##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the quarterly period ended September 29, 2007
 Commission file number 0-6072
 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 o
  o þ o
 o þ
  Class
    
    Number of SharesCommon Stock, $.10 par Value
    
    15,453,367
 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
    
    
    12ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    24ITEM 4. Controls and Procedures
    
    
    25PART II  OTHER INFORMATION
    
    
    26ITEM 1A. Risk Factors
    
    
    26ITEM 6. Exhibits
    
    
    26SIGNATURES
    
    
    27EX-10.1 SUMMARY OF COMPENSATION ARRANGEMENTSEX-31.1 SECTION 302 CERTIFICATION OF THE CEOEX-31.2 SECTION 302 CERTIFICATION OF THE CFOEX-32 SECTION 906 CERTIFICATION OF THE CEO AND 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
    
    
    Nine Months EndedSep 29
    
    
    Sep 30
    
    
    Sep 29
    
    
    Sep 302007
    
    
    2006
    
    
    2007
    
    
    2006Product net sales
    
    $
    63,034
    
    
    
    54,276
    
    
    
    181,372
    
    
    
    161,540Service net sales
    
    
    10,111
    
    
    
    10,385
    
    
    
    30,494
    
    
    
    27,212Net sales
    
    
    73,145
    
    
    
    64,661
    
    
    
    211,866
    
    
    
    188,752Product cost of sales
    
    
    38,096
    
    
    
    34,062
    
    
    
    111,683
    
    
    
    101,949Service cost of sales
    
    
    5,478
    
    
    
    6,635
    
    
    
    18,767
    
    
    
    17,799Cost of sales
    
    
    43,574
    
    
    
    40,697
    
    
    
    130,450
    
    
    
    119,748Selling, general and administrative expenses
    
    
    19,526
    
    
    
    17,124
    
    
    
    55,276
    
    
    
    48,567Research and development expenses
    
    
    4,803
    
    
    
    4,100
    
    
    
    13,840
    
    
    
    11,954Operating income
    
    
    5,242
    
    
    
    2,740
    
    
    
    12,300
    
    
    
    8,483Interest income
    
    
    1,341
    
    
    
    628
    
    
    
    4,197
    
    
    
    1,590Interest expense
    
    
    (476
    )
    
    
    (411
    )
    
    
    (1,476
    )
    
    
    (1,452
    )Foreign exchange loss
    
    
    (236
    )
    
    
    (143
    )
    
    
    (712
    )
    
    
    (798
    )Earnings from continuing operations before income taxes
    
    
    5,871
    
    
    
    2,814
    
    
    
    14,309
    
    
    
    7,823Income tax expense (benefit)
    
    
    265
    
    
    
    (2,676
    )
    
    
    2,249
    
    
    
    (1,172
    )Earnings from continuing operations
    
    
    5,606
    
    
    
    5,490
    
    
    
    12,060
    
    
    
    8,995Discontinued operations (note 2):Earnings (loss) from discontinued operations before
income taxes
    
    
    11
    
    
    
    368
    
    
    
    (555
    )
    
    
    (802
    )Income tax expense (benefit)
    
    
    
    
    
    
    286
    
    
    
    (102
    )
    
    
    721Earnings (loss) from discontinued operations
    
    
    11
    
    
    
    82
    
    
    
    (453
    )
    
    
    (1,523
    )Net earnings
    
    $
    5,617
    
    
    
    5,572
    
    
    
    11,607
    
    
    
    7,472Net earnings (loss) per share:Basic:From continuing operations
    
    $
    0.37
    
    
    
    0.36
    
    
    
    0.79
    
    
    
    0.62From discontinued operations
    
    
    
    
    
    
    0.01
    
    
    
    (0.03
    )
    
    
    (0.10
    )Net earnings
    
    $
    0.37
    
    
    
    0.37
    
    
    
    0.76
    
    
    
    0.52Diluted:From continuing operations
    
    $
    0.36
    
    
    
    0.36
    
    
    
    0.78
    
    
    
    0.62From discontinued operations
    
    
    
    
    
    
    0.01
    
    
    
    (0.03
    )
    
    
    (0.10
    )Net earnings
    
    $
    0.36
    
    
    
    0.37
    
    
    
    0.75
    
    
    
    0.52Weighted average number of shares (note 3):Basic
    
    
    15,343
    
    
    
    15,226
    
    
    
    15,318
    
    
    
    14,426Diluted
    
    
    15,477
    
    
    
    15,263
    
    
    
    15,416
    
    
    
    14,481
  2




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EMS Technologies, Inc. and Subsidiaries
 
 Consolidated Balance Sheets (Unaudited)
 (in thousands)
 Sep 29
    
    
    Dec 312007
    
    
    2006ASSETSCurrent assets:Cash and cash equivalents
    
    $
    123,931
    
    
    
    109,431Restricted cash
    
    
    81
    
    
    
    162Trade accounts receivable, net (note 5)
    
    
    81,105
    
    
    
    93,720Inventories, net (note 6)
    
    
    29,779
    
    
    
    26,042Deferred income taxes
    
    
    1,963
    
    
    
    1,963Other current assets
    
    
    6,565
    
    
    
    7,697Total current assets
    
    
    243,424
    
    
    
    239,015Property, plant and equipment:Land
    
    
    1,150
    
    
    
    1,150Buildings and leasehold improvements
    
    
    15,853
    
    
    
    15,361Machinery and equipment
    
    
    83,743
    
    
    
    72,569Furniture and fixtures
    
    
    9,284
    
    
    
    7,763Total property, plant and equipment
    
    
    110,030
    
    
    
    96,843Less accumulated depreciation and amortization
    
    
    72,014
    
    
    
    65,108Net property, plant and equipment
    
    
    38,016
    
    
    
    31,735Deferred income taxes  non-current
    
    
    6,282
    
    
    
    6,282Intangible assets, net
    
    
    6,305
    
    
    
    2,084Goodwill
    
    
    9,982
    
    
    
    9,982Other assets
    
    
    7,996
    
    
    
    2,586Total assets
    
    $
    312,005
    
    
    
    291,684
  3




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EMS Technologies, Inc. and Subsidiaries
Consolidated Balance Sheets (Unaudited), continued
(in thousands, except share data)
 Sep 29
    
    
    Dec 312007
    
    
    2006LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Current installments of long-term debt
    
    $
    2,848
    
    
    
    3,102Accounts payable
    
    
    23,292
    
    
    
    29,285Billings in excess of contract costs
    
    
    7,464
    
    
    
    7,899Accrued compensation costs
    
    
    10,162
    
    
    
    8,042Accrued retirement costs
    
    
    2,098
    
    
    
    2,666Deferred service revenue
    
    
    7,673
    
    
    
    6,289Other current liabilities (note 8)
    
    
    5,290
    
    
    
    5,162Total current liabilities
    
    
    58,827
    
    
    
    62,445Long-term debt, excluding current installments
    
    
    10,854
    
    
    
    11,755Other liabilities
    
    
    7,047
    
    
    
    4,401Total liabilities
    
    
    76,728
    
    
    
    78,601Shareholders equity:Preferred stock of $1.00 par value per shareAuthorized 10,000,000 shares; none issued
    
    
    
    
    
    
    Common stock of $.10 par value per shareAuthorized 75,000,000 shares, issued and outstanding 15,410,000 in 2007 and
15,327,000 in 2006
    
    
    1,541
    
    
    
    1,533Additional paid-in capital
    
    
    135,441
    
    
    
    133,050Accumulated other comprehensive income  foreign currency translation adjustment
    
    
    12,450
    
    
    
    4,262Retained earnings
    
    
    85,845
    
    
    
    74,238Total shareholders equity
    
    
    235,277
    
    
    
    213,083Total liabilities and shareholders equity
    
    $
    312,005
    
    
    
    291,684
  4




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EMS Technologies, Inc. and Subsidiaries
 
 Consolidated Statements of Cash Flows (Unaudited)
 (in thousands)
 Nine Months EndedSep 29
    
    
    Sep 302007
    
    
    2006Cash flows from operating activities:Net earnings
    
    $
    11,607
    
    
    
    7,472Adjustments to reconcile net earnings to net cash provided by (used in)
operating activities:Depreciation and other intangibles amortization
    
    
    6,847
    
    
    
    6,546Loss (gain) on sale of assets
    
    
    38
    
    
    
    (330
    )Loss from discontinued operations
    
    
    453
    
    
    
    1,523Stock-based compensation expense
    
    
    1,220
    
    
    
    529Deferred income taxes
    
    
    
    
    
    
    (3,520
    )Changes in
operating assets and liabilities, exclusive of acquisitions:Trade accounts receivable
    
    
    15,223
    
    
    
    (2,243
    )Inventories
    
    
    (1,860
    )
    
    
    (3,708
    )Accounts payable
    
    
    (5,871
    )
    
    
    (4,348
    )Billings in excess of contract costs
    
    
    (934
    )
    
    
    626Income taxes payable
    
    
    988
    
    
    
    952Accrued compensation and retirement costs
    
    
    884
    
    
    
    (738
    )Accrued costs, deferred revenue, and other
    
    
    1,882
    
    
    
    1,359Net cash provided by operating activities in continuing operations
    
    
    30,477
    
    
    
    4,120Net cash (used in) provided by operating activities in discontinued
operations
    
    
    (3,048
    )
    
    
    7,186Net cash provided by operating activities
    
    
    27,429
    
    
    
    11,306Cash flows from investing activities:Purchase of property, plant and equipment
    
    
    (10,448
    )
    
    
    (5,428
    )Payments for acquisitions
    
    
    (5,000
    )
    
    
    (188
    )Proceeds from sale of assets
    
    
    845
    
    
    
    9,631Net cash (used in) provided by investing activities in continuing operations
    
    
    (14,603
    )
    
    
    4,015Net cash used in investing activities in discontinued operations
    
    
    
    
    
    
    (332
    )Net cash (used in) provided by investing activities
    
    
    (14,603
    )
    
    
    3,683Cash flows from financing activities:Net decrease in revolving debt
    
    
    (427
    )
    
    
    (26,745
    )Repayment of term debt
    
    
    (826
    )
    
    
    (1,056
    )Change in restricted cash
    
    
    81
    
    
    
    2,459Proceeds from stock offering, net of expenses
    
    
    
    
    
    
    58,736Proceeds from exercise of stock options
    
    
    1,179
    
    
    
    1,388Net cash provided by financing activities in continuing operations
    
    
    7
    
    
    
    34,782Net change in cash and cash equivalents
    
    
    12,833
    
    
    
    49,771Effect of exchange rates on cash and cash equivalents
    
    
    1,667
    
    
    
    1,095Cash and cash equivalents at beginning of period
    
    
    109,431
    
    
    
    12,795Cash and cash equivalents at end of period
    
    $
    123,931
    
    
    
    63,661
  5




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EMS Technologies, Inc. and Subsidiaries
 
 Notes to Consolidated Financial Statements (Unaudited)
 September 29, 2007 and September 30, 2006
 1. Basis of Presentation
      Managements Use of Estimates
   Cash Equivalents
  Effect of New Accounting Pronouncements
   6




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2. Discontinued Operations
     Quarters Ended
    
    
    Nine Months EndedSep 29
    
    
    Sep 30
    
    
    Sep 29
    
    
    Sep 302007
    
    
    2006
    
    
    2007
    
    
    2006Net sales
    
    $
    
    
    
    
    11,463
    
    
    
    
    
    
    
    40,804Expenses
    
    
    
    
    
    
    10,510
    
    
    
    
    
    
    
    39,992Gain (loss) on the sale of assets
    
    
    11
    
    
    
    (585
    )
    
    
    (555
    )
    
    
    (1,614
    )Earnings (loss) before income taxes
    
    
    11
    
    
    
    368
    
    
    
    (555
    )
    
    
    (802
    )Income tax expense (benefit)
    
    
    
    
    
    
    286
    
    
    
    (102
    )
    
    
    721Earnings (loss) from discontinued operations
    
    $
    11
    
    
    
    82
    
    
    
    (453
    )
    
    
    (1,523
    )
 3. Earnings Per Share
  Quarters Ended
    
    
    Nine Months EndedSep 29
    
    
    Sep 30
    
    
    Sep 29
    
    
    Sep 302007
    
    
    2006
    
    
    2007
    
    
    2006Basic-weighted average common shares outstanding
    
    
    15,343
    
    
    
    15,226
    
    
    
    15,318
    
    
    
    14,426Incremental share-based payment
    
    
    134
    
    
    
    37
    
    
    
    98
    
    
    
    55Diluted-weighted average common shares outstanding
    
    
    15,477
    
    
    
    15,263
    
    
    
    15,416
    
    
    
    14,481
 7




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4. Comprehensive Income
  Quarters Ended
    
    
    Nine Months EndedSep 29
    
    
    Sep 30
    
    
    Sep 29
    
    
    Sep 302007
    
    
    2006
    
    
    2007
    
    
    2006Net earnings
    
    $
    5,617
    
    
    
    5,572
    
    
    
    11,607
    
    
    
    7,472Other comprehensive income (loss):Reclassification due to sale of discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,008Foreign currency translation adjustment
    
    
    3,532
    
    
    
    (89
    )
    
    
    8,188
    
    
    
    3,589Comprehensive income
    
    $
    9,149
    
    
    
    5,483
    
    
    
    19,795
    
    
    
    13,069
 5. Trade Accounts Receivable
  Sep 29
    
    
    Dec 312007
    
    
    2006Amounts billed
    
    $
    61,958
    
    
    
    71,327Unbilled revenues under long-term contracts (1)
    
    
    20,914
    
    
    
    23,134Allowance for doubtful accounts
    
    
    (1,767
    )
    
    
    (741
    )Trade accounts receivable, net
    
    $
    81,105
    
    
    
    93,720(1) Unbilled
revenues under long-term contracts are usually billed and collected
within one year.
  6. Inventories
  Sep 29
    
    
    Dec 312007
    
    
    2006Parts and materials
    
    $
    18,505
    
    
    
    17,318Work-in-process
    
    
    4,303
    
    
    
    4,124Finished goods
    
    
    6,971
    
    
    
    4,600Inventories, net
    
    $
    29,779
    
    
    
    26,042
 8




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7. Interim Segment Disclosures
      Quarters Ended
    
    
    Nine Months EndedSep 29
    
    
    Sep 30
    
    
    Sep 29
    
    
    Sep 302007
    
    
    2006
    
    
    2007
    
    
    2006Net sales:Defense & Space Systems
    
    $
    15,698
    
    
    
    13,666
    
    
    
    44,133
    
    
    
    37,027LXE
    
    
    33,399
    
    
    
    33,003
    
    
    
    103,449
    
    
    
    99,728SATCOM
    
    
    24,048
    
    
    
    17,992
    
    
    
    64,284
    
    
    
    51,997Total
    
    $
    73,145
    
    
    
    64,661
    
    
    
    211,866
    
    
    
    188,752Operating income (loss):Defense & Space Systems
    
    $
    1,445
    
    
    
    1,022
    
    
    
    3,248
    
    
    
    1,754LXE
    
    
    1,742
    
    
    
    2,412
    
    
    
    4,777
    
    
    
    7,159SATCOM
    
    
    3,527
    
    
    
    1,122
    
    
    
    7,715
    
    
    
    3,976Corporate
    
    
    (1,472
    )
    
    
    (1,816
    )
    
    
    (3,440
    )
    
    
    (4,406
    )Total
    
    $
    5,242
    
    
    
    2,740
    
    
    
    12,300
    
    
    
    8,483Net earnings (loss) from continuing operations:Defense & Space Systems
    
    $
    870
    
    
    
    555
    
    
    
    1,922
    
    
    
    882LXE
    
    
    1,040
    
    
    
    1,460
    
    
    
    2,913
    
    
    
    4,252SATCOM
    
    
    3,509
    
    
    
    1,237
    
    
    
    7,610
    
    
    
    3,657Other
    
    
    2
    
    
    
    (130
    )
    
    
    (93
    )
    
    
    (347
    )Corporate
    
    
    185
    
    
    
    2,368
    
    
    
    (292
    )
    
    
    551Total
    
    $
    5,606
    
    
    
    5,490
    
    
    
    12,060
    
    
    
    8,995
 9




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8. Warranty Liability
   Quarters Ended
    
    
    Nine Months EndedSep 29
    
    
    Sep 30
    
    
    Sep 29
    
    
    Sep 302007
    
    
    2006
    
    
    2007
    
    
    2006Balance at beginning of the period
    
    $
    2,246
    
    
    
    2,154
    
    
    
    2,051
    
    
    
    1,894Accruals for warranties issued during the period
    
    
    925
    
    
    
    321
    
    
    
    2,157
    
    
    
    1,399Settlements made during the period
    
    
    (671
    )
    
    
    (361
    )
    
    
    (1,708
    )
    
    
    (1,179
    )Balance at end of period
    
    $
    2,500
    
    
    
    2,114
    
    
    
    2,500
    
    
    
    2,114
 9. Revolving Credit Facilities
    10. Stock-Based Compensation
   10




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11. Income Taxes
    12. Litigation
  13. Acquisition
    11




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ITEM 2. Management s Discussion and Analysis of Financial Condition and Results of Operations
   
    
    Defense & Space Systems  Highly engineered hardware for satellites and defense
electronics applications;
    
    LXE  Rugged mobile computer terminals and related equipment for wireless local area
networks; and
    
    SATCOM  Satellite communications antennas and terminals for aircraft and ground-based
vehicles, and satellite ground stations for search and rescue operations.
  For continuing operations:
 
    
    Consolidated net sales reached an all-time high of $73.1 million and $211.9 million for
continuing operations in the third quarter and first nine months of 2007, respectively, due
to record net sales recorded at our SATCOM, LXE and D&SS divisions for those periods.
    
    Increased operating income was recorded for each of our three divisions for the third
quarter and the first nine months of 2007, and in total continuing operations were nearly
double that reported in the third quarter of 2006, and nearly 50% higher than that reported
in the first nine months of 2006.
 For discontinued operations:
 
    
    The financial results for discontinued operations now reflect only the resolution of
various contingencies under the asset-sale agreements, and discontinued operations had no
material net effect on the third quarter results.
 Description of Net Sales, Costs and Expenses
 Net sales
   12




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Cost of sales
      Selling, general and administrative expenses
  Research and development expenses
  Interest income
  13




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##### Table of Contents



Interest expense
  Foreign exchange gains and losses
   Income taxes
  Discontinued operations
  14




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##### Table of Contents



Results of Operations
 Quarters Ended
    
    
    Nine Months EndedSep 29
    
    
    Sep 30
    
    
    Sep 29
    
    
    Sep 302007
    
    
    2006
    
    
    2007
    
    
    2006Product net sales
    
    
    86.2
    %
    
    
    83.9
    %
    
    
    85.6
    %
    
    
    85.6
    %Service net sales
    
    
    13.8
    
    
    
    16.1
    
    
    
    14.4
    
    
    
    14.4Net sales
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.0Product cost of sales, as a percentage of product net sales
    
    
    60.4
    
    
    
    62.8
    
    
    
    61.6
    
    
    
    63.1Service cost of sales, as a percentage of service net sales
    
    
    54.2
    
    
    
    63.9
    
    
    
    61.5
    
    
    
    65.4Cost of sales
    
    
    59.6
    
    
    
    62.9
    
    
    
    61.6
    
    
    
    63.4Selling, general and administrative expenses
    
    
    26.7
    
    
    
    26.5
    
    
    
    26.1
    
    
    
    25.7Research and development expenses
    
    
    6.5
    
    
    
    6.4
    
    
    
    6.5
    
    
    
    6.4Operating income
    
    
    7.2
    
    
    
    4.2
    
    
    
    5.8
    
    
    
    4.5Interest income
    
    
    1.8
    
    
    
    1.0
    
    
    
    2.0
    
    
    
    0.8Interest expense
    
    
    (0.7
    )
    
    
    (0.6
    )
    
    
    (0.7
    )
    
    
    (0.8
    )Foreign exchange loss
    
    
    (0.3
    )
    
    
    (0.2
    )
    
    
    (0.3
    )
    
    
    (0.4
    )Earnings from continuing operations before
income taxes
    
    
    8.0
    
    
    
    4.4
    
    
    
    6.8
    
    
    
    4.1Income tax expense (benefit)
    
    
    0.3
    
    
    
    (4.1
    )
    
    
    1.1
    
    
    
    (0.7
    )Earnings from continuing operations
    
    
    7.7
    
    
    
    8.5
    
    
    
    5.7
    
    
    
    4.8Discontinued operations:Earnings (loss) from discontinued operations before
income taxes
    
    
    
    
    
    
    0.6
    
    
    
    (0.3
    )
    
    
    (0.4
    )Income tax expense (benefit)
    
    
    
    
    
    
    0.5
    
    
    
    (0.1
    )
    
    
    0.4Earnings (loss) from discontinued operations
    
    
    
    
    
    
    0.1
    
    
    
    (0.2
    )
    
    
    (0.8
    )Net earnings
    
    
    7.7
    %
    
    
    8.6
    %
    
    
    5.5
    %
    
    
    4.0
    %
 Three Months ended September 29, 2007 and September 30, 2006:
    15




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Nine Months ended September 29, 2007 and September 30, 2006:
     16




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##### Table of Contents



Net Sales, Cost of Sales, and Operating Income (Loss) by Segment
  Percentage IncreaseQuarters Ended
    
    
    Nine Months Ended
    
    
    (Decrease)Sep 29
    
    
    Sep 30
    
    
    Sep 29
    
    
    Sep 30
    
    
    Three
    
    
    Nine(in thousands, except percentages)
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006
    
    
    Months
    
    
    MonthsNet sales:Defense & Space Systems
    
    $
    15,698
    
    
    
    13,666
    
    
    
    44,133
    
    
    
    37,027
    
    
    
    14.9
    %
    
    
    19.2LXE
    
    
    33,399
    
    
    
    33,003
    
    
    
    103,449
    
    
    
    99,728
    
    
    
    1.2
    
    
    
    3.7SATCOM
    
    
    24,048
    
    
    
    17,992
    
    
    
    64,284
    
    
    
    51,997
    
    
    
    33.7
    
    
    
    23.6Total
    
    $
    73,145
    
    
    
    64,661
    
    
    
    211,866
    
    
    
    188,752
    
    
    
    13.1
    %
    
    
    12.2Cost of sales percentage:Defense & Space Systems
    
    
    73.7
    %
    
    
    78.4
    
    
    
    76.0
    
    
    
    78.8
    
    
    
    (4.7
    )
    
    
    (2.8
    )LXE
    
    
    56.6
    
    
    
    58.3
    
    
    
    58.1
    
    
    
    59.1
    
    
    
    (1.7
    )
    
    
    (1.0
    )SATCOM
    
    
    53.9
    
    
    
    58.7
    
    
    
    57.0
    
    
    
    59.6
    
    
    
    (4.8
    )
    
    
    (2.6
    )Total
    
    
    59.6
    %
    
    
    62.9
    
    
    
    61.6
    
    
    
    63.4
    
    
    
    (3.3
    )
    
    
    (1.8
    )Operating income (loss):Defense & Space Systems
    
    $
    1,445
    
    
    
    1,022
    
    
    
    3,248
    
    
    
    1,754
    
    
    
    41.4
    %
    
    
    85.2LXE
    
    
    1,742
    
    
    
    2,412
    
    
    
    4,777
    
    
    
    7,159
    
    
    
    (27.8
    )
    
    
    (33.3
    )SATCOM
    
    
    3,527
    
    
    
    1,122
    
    
    
    7,715
    
    
    
    3,976
    
    
    
    214.3
    
    
    
    94.0Corporate and other
    
    
    (1,472
    )
    
    
    (1,816
    )
    
    
    (3,440
    )
    
    
    (4,406
    )
    
    
    (18.9
    )
    
    
    (21.9
    )Total
    
    $
    5,242
    
    
    
    2,740
    
    
    
    12,300
    
    
    
    8,483
    
    
    
    91.3
    %
    
    
    45.0
 Defense & Space Systems:
 17




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##### Table of Contents



LXE:
   SATCOM:
   Discontinued Operations
   Liquidity and Capital Resources
  18




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##### Table of Contents



Off-Balance Sheet Arrangements
   Commitments and Contractual Obligations
  19




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##### Table of Contents



Critical Accounting Policies
  Revenue recognition on long-term contracts
      Inventory valuation
  20




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##### Table of Contents



Evaluation of long-lived assets for impairment
  Evaluation of contingencies related to discontinued operations
  Establishment of reserves for deferred income tax assets
  
 21




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##### Table of Contents



Forward-Looking Statements
  
    
    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 the Companys quarterly results;
    
    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;
    
    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;
    
    changes in the rate at which the Companys products are returned for repair or
replacement under warranty;
    
    customer response to new products and services, and general conditions in the Companys
target markets (such as logistics, and space-based communications), and whether these
responses and conditions develop according to our expectations;
    
    the success of certain of the Companys customers in marketing our line of high-speed
commercial airline communications products as a complementary offering with their own lines
of avionics products;
    
    the availability of financing for satellite data communications systems;
    
    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;
 22




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##### Table of Contents




    
    the availability of sufficient additional credit or other financing, on acceptable
terms, to support any large acquisitions that we believe would contribute to our growth and
profitability;
    
    the ability to negotiate successfully with potential acquisition candidates, finance
acquisitions, or effectively integrate the acquired businesses, products or technologies
into the Companys existing businesses and products, and the risk that any such
acquisitions do not perform as expected or are otherwise dilutive to our earnings;
    
    the potential effects, on cash and results of discontinued operations, of final
resolution of potential liabilities under warranties and representations made by the
Company, and obligations assumed by purchasers, in connection with the Companys
dispositions of discontinued operations;
    
    the availability, capabilities and performance of suppliers of basic materials,
electronic components and sophisticated subsystems on which the Company must rely in order
to perform according to contract requirements, or to introduce new products on the desired
schedule; and
    
    uncertainties associated with U.S. export controls and the export license process, which
restrict the Companys ability to hold technical discussions with customers, suppliers and
internal engineering resources and can reduce the Companys ability to obtain sales from
foreign customers or to perform contracts with the desired level of efficiency or
profitability.
  Effect of New Accounting Pronouncements
   23




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##### Table of Contents



ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
  Revolving credit loan with a bank in the United Kingdom, matures in
April 2008, interest payable monthly at a variable rate (6.75% at
the end of the quarter)
    
    $
    1,656
   Exchange Rate
    
    
    $U.S.($U.S. per unit of
    
    
    in thousandslocal currency)
    
    
    (reporting currency)Australia
    
    0.8855 /Dollar
    
    
    $ 1,109Belgium
    
    1.4218 /Euro
    
    
    1,040Germany
    
    1.4218 /Euro
    
    
    846France
    
    1.4218 /Euro
    
    
    732Italy
    
    1.4218 /Euro
    
    
    678Netherlands
    
    1.4218 /Euro
    
    
    520United Kingdom
    
    2.0388 /Pound
    
    
    65Sweden
    
    0.1544 /Krona
    
    
    20Canada
    
    1.0037 /Dollar
    
    
    (138
    )Total short-term due to parent
    
    
    
    
    
    
    $ 4,872
  Average
    
    
    ($U.S.)Notional
    
    
    Contract
    
    
    FairAmount
    
    
    Rate
    
    
    ValueForeign currency forward contractsU.S. dollars (sell for Canadian dollars)
    
    23,900  USD
    
    
    1.0531
    
    
    $
    1,436British pounds (buy with Canadian dollars)
    
    1,000  GBP
    
    
    2.1466
    
    
    
    (115
    )Euros (sell for U.S. dollars)
    
    2,250  EUR
    
    
    1.3848
    
    
    
    (99
    )Australian dollars (sell for U.S. dollars)
    
    1,250  AUD
    
    
    0.8137
    
    
    
    (79
    )$
    1,143Embedded derivativesQualifying for U.S. dollar contracts at Canadian subsidiary
    
    11,626  USD
    
    
    1.0037
    
    
    $
    (18
    )
  24




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ITEM 4. Controls and Procedures
    25




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##### Table of Contents



PART II
 OTHER INFORMATION
 
 ITEM 1A. Risk Factors
  
 ITEM 6. Exhibits
        
 *
    
    Filed herewith 26




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##### Table of Contents



SIGNATURES
  EMS TECHNOLOGIES, INC.By:
    
    /s/ Paul B. Domorski

Paul B. Domorski
    
    Date: November 8, 2007President, Chief Executive Officer
and Director (Principal Executive Officer)By:
    
    /s/ Don T. Scartz

Don T. Scartz
    
    Date: November 8, 2007Executive Vice President, Chief FinancialOfficer and Treasurer (Principal Financial Officer)
 27