $
    31,572
    
    
    
    27,725
    
    
    
    58,391
    
    
    
    52,625Defense & Space Systems
    
    
    13,293
    
    
    
    12,260
    
    
    
    24,573
    
    
    
    25,061SATCOM
    
    
    12,189
    
    
    
    9,456
    
    
    
    22,053
    
    
    
    19,571EMS Wireless
    
    
    24,505
    
    
    
    12,869
    
    
    
    36,726
    
    
    
    25,079Other
    
    
    
    
    
    
    (237
    )
    
    
    
    
    
    
    (237
    )Total
    
    $
    81,559
    
    
    
    62,073
    
    
    
    141,743
    
    
    
    122,099Operating income (loss):LXE
    
    $
    2,170
    
    
    
    1,699
    
    
    
    3,152
    
    
    
    2,828Defense & Space Systems
    
    
    1,456
    
    
    
    620
    
    
    
    957
    
    
    
    1,452SATCOM
    
    
    901
    
    
    
    477
    
    
    
    1,341
    
    
    
    710EMS Wireless
    
    
    2,605
    
    
    
    368
    
    
    
    1,730
    
    
    
    483Other
    
    
    (170
    )
    
    
    (106
    )
    
    
    (449
    )
    
    
    95Total
    
    $
    6,962
    
    
    
    3,058
    
    
    
    6,731
    
    
    
    5,568
 11




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Earnings (loss) from continuing operations:LXE
    
    $
    1,290
    
    
    
    932
    
    
    
    1,795
    
    
    
    1,600Defense & Space Systems
    
    
    846
    
    
    
    318
    
    
    
    473
    
    
    
    769SATCOM
    
    
    739
    
    
    
    450
    
    
    
    1,252
    
    
    
    662EMS Wireless
    
    
    1,516
    
    
    
    153
    
    
    
    873
    
    
    
    124Other
    
    
    (61
    )
    
    
    (175
    )
    
    
    (122
    )
    
    
    377Corporate
    
    
    (425
    )
    
    
    82
    
    
    
    (1,062
    )
    
    
    309Total
    
    $
    3,905
    
    
    
    1,760
    
    
    
    3,209
    
    
    
    3,841
 9. Warranty Liability
   Quarters EndedJuly 2
    
    
    July 32005
    
    
    2004Balance at beginning of quarter
    
    $
    2,023
    
    
    
    1,776Accruals for warranties issued during the period
    
    
    742
    
    
    
    287Settlements made during the period
    
    
    (230
    )
    
    
    (62
    )Balance at end of quarter
    
    $
    2,535
    
    
    
    2,001
 Six Months EndedJuly 2
    
    
    July 32005
    
    
    2004Balance at December 31, 2004 and 2003
    
    $
    2,089
    
    
    
    1,826Accruals for warranties issued during the period
    
    
    892
    
    
    
    375Settlements made during the period
    
    
    (446
    )
    
    
    (200
    )Balance at end of period
    
    $
    2,535
    
    
    
    2,001
 10. Long-term Debt
  12




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##### Table of Contents



11. Litigation
  Other Legal Matters
  13




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##### Table of Contents



ITEM
2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
  Overview:
   For continuing operations:
  For discontinued operations:
  Discontinued Operations
   Results of Operations
 Net Sales
  14




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##### Table of Contents



Cost of Sales
  Net Sales, Cost of Sales, and Operating Income (Loss) by Segment
  Percentage IncreaseQuarters Ended
    
    
    Six Months Ended
    
    
    
    
    
    (Decrease)July 2
    
    
    July 3
    
    
    July 2
    
    
    July 3
    
    
    Three
    
    
    Six2005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    Months
    
    
    MonthsNet sales:LXE
    
    $
    31,572
    
    
    
    27,725
    
    
    
    58,391
    
    
    
    52,625
    
    
    
    14
    %
    
    
    11
    %Defense & Space Systems
    
    
    13,293
    
    
    
    12,260
    
    
    
    24,573
    
    
    
    25,061
    
    
    
    8
    %
    
    
    (2
    )%SATCOM
    
    
    12,189
    
    
    
    9,456
    
    
    
    22,053
    
    
    
    19,571
    
    
    
    29
    %
    
    
    13
    %EMS Wireless
    
    
    24,505
    
    
    
    12,869
    
    
    
    36,726
    
    
    
    25,079
    
    
    
    90
    %
    
    
    46
    %Other
    
    
    
    
    
    
    (237
    )
    
    
    
    
    
    
    (237
    )
    
    
    *
    *
    
    
    *
    *Total
    
    $
    81,559
    
    
    
    62,073
    
    
    
    141,743
    
    
    
    122,099
    
    
    
    31
    %
    
    
    16
    %Cost of sales percentage:LXE
    
    
    60
    %
    
    
    61
    %
    
    
    60
    %
    
    
    59
    %
    
    
    (1
    )%
    
    
    1
    %Defense & Space Systems
    
    
    76
    %
    
    
    80
    %
    
    
    81
    %
    
    
    77
    %
    
    
    (4
    )%
    
    
    4
    %SATCOM
    
    
    61
    %
    
    
    59
    %
    
    
    60
    %
    
    
    60
    %
    
    
    2
    %
    
    
    
    %EMS Wireless
    
    
    74
    %
    
    
    65
    %
    
    
    74
    %
    
    
    65
    %
    
    
    9
    %
    
    
    9
    %Total
    
    
    67
    %
    
    
    65
    %
    
    
    67
    %
    
    
    64
    %
    
    
    2
    %
    
    
    3
    %Operating income (loss):LXE
    
    $
    2,170
    
    
    
    1,699
    
    
    
    3,152
    
    
    
    2,828
    
    
    
    28
    %
    
    
    11
    %Defense & Space Systems
    
    
    1,456
    
    
    
    620
    
    
    
    957
    
    
    
    1,452
    
    
    
    135
    %
    
    
    (34
    )%SATCOM
    
    
    901
    
    
    
    477
    
    
    
    1,341
    
    
    
    710
    
    
    
    89
    %
    
    
    89
    %EMS Wireless
    
    
    2,605
    
    
    
    368
    
    
    
    1,730
    
    
    
    483
    
    
    
    608
    %
    
    
    258
    %Other
    
    
    (170
    )
    
    
    (106
    )
    
    
    (449
    )
    
    
    95
    
    
    
    *
    *
    
    
    *
    *Total
    
    $
    6,962
    
    
    
    3,058
    
    
    
    6,731
    
    
    
    5,568
    
    
    
    128
    %
    
    
    21
    %
 
 **
    
    = Not Meaningful LXE:
  15




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##### Table of Contents



Defense & Space Systems:
  SATCOM:
  EMS Wireless:
  Selling, General and Administrative Expenses
   Research and Development Expenses
   16




---



##### Table of Contents



Non-Operating Income, Net
  Foreign Exchange Loss
    Interest Expense
  Income Tax Expense
  Discontinued Operations
  17




---



##### Table of Contents



Liquidity and Capital Resources
          18




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##### Table of Contents



Less than
    
    
    
    
    
    
    
    
    
    
    After 5Total
    
    
    1 year
    
    
    1-3 years
    
    
    4-5 years
    
    
    yearsContinuing Operations:December 31, 2004 (no significant change to
date):Capital lease obligations
    
    $
    0.8
    
    
    
    0.5
    
    
    
    0.3
    
    
    
    
    
    
    
    Operating lease obligations(1)
    
    
    13.2
    
    
    
    4.4
    
    
    
    6.7
    
    
    
    2.1
    
    
    
    Deferred compensation
    
    
    0.2
    
    
    
    0.2
    
    
    
    
    
    
    
    
    
    
    
    Foreign currency forward contracts, net
    
    
    0.2
    
    
    
    0.2
    
    
    
    
    
    
    
    
    
    
    
    Interest on outstanding long-term debt (2)
    
    
    15.6
    
    
    
    4.1
    
    
    
    7.6
    
    
    
    1.6
    
    
    
    2.3Purchase commitments (1)
    
    
    20.6
    
    
    
    20.5
    
    
    
    0.1
    
    
    
    
    
    
    
    July 2, 2005:Long-term debt, excluding capital leases
    
    
    70.3
    
    
    
    17.5
    
    
    
    41.0
    
    
    
    2.5
    
    
    
    9.3Discontinued Operations:December 31, 2004 (no significant change to
date):Capital lease obligations
    
    $
    0.4
    
    
    
    0.1
    
    
    
    0.2
    
    
    
    0.1
    
    
    
    Operating lease obligations
    
    
    1.0
    
    
    
    0.5
    
    
    
    0.5
    
    
    
    
    
    
    
    Purchase commitments (1)
    
    
    8.1
    
    
    
    7.8
    
    
    
    0.3
    
    
    
    
    
    
    
    July 2, 2005:Long-term debt, excluding capital leases (3)
    
    
    2.5
    
    
    
    0.5
    
    
    
    0.4
    
    
    
    0.4
    
    
    
    1.2
 
 (1)
    
    Purchase commitments primarily represent existing commitments under purchase orders or
contracts to purchase inventory and raw materials for our products. Most of these purchase
orders and contracts can be terminated for a fee that is either fixed or based on when
termination occurs.(2)
    
    Assumes that the revolving loan balances and related variable interest rates remain
unchanged for December 31, 2004 until the loan matures in December of 2007.(3)
    
    Long-term debt for discontinued operations is included in liabilities related to assets
held for sale on the consolidated balance sheets.  Amount of commitment expiration per periodLess than
    
    
    
    
    
    
    
    
    After 5Other commercial commitments
    
    Total
    
    
    1 year
    
    
    1-3 years
    
    
    4-5 years
    
    
    yearsStandby letters of credit
as performance guarantees
    
    $
    6,855
    
    
    
    1,828
    
    
    
    4,855
    
    
    
    172
    
    
    
    
   19




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##### Table of Contents



Critical Accounting Policies
  Revenue recognition on long-term contracts
      20




---



##### Table of Contents



Accounting for government research incentives
  Inventory valuation
  Evaluation of long-lived assets for impairment
    Establishment of reserves for deferred income tax assets
  21




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##### Table of Contents



Risk Factors and Forward-Looking Statements
  
    
    uncertainties related to the proposed sale of the Space & Technology/Montreal and
SatNet divisions, as well as external market conditions, internal priorities and
constraints, and financing availability that could affect a purchasers willingness and
ability to complete the transaction on terms and timing expected by the Company (in the
event a sales transaction is not completed, the Space & Technology/Montreal operations
and/or the SatNet division would, during 2005, be reclassified back into continuing operations, and prior-year
financial statements would be restated to reflect that status);
    
    economic conditions in the U.S. and abroad and their effect on capital spending in the
Companys principal markets;
    
    difficulty predicting the timing of receipt of major customer orders, and the effect of
customer timing decisions on our quarterly results;
    
    the requirement to obtain waivers from its bank creditors of financial-performance
covenants contained in the Companys credit agreements, should the Company fail to meet its
expectations for earnings and positive cash flow in future quarters, and the risk of credit
agreement default if any such waiver should be required and cannot be obtained;
    
    successful completion of technological development programs by the Company and the
effects of technology that may be developed by, and patent rights that may be held or
obtained by, competitors;
    
    the ability of the Company to obtain patent licenses, with satisfactory license rights
and royalty rates, from owners of RFID-related patents;
    
    the effects of the guidelines of FASB Emerging Issues Task Force (EITF) Issue No. 00-21
and AICPA Statement of Position 97-2, under which it is possible that SatNet may deliver or
complete performance relative to most of the significant deliverables under particular
contracts, but not recognize any revenue on those contracts until performance or delivery
has been completed relative to all deliverables, including some deliverables that
management believes are not significant to the total system being delivered;
    
    U.S. defense budget pressures on near-term spending priorities;
    
    uncertainties inherent in the process of converting contract awards into firm
contractual orders in the future;
    
    volatility of foreign exchange rates relative to the U.S. dollar and their effect on
purchasing power by international customers, and the cost structure of the Companys
non-U.S. operations, as well as the potential for realizing foreign exchange gains and
losses associated with non-U.S. assets or liabilities held by the Company;
    
    successful resolution of technical problems, proposed scope changes, or proposed
funding changes that may be encountered on contracts;
    
    changes in the Companys consolidated effective income tax rate caused by the extent to
which actual taxable earnings in the U.S., Canada and other taxing jurisdictions may vary
from expected taxable earnings;
    
    successful transition of products from development stages to an efficient manufacturing
environment;
    
    customer response to new products and services, and general conditions in our target
markets (such as logistics, PCS/cellular telephony and space-based communications);
 22




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##### Table of Contents




    
    the success of certain of our customers in marketing our line of high-speed commercial
airline communications products as a complimentary offering with their own lines of
avionics products;
    
    the availability of financing for satellite data communications systems and for
expansion of terrestrial PCS/cellular phone systems;
    
    the extent to which terrestrial systems reduce market opportunities for space-based
broadband communications systems by providing extensive broadband Internet access on a
dependable and economical basis;
    
    development of successful working relationships with local business and government
personnel in connection with distribution and manufacture of products in foreign countries;
    
    the demand growth for various mobile and high-speed data communications services;
    
    the Companys ability to attract and retain qualified personnel, particularly those
with key technical skills; and
    
    the availability of sufficient additional credit or other financing, on acceptable
terms, to support the Companys expected growth.
  Effect of New Accounting Pronouncements
     23




---



##### Table of Contents



24
    Table of Contents  ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
  Revolving credit loan with U.S. and Canadian banks, maturing in December 2007,
interest payable quarterly at a variable rate (7.02% at the end of the quarter)
    
    $
    53,173Revolving credit loan with a bank in the United Kingdom, maturing in April 2006,
interest payable monthly at a variable rate (5.75% at the end of the quarter)
    
    
    1,732Total market-sensitive debt
    
    $
    54,905
   Exchange Rate
    
    
    $U.S.($U.S. per unit of
    
    
    in thousandslocal currency)
    
    
    (reporting currency)Australia
    
    0.7616/Dollar
    
$
    801France
    
    1.2098/Euro
    
    
    760Canada
    
    0.8159/Dollar
    
    
    729United Kingdom
    
    1.7928/Pound
    
    
    166Netherlands
    
    1.2098/Euro
    
    
    57Singapore
    
    0.5928/Dollar
    
    
    49Italy
    
    1.2098/Euro
    
    
    36Sweden
    
    0.1282/Krona
    
    
    29Belgium
    
    1.2098/Euro
    
    
    15Germany
    
    1.2098/Euro
    
    
    12Total short-term due to parent
    
    
    
    
    
    $
    2,654
  Average
    
    
    ($U.S.)Notional
    
    
    Contract
    
    
    FairAmount
    
    
    Rate
    
    
    ValueForeign currency forward contracts:Continuing Operations:Euros (sell for U.S. dollars)
    
    1,700 Euros
    
    
    1.2092
    
    
    $
    (5
    )U.S. dollars (sell for Canadian dollars)
    
    9,500 Dollars
    
    
    1.2511
    
    
    
    146Australian dollars (sell for U.S. dollars)
    
    1,000 Dollars
    
    
    0.7138
    
    
    
    (41
    )$
    100Discontinued Operations:British Pounds (sell for Canadian dollars)
    
    1,015 Pound
    
    
    2.3561
    
    
    $
    132
  25
    Table of Contents  ITEM 4. Controls and Procedures
    26
    Table of Contents  PART II
 OTHER INFORMATION
 
 ITEM 4. Submission of Matters to a Vote of Security Holders
  Abstain orBrokerFor
    
    Withheld
    
    Non-VotesHermann Buerger
    
    
    7,243,198
    
    
    
    42,855
    
    
    
    2,831,300Alfred G. Hansen
    
    
    7,283,104
    
    
    
    2,949
    
    
    
    2,831,300John R. Kreick
    
    
    7,284,297
    
    
    
    1,756
    
    
    
    2,831,300John B. Mowell
    
    
    7,281,403
    
    
    
    4,650
    
    
    
    2,831,300Norman E. Thagard
    
    
    7,284,604
    
    
    
    1,449
    
    
    
    2,831,300John L. Woodward, Jr.
    
    
    7,285,297
    
    
    
    756
    
    
    
    2,831,300
 
 ITEM 6. Exhibits
  3.1
    
    Second Amended and Restated Articles of Incorporation of EMS Technologies, Inc. effective March
22, 1999 (incorporated by reference to Exhibit 3.1 to the Companys Quarterly Report on Form 10-Q
for the quarter ended April 3, 2004).3.2
    
    Bylaws of EMS Technologies, Inc., as amended through March 15, 1999 (incorporated by reference to
Exhibit 3.2 to the Companys Quarterly Report on Form 10-Q for the quarter ended April 3, 2004).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
    
    Certifications of the Registrants Chief Executive and Chief Financial Officers, pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
 27
    Table of Contents  SIGNATURES
  EMS TECHNOLOGIES, INC.By:
    
    /s/ Alfred G. Hansen
    
    Date: August 15, 2005Alfred G. HansenPresident, Chief Executive Officer (Principal Executive Officer)By:
    
    /s/ Don T. Scartz
    
    Date: August 15, 2005Don T. ScartzExecutive Vice President, Chief FinancialOfficer and Treasurer (Principal Financial Officer)
  28