##### 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 July 4, 2009
 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)
  þ o
 o o
  Large accelerated filer o
Accelerated filer þ
Non-accelerated filer o(Do not check if a smaller reporting company)
Smaller reporting company o o þ
  Class
    
    Number of SharesCommon Stock, $.10 par Value
    
    15,245,831
 AVAILABLE INFORMATION
 www.ems-t.com




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##### 



TABLE OF CONTENTS
 PagePART I   FINANCIAL INFORMATION
    
    2Item 1. Financial Statements
    
    2Consolidated Statements of Operations (unaudited)
    
    2Consolidated Balance Sheets (unaudited)
    
    3Consolidated Statements of Cash Flows (unaudited)
    
    5Notes to Consolidated Financial Statements (unaudited)
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    18Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    31Item 4. Controls and Procedures
    
    33PART II  OTHER INFORMATION
    
    34Item 1A. Risk Factors
    
    34Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    34Item 4. Submission of Matters to a Vote of Security Holders
    
    35Item 6. Exhibits
    
    36SIGNATURES
    
    37EX-31.1EX-31.2EX-32




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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)
 Three Months Ended
    
    
    Six Months EndedJuly 4
    
    
    June 28
    
    
    July 4
    
    
    June 282009
    
    
    2008
    
    
    2009
    
    
    2008Product net sales
    
    $
    75,906
    
    
    
    65,956
    
    
    
    144,698
    
    
    
    129,669Service net sales
    
    
    21,032
    
    
    
    15,323
    
    
    
    44,518
    
    
    
    27,104Net sales
    
    
    96,938
    
    
    
    81,279
    
    
    
    189,216
    
    
    
    156,773Product cost of sales
    
    
    50,743
    
    
    
    42,500
    
    
    
    97,764
    
    
    
    82,142Service cost of sales
    
    
    13,220
    
    
    
    9,211
    
    
    
    29,516
    
    
    
    16,407Cost of sales
    
    
    63,963
    
    
    
    51,711
    
    
    
    127,280
    
    
    
    98,549Selling, general and administrative expenses
    
    
    23,684
    
    
    
    20,640
    
    
    
    46,280
    
    
    
    40,838Research and development expenses
    
    
    4,309
    
    
    
    5,521
    
    
    
    8,721
    
    
    
    10,542Acquisition-related charges
    
    
    1,627
    
    
    
    
    
    
    
    5,522
    
    
    
    Operating income
    
    
    3,355
    
    
    
    3,407
    
    
    
    1,413
    
    
    
    6,844Interest income
    
    
    103
    
    
    
    744
    
    
    
    165
    
    
    
    1,743Interest expense
    
    
    (667
    )
    
    
    (428
    )
    
    
    (1,288
    )
    
    
    (797
    )Foreign exchange gain (loss), net
    
    
    235
    
    
    
    172
    
    
    
    (232
    )
    
    
    223Earnings before income taxes
    
    
    3,026
    
    
    
    3,895
    
    
    
    58
    
    
    
    8,013Income tax benefit (expense)
    
    
    160
    
    
    
    (484
    )
    
    
    160
    
    
    
    (442
    )Net earnings
    
    $
    3,186
    
    
    
    3,411
    
    
    
    218
    
    
    
    7,571Net earnings per share:Basic
    
    $
    0.21
    
    
    
    0.22
    
    
    
    0.01
    
    
    
    0.49Diluted
    
    
    0.21
    
    
    
    0.22
    
    
    
    0.01
    
    
    
    0.48Weighted-average number of shares outstanding:Basic
    
    
    15,159
    
    
    
    15,574
    
    
    
    15,152
    
    
    
    15,561Diluted
    
    
    15,225
    
    
    
    15,776
    
    
    
    15,244
    
    
    
    15,774
  2




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##### Table of Contents



EMS Technologies, Inc. and Subsidiaries
Consolidated Balance Sheets (Unaudited)
(in thousands)
 July 4
    
    
    December 312009
    
    
    2008ASSETSCurrent assets:Cash and cash equivalents
    
    $
    42,077
    
    
    
    86,979Trade accounts receivable, net of allowance for doubtful accounts of
$1,234 in 2009 and $856 in 2008
    
    
    68,242
    
    
    
    65,831Costs and estimated earnings in excess of billings on long-term contracts
    
    
    26,565
    
    
    
    30,485Inventories
    
    
    43,284
    
    
    
    35,670Deferred income taxes
    
    
    2,123
    
    
    
    1,632Other current assets
    
    
    19,633
    
    
    
    12,184Total current assets
    
    
    201,924
    
    
    
    232,781Property, plant and equipment:Land
    
    
    1,150
    
    
    
    1,150Buildings and leasehold improvements
    
    
    18,674
    
    
    
    16,238Machinery and equipment
    
    
    101,446
    
    
    
    92,100Furniture and fixtures
    
    
    9,899
    
    
    
    10,059Total property, plant and equipment
    
    
    131,169
    
    
    
    119,547Less accumulated depreciation and amortization
    
    
    83,589
    
    
    
    78,975Net property, plant and equipment
    
    
    47,580
    
    
    
    40,572Deferred income taxes
    
    
    6,202
    
    
    
    7,318Goodwill
    
    
    80,426
    
    
    
    31,402Other intangible assets, net of accumulated amortization
of $13,901 in 2009 and $8,219 in 2008
    
    
    53,293
    
    
    
    11,166Other assets
    
    
    8,892
    
    
    
    4,126Total assets
    
    $
    398,317
    
    
    
    327,365
  3




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EMS Technologies, Inc. and Subsidiaries
Consolidated Balance Sheets (Unaudited), continued
(in thousands, except share data)
 July 4
    
    
    December 312009
    
    
    2008LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Current installments of long-term debt
    
    $
    1,349
    
    
    
    1,302Accounts payable
    
    
    31,237
    
    
    
    25,361Billings in excess of costs and estimated earnings on long-term contracts
    
    
    8,815
    
    
    
    8,172Accrued compensation and retirement costs
    
    
    14,667
    
    
    
    14,456Deferred service revenue
    
    
    10,221
    
    
    
    7,998Other current liabilities
    
    
    19,765
    
    
    
    10,073Total current liabilities
    
    
    86,054
    
    
    
    67,362Long-term debt, excluding current installments
    
    
    37,063
    
    
    
    9,250Deferred income taxes
    
    
    10,698
    
    
    
    Other liabilities
    
    
    17,449
    
    
    
    8,011Total liabilities
    
    
    151,264
    
    
    
    84,623Shareholders equity:Preferred stock of $1.00 par value per share; Authorized 10,000 shares; none issued
    
    
    
    
    
    
    Common stock of $.10 par value per share; Authorized 75,000 shares, issued and
outstanding 15,246 in 2009 and 15,188 in 2008
    
    
    1,525
    
    
    
    1,519Additional paid-in capital
    
    
    134,461
    
    
    
    133,270Accumulated other comprehensive loss  foreign currency translation adjustment
    
    
    (2,604
    )
    
    
    (5,500
    )Retained earnings
    
    
    113,671
    
    
    
    113,453Total shareholders equity
    
    
    247,053
    
    
    
    242,742Commitments and contingenciesTotal liabilities and shareholders equity
    
    $
    398,317
    
    
    
    327,365
  4




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EMS Technologies, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
 Six Months EndedJuly 4
    
    
    June 282009
    
    
    2008Cash flows from operating activities:Net earnings
    
    $
    218
    
    
    
    7,571Adjustments to reconcile net earnings to net cash provided byoperating activities:Depreciation and amortization
    
    
    10,160
    
    
    
    5,693Deferred income taxes
    
    
    
    
    
    
    (742
    )Stock-based compensation expense
    
    
    1,070
    
    
    
    972Change in fair value of contingent consideration liability
    
    
    1,767
    
    
    
    Changes in operating assets and liabilities, net of effects of acquisitions:Trade accounts receivable
    
    
    3,331
    
    
    
    (2,231
    )Costs and estimated earnings in excess of billings on long-term contracts
    
    
    4,607
    
    
    
    305Inventories
    
    
    3,211
    
    
    
    (3,799
    )Accounts payable
    
    
    (2,140
    )
    
    
    5,647Other
    
    
    (172
    )
    
    
    (6,658
    )Net cash provided by operating activities
    
    
    22,052
    
    
    
    6,758Cash flows from investing activities:Purchases of property, plant and equipment
    
    
    (8,064
    )
    
    
    (5,861
    )Payments for acquisitions of businesses, net of cash acquired
    
    
    (87,264
    )
    
    
    (15,856
    )Proceeds from sales of assets
    
    
    36
    
    
    
    506Net cash used in investing activities
    
    
    (95,292
    )
    
    
    (21,211
    )Cash flows from financing activities:Net borrowings under revolving credit facility
    
    
    28,501
    
    
    
    Repayment of other debt
    
    
    (635
    )
    
    
    (2,551
    )Deferred financing costs paid
    
    
    (251
    )
    
    
    (1,041
    )Proceeds from the exercise of stock options
    
    
    238
    
    
    
    756Payments for repurchase and retirement of common shares
    
    
    (110
    )
    
    
    Net cash provided by (used in) financing activities
    
    
    27,743
    
    
    
    (2,836
    )Effect of changes in exchange rates on cash and cash equivalents
    
    
    595
    
    
    
    860Net change in cash and cash equivalents
    
    
    (44,902
    )
    
    
    (16,429
    )Cash and cash equivalents at beginning of period
    
    
    86,979
    
    
    
    133,959Cash and cash equivalents at end of period
    
    $
    42,077
    
    
    
    117,530
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EMS Technologies, Inc. and Subsidiaries
Notes to Consolidated Financial Statements (Unaudited)
July 4, 2009 and June 28, 2008
 1. Basis of Presentation
    Managements Use of Estimates
   Accounting Changes
 Fair Value Measurements
 Determining Fair Value
When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and
Identifying Transactions That Are Not Orderly,
 6




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Interim Disclosures about
Fair Value of Financial Instruments Disclosures about Fair Value of Financial Instruments
 Business Combinations
 
    
    An acquiring entity must recognize all the assets acquired and liabilities assumed in a
business combination at the acquisition-date fair value, as determined under the provisions
of SFAS No. 157;
    
    Transaction costs are expensed as incurred, and are classified within cash flows from
operating activities in the consolidated statement of cash flows. Such costs were
previously capitalized as part of the cost of an acquisition, and were classified within
cash flows from investing activities in the consolidated statement of cash flows;
    
    Contingent consideration is recognized at fair value at the acquisition date as a
liability or as equity. Subsequent adjustments of an amount recognized as a liability,
including accretion of the discounted liability, are recognized in the statement of
operations. Contingent consideration was previously accounted for as an adjustment to the
cost of the acquisition when the results of the contingency were determined;
    
    Subsequent changes to valuation allowances against deferred tax assets after the
measurement period are recognized as an adjustment to income tax expense. Such changes
were previously reflected as an adjustment to goodwill. This provision of SFAS No. 141(R)
also applies to acquisitions completed prior to the effective date;
    
    Acquired in-process research and development (IPR&D) is recognized as an asset at fair
value at the acquisition date, with the fair value recognized as an expense as the asset is
realized or abandoned. IPR&D was previously expensed at the acquisition date; and
    
    Costs associated with restructuring or exit activities of an acquired entity are
expensed when incurred. Previously, such costs were recorded as liabilities at the
acquisition date if specified criteria were met.
 Business Combinations
 Accounting for Assets Acquired and
Liabilities Assumed in a Business Combination That Arise from Contingencies Determination of the Useful Life of Intangible Assets Goodwill and Other Intangible Assets
 7




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Accounting for Contingencies
 Subsequent Events
 Recently Issued Pronouncements Not Yet Adopted
 The FASB Accounting Standards Codification and
Hierarchy of GAAP The Hierarchy of Generally Accepted
Accounting Principles FASB Accounting Standards Codification TM
 2. Business Combinations
      8




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Acquisition Date Fair Value MeasurementsMeasurementAs of
    
    
    Period
    
    
    As ofApril 4, 2009
    
    
    Adjustments
    
    
    July 4, 2009Cash
    
    $
    5.0
    
    
    
    
    
    
    
    5.0Receivables
    
    
    4.7
    
    
    
    
    
    
    
    4.7Inventories
    
    
    10.4
    
    
    
    
    
    
    
    10.4Developed technology
    
    
    21.2
    
    
    
    2.8
    
    
    
    24.0Customer relationships
    
    
    11.8
    
    
    
    3.9
    
    
    
    15.7Other
identifiable intangible assets
    
    
    8.2
    
    
    
    (0.9
    )
    
    
    7.3Other assets
    
    
    4.1
    
    
    
    0.4
    
    
    
    4.5Payables and accrued expenses
    
    
    (8.5
    )
    
    
    
    
    
    
    (8.5
    )Deferred tax liabilities
    
    
    (9.9
    )
    
    
    (1.7
    )
    
    
    (11.6
    )47.0
    
    
    
    4.5
    
    
    
    51.5Goodwill
    
    
    54.2
    
    
    
    (4.5
    )
    
    
    49.7$
    101.2
    
    
    
    
    
    
    
    101.2
  9




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Goodwill and Other Intangible Assets
   Three Months Ended
    
    Six Months EndedJuly 4
    
    June 28
    
    July 4
    
    June 282009
    
    2008
    
    2009
    
    2008Net sales
    
    $
    96,938
    
    
    
    92,952
    
    
    
    192,214
    
    
    
    179,032Net earnings (loss)
    
    
    3,186
    
    
    
    (285
    )
    
    
    683
    
    
    
    (2,603
    )
 3. Goodwill and Other Intangible Assets
  10




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Communications& Tracking
    
    
    LXE
    
    
    TotalBalance as of December 31, 2008
    
    $
    11,007
    
    
    
    20,395
    
    
    
    31,402Goodwill acquired during period
    
    
    49,700
    
    
    
    
    
    
    
    49,700Foreign currency translation adjustment
    
    
    
    
    
    
    (676
    )
    
    
    (676
    )Balance as of July 4, 2009
    
    $
    60,707
    
    
    
    19,719
    
    
    
    80,426
   Gross
    
    
    
    
    
    
    NetCarrying
    
    
    Accumulated
    
    
    CarryingAmount
    
    
    Amortization
    
    
    AmountDeveloped technology
    
    $
    39,840
    
    
    
    10,570
    
    
    
    29,270Customer relationships
    
    
    19,111
    
    
    
    1,402
    
    
    
    17,709Trade names and trademarks
    
    
    6,035
    
    
    
    654
    
    
    
    5,381Other
    
    
    2,208
    
    
    
    1,275
    
    
    
    933$
    67,194
    
    
    
    13,901
    
    
    
    53,293
  4. Fair Value of Financial Instruments
  
    
    Level 1  Observable inputs consisting of quoted prices in active markets;
    
    Level 2  Inputs, other than quoted prices in active markets, that are observable
either directly or indirectly; and
    
    Level 3  Unobservable inputs in which there is little or no market data, which
require the reporting entity to develop its own assumptions.
  11




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Three Months
    
    
    Six MonthsEnded
    
    
    EndedJuly 4, 2009
    
    
    July 4, 2009Balance at the beginning of the period
    
    $
    10,888
    
    
    
    Acquisitions
    
    
    
    
    
    
    10,500Fair value adjustment, including accretion
    
    
    1,379
    
    
    
    1,767Balance at the end of the period
    
    $
    12,267
    
    
    
    12,267
  12




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5. Interim Segment Disclosures
  Three Months Ended
    
    
    Six Months EndedJuly 4
    
    
    June 28
    
    
    July 4
    
    
    June 282009
    
    
    2008
    
    
    2009
    
    
    2008Net sales:Communications & Tracking
    
    $
    41,942
    
    
    
    24,791
    
    
    
    83,368
    
    
    
    50,613Defense & Space
    
    
    25,189
    
    
    
    18,945
    
    
    
    52,097
    
    
    
    34,407LXE
    
    
    29,807
    
    
    
    37,543
    
    
    
    53,751
    
    
    
    71,753Total
    
    $
    96,938
    
    
    
    81,279
    
    
    
    189,216
    
    
    
    156,773Operating income (loss):Communications & Tracking
    
    $
    3,795
    
    
    
    1,397
    
    
    
    8,102
    
    
    
    4,480Defense & Space
    
    
    2,301
    
    
    
    1,871
    
    
    
    5,193
    
    
    
    2,435LXE
    
    
    214
    
    
    
    726
    
    
    
    (4,847
    )
    
    
    1,203Corporate & Other
    
    
    (2,955
    )
    
    
    (587
    )
    
    
    (7,035
    )
    
    
    (1,274
    )Total
    
    $
    3,355
    
    
    
    3,407
    
    
    
    1,413
    
    
    
    6,844Earnings (loss) before income taxes:Communications & Tracking
    
    $
    4,238
    
    
    
    1,655
    
    
    
    9,387
    
    
    
    5,009Defense & Space
    
    
    2,301
    
    
    
    1,867
    
    
    
    5,193
    
    
    
    2,431LXE
    
    
    (22
    )
    
    
    829
    
    
    
    (5,160
    )
    
    
    1,232Corporate & Other
    
    
    (3,491
    )
    
    
    (456
    )
    
    
    (9,362
    )
    
    
    (659
    )Total
    
    $
    3,026
    
    
    
    3,895
    
    
    
    58
    
    
    
    8,013Depreciation and amortization:Communications & Tracking
    
    $
    3,482
    
    
    
    686
    
    
    
    6,157
    
    
    
    1,984Defense & Space
    
    
    849
    
    
    
    715
    
    
    
    1,655
    
    
    
    1,387LXE
    
    
    942
    
    
    
    1,278
    
    
    
    1,783
    
    
    
    1,855Corporate & Other
    
    
    280
    
    
    
    261
    
    
    
    565
    
    
    
    467Total
    
    $
    5,553
    
    
    
    2,940
    
    
    
    10,160
    
    
    
    5,693
  13




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July 4
    
    
    December 312009
    
    
    2008Assets:Communications & Tracking
    
    $
    214,862
    
    
    
    99,323Defense & Space
    
    
    57,230
    
    
    
    47,417LXE
    
    
    100,105
    
    
    
    107,230Corporate & Other
    
    
    26,120
    
    
    
    73,395Total
    
    $
    398,317
    
    
    
    327,365Concentration of net assets by geographic region:United States
    
    $
    87,904
    
    
    
    128,692Canada
    
    
    50,628
    
    
    
    53,252Europe
    
    
    101,965
    
    
    
    53,801Other
    
    
    6,556
    
    
    
    6,997Total
    
    $
    247,053
    
    
    
    242,742
 6. Earnings Per Share
  Three Months Ended
    
    Six Months EndedJuly 4
    
    June 28
    
    July 4
    
    June 282009
    
    2008
    
    2009
    
    2008Basic weighted-average number of common shares
outstanding
    
    
    15,159
    
    
    
    15,574
    
    
    
    15,152
    
    
    
    15,561Dilutive potential shares using the treasury share method
    
    
    66
    
    
    
    197
    
    
    
    92
    
    
    
    210Diluted weighted-average number of common shares
outstanding
    
    
    15,225
    
    
    
    15,771
    
    
    
    15,244
    
    
    
    15,771Shares that were not included in computation of diluted earnings
per share that could potentially dilute future basic earnings
per share because their effect on the periods were antidilutive
    
    
    653
    
    
    
    165
    
    
    
    572
    
    
    
    139
 7. Comprehensive Income
  Three Months Ended
    
    
    Six Months EndedJuly 4
    
    
    June 28
    
    
    July 4
    
    
    June 282009
    
    
    2008
    
    
    2009
    
    
    2008Net earnings
    
    $
    3,186
    
    
    
    3,411
    
    
    
    218
    
    
    
    7,571Other comprehensive income:Foreign currency translation adjustment
    
    
    4,076
    
    
    
    97
    
    
    
    2,896
    
    
    
    1,005$
    7,262
    
    
    
    3,508
    
    
    
    3,114
    
    
    
    8,576
 14




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8. Inventories
  July 4
    
    
    December 312009
    
    
    2008Parts and materials
    
    $
    29,529
    
    
    
    26,730Work-in-process
    
    
    5,835
    
    
    
    2,404Finished goods
    
    
    7,920
    
    
    
    6,536$
    43,284
    
    
    
    35,670
 9. Revolving Credit Facility
   10. Warranty Liability
  Three Months Ended
    
    
    Six Months EndedJuly 4
    
    
    June 28
    
    
    July 4
    
    
    June 282009
    
    
    2008
    
    
    2009
    
    
    2008Balance at beginning of the period
    
    $
    3,380
    
    
    
    2,869
    
    
    
    2,789
    
    
    
    2,647Additions at dates of acquisition for businesses
acquired during period
    
    
    
    
    
    
    
    
    
    
    516
    
    
    
    Accruals for warranties issued during the period
    
    
    1,278
    
    
    
    776
    
    
    
    2,253
    
    
    
    1,806Settlements made during the period
    
    
    (862
    )
    
    
    (663
    )
    
    
    (1,762
    )
    
    
    (1,471
    )Balance at end of period
    
    $
    3,796
    
    
    
    2,982
    
    
    
    3,796
    
    
    
    2,982
 11. Stock-Based Compensation
  15




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##### Table of Contents



12. Income Taxes
   13. Discontinued Operations
   14. Common Shares
   16




---



##### Table of Contents



15. Litigation
  17




---



##### Table of Contents



Item 2. Management s Discussion and Analysis of Financial Condition and Results of Operations
   
    
    Communications & Trackingsupplies a broad array of terminals and antennas that enable
end-users in aircraft and other mobile platforms to communicate over satellite and
air-to-ground links. This segment includes the product lines previously reported in the
Satellite Communications segment, and the newly acquired Formation, Inc. (Formation) and
Satamatics Global Limited (Satamatics) product lines which include aeronautical wi-fi
communications and data storage, aeronautical voice and tracking, and satellite-based
machine-to-machine mobile communications (refer to Note 2 of the consolidated financial
statements in Item 1 of this Quarterly Report for additional information);
    
    Defense & Space (D&S)supplies highly engineered subsystems for defense electronics
and sophisticated satellite applications  from military communications, radar,
surveillance and countermeasures to commercial high-definition television, satellite radio,
and live TV for innovative airlines; and
    
    LXEprovides rugged mobile terminals and wireless data networks used for logistics
applications such as distribution centers, warehouses and container ports. LXE operates
mainly in two markets: the Americas market which is comprised of North, South and Central
America; and the International market, which is comprised of all other geographic areas,
with the highest concentration in Europe.
  
    
    We completed the acquisitions of Formation and Satamatics on January 9, 2009 and
February 13, 2009, respectively. These newly acquired product lines along with Sky
Connect, LLC (Sky Connect), which was acquired in August of 2008, contributed $19.0
million and $36.3 million of net sales, and $0.3 million and $0.6 million in earnings
before income taxes in the second quarter and first six months of 2009.
    
    Consolidated net sales grew by 19.3% and 20.7% in the second quarter and first six
months of 2009, respectively, as compared with the same periods of 2008 mainly due to
higher net sales at Communications & Tracking (principally reflecting the newly acquired
product lines), and D&S, partially offset by lower net sales at LXE (reflecting the
challenging global economic climate).
    
    Our net earnings for the six months ended July 4, 2009 included $5.5 million of
acquisition-related charges that are now required to be reported as a current expense per
Statement of Financial Accounting Standards (SFAS) No. 141(R), Business Combinations,
$4.3 million of amortization of intangible assets related to our new acquisitions, and
approximately $2.3 million of severance costs. Our net earnings for the three months ended
July 4, 2009 included $1.6 million of acquisition-related charges, $2.5 million of
amortization of intangible assets related to our new acquisitions, and approximately $1.2
million of severance costs.
    
    Our markets are strong but not immune to increasing pressures and risks. The current
economic conditions are affecting our businesses and we expect that we will continue to be
faced with these economic pressures throughout at least  the remainder of 2009. These and other
factors could cause a decline in expected future cash flows for one or more of our business
units (including LXE and our recently acquired businesses) and require us to recognize an
impairment loss related to goodwill or other intangible assets.
 18




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Description of Net Sales, Costs and Expenses
 Net sales
 Revenue Arrangements with Multiple Deliverables, Software Revenue Recognition,
  Cost of sales
      19




---



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Selling, general and administrative expenses
  Research and development expenses
  Acquisition-related charges
  Interest income
  Interest expense
  Foreign exchange gains and losses
   Income taxes
  20




---



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Results of Operations
  Three Months Ended
    
    Six Months EndedJuly 4
    
    June 28
    
    July 4
    
    June 282009
    
    2008
    
    2009
    
    2008Product net sales
    
    
    78.3
    %
    
    
    81.1
    
    
    
    76.5
    
    
    
    82.7Service net sales
    
    
    21.7
    
    
    
    18.9
    
    
    
    23.5
    
    
    
    17.3Net sales
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.0Product cost of sales as a percentage of product net sales
    
    
    66.8
    
    
    
    64.4
    
    
    
    67.6
    
    
    
    63.3Service cost of sales as a percentage of service net sales
    
    
    62.9
    
    
    
    60.1
    
    
    
    66.3
    
    
    
    60.5Cost of sales
    
    
    66.0
    
    
    
    63.6
    
    
    
    67.3
    
    
    
    62.9Selling, general and administrative expenses
    
    
    24.4
    
    
    
    25.4
    
    
    
    24.5
    
    
    
    26.0Research and development expenses
    
    
    4.4
    
    
    
    6.8
    
    
    
    4.6
    
    
    
    6.7Acquisition-related charges
    
    
    1.7
    
    
    
    
    
    
    
    2.9
    
    
    
    Operating income
    
    
    3.5
    
    
    
    4.2
    
    
    
    0.7
    
    
    
    4.4Interest income
    
    
    0.1
    
    
    
    0.9
    
    
    
    0.1
    
    
    
    1.1Interest expense
    
    
    (0.7
    )
    
    
    (0.5
    )
    
    
    (0.7
    )
    
    
    (0.5
    )Foreign exchange gain (loss), net
    
    
    0.2
    
    
    
    0.2
    
    
    
    (0.1
    )
    
    
    0.1Earnings before income taxes
    
    
    3.1
    
    
    
    4.8
    
    
    
    
    
    
    
    5.1Income tax benefit (expense)
    
    
    0.2
    
    
    
    (0.6
    )
    
    
    0.1
    
    
    
    (0.3
    )Net earnings
    
    
    3.3
    %
    
    
    4.2
    
    
    
    0.1
    
    
    
    4.8
 Three Months ended July 4, 2009 and June 28, 2008:
    21




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Six Months ended July 4, 2009 and June 28, 2008:
  22




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23




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Net Sales, Cost of Sales, and Operating Income (Loss) by Segment
  Percentage IncreaseThree Months Ended
    
    
    Six Months Ended
    
    
    (Decrease)July 4
    
    
    June 28
    
    
    July 4
    
    
    June 28
    
    
    Three
    
    
    Six2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    Months
    
    
    MonthsNet sales:Communications & Tracking
    
    $
    41,942
    
    
    
    24,791
    
    
    
    83,368
    
    
    
    50,613
    
    
    
    69.2
    %
    
    
    64.7Defense & Space
    
    
    25,189
    
    
    
    18,945
    
    
    
    52,097
    
    
    
    34,407
    
    
    
    33.0
    
    
    
    51.4LXE
    
    
    29,807
    
    
    
    37,543
    
    
    
    53,751
    
    
    
    71,753
    
    
    
    (20.6
    )
    
    
    (25.1
    )Total
    
    $
    96,938
    
    
    
    81,279
    
    
    
    189,216
    
    
    
    156,773
    
    
    
    19.3
    
    
    
    20.7Cost of sales percentage:Communications & Tracking
    
    
    60.5
    %
    
    
    60.7
    
    
    
    61.3
    
    
    
    58.5
    
    
    
    (0.2
    )
    
    
    2.8Defense & Space
    
    
    80.6
    
    
    
    74.7
    
    
    
    79.4
    
    
    
    76.4
    
    
    
    5.9
    
    
    
    3.0LXE
    
    
    61.1
    
    
    
    59.1
    
    
    
    63.8
    
    
    
    58.9
    
    
    
    2.0
    
    
    
    4.9Total
    
    
    66.0
    
    
    
    63.6
    
    
    
    67.3
    
    
    
    62.9
    
    
    
    2.4
    
    
    
    4.4Operating income (loss):Communications & Tracking
    
    $
    3,795
    
    
    
    1,397
    
    
    
    8,102
    
    
    
    4,480
    
    
    
    171.7
    
    
    
    80.8Defense & Space
    
    
    2,301
    
    
    
    1,871
    
    
    
    5,193
    
    
    
    2,435
    
    
    
    23.0
    
    
    
    113.3LXE
    
    
    214
    
    
    
    726
    
    
    
    (4,847
    )
    
    
    1,203
    
    
    
    (70.5
    )
    
    
    (502.9
    )Corporate & Other
    
    
    (2,955
    )
    
    
    (587
    )
    
    
    (7,035
    )
    
    
    (1,274
    )
    
    
    (403.4
    )
    
    
    452.2Total
    
    $
    3,355
    
    
    
    3,407
    
    
    
    1,413
    
    
    
    6,844
    
    
    
    (1.5
    )
    
    
    (79.4
    )
 Communications & Tracking: ®
   24




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##### Table of Contents



Defense & Space:
   LXE:
   25




---



##### Table of Contents



Corporate & Other:
 Backlog
  July 4
    
    
    December 312009
    
    
    2008Defense & Space
    
    $
    102.9
    
    
    
    114.9Communications & Tracking
    
    
    77.4
    
    
    
    58.4LXE
    
    
    13.6
    
    
    
    12.6Total
    
    $
    193.9
    
    
    
    185.9
  Liquidity and Capital Resources
     26




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Off-Balance Sheet Arrangements
    27




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Commitments and Contractual Obligations
 .
 Critical Accounting Policies
  Risk Factors and Forward-Looking Statements
  
    
    economic conditions in the U.S. and abroad and their effect on capital spending in our
principal markets;
    
    difficulty predicting the timing of receipt of major customer orders, and the effect of
customer timing decisions on our results;
    
    our successful completion of technological development programs 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 currency exchange rates relative to the U.S. dollar and their
effect on purchasing power by international customers, and on the cost structure of our
operations outside the U.S., as well as the
 28




---



##### Table of Contents




    
    successful resolution of technical problems, proposed scope changes, or proposed funding
changes that may be encountered on contracts;
    
    changes in our 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 our products are returned for repair or replacement under
warranty;
    
    customer response to new products and services, and general conditions in our 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 our customers in marketing our line of high-speed commercial
airline communications products as a complementary offering with their own lines of
avionics products;
    
    the continued availability of financing for various mobile and high-speed data
communications systems;
    
    risk that the recent turmoil in the credit markets may make it more difficult for some
customers to obtain financing and adversely affect their ability to pay, which in turn
could have an adverse impact on our business, operating results, and financial condition;
    
    development of successful working relationships with local business and government
personnel in connection with the distribution and manufacture of products in foreign
countries;
    
    the demand growth for various mobile and high-speed data communications services;
    
    our ability to attract and retain qualified senior management and other personnel,
particularly those with key technical skills;
    
    our ability to effectively integrate our acquired businesses, products or technologies
into our existing businesses and products, and the risk that any such acquired businesses,
products or technologies do not perform as expected, are subject to undisclosed or
unanticipated liabilities, or are otherwise dilutive to our earnings;
    
    the increased potential for asset impairment charges as unfavorable economic conditions
might affect the fair value of one or more of our business units;
    
    the potential effects of SFAS No. 141 (R), Business Combinations, which requires, for
acquisitions completed in 2009 and thereafter, that certain acquisition-related
expenditures should be accounted for as period expenses in the income statement, and that
the acquisition-date fair value will become the measurement objective for all assets
acquired and liabilities assumed, resulting in potential unfavorable effects on the income
statement, including charges to reflect changes in the amounts expected to be paid on
post-acquisition earn-outs, as well as for the accretion of the discounted value of the
estimated payments;
    
    the potential effects, on cash and results of discontinued operations, of final
resolution of potential liabilities under warranties and representations that we made, and
obligations assumed by purchasers, in connection with our dispositions of discontinued
operations;
    
    the availability, capabilities and performance of suppliers of basic materials,
electronic components and sophisticated subsystems on which we 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 our ability to hold technical discussions with customers, suppliers and internal
engineering resources and can reduce
 29




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##### Table of Contents



Effect of New Accounting Pronouncements
  Adoption of Shareholder Rights Plan
  30




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures about Market Risk
  Government-obligations money market funds, other money market
instruments, and interest-bearing time deposits, with maturity dates
of less than 3 months interest payable monthly at variable rates (a
weighted-average rate of 0.1% at July 4, 2009)
    
    $
    691Revolving credit agreement with U.S. and Canadian
banks, maturing in February 2013, interest payable
quarterly at a variable rate (4.0% at July 4, 2009)
    
    $
    28,500
   Exchange Rate
    
    
    USD(USD per unit of
    
    
    in thousandslocal currency)
    
    
    (reporting currency)Australia
    
    0.7981 /AUD
    
    $
    2,063Canada
    
    0.8608 /CAD
    
    
    815Sweden
    
    0.1284 /SEK
    
    
    575Germany
    
    1.3978 /EUR
    
    
    355Netherlands
    
    1.3978 /EUR
    
    
    337Belgium
    
    1.3978 /EUR
    
    
    289United Kingdom
    
    1.6325 /GBP
    
    
    279France
    
    1.3978 /EUR
    
    
    228Italy
    
    1.3978 /EUR
    
    
    80Total amount subject to foreign currency risk
    
    
    
    
    
    $
    5,021
 31




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##### Table of Contents



Exchange RateFunctionalCurrency per
    
    
    USDCurrency
    
    Functional
    
    
    Denominated
    
    
    EquivalentDenomination
    
    Currency
    
    
    Currency
    
    
    (in thousands)USD
    
    CAD
    
    
    1.1617
    
    
    $
    6,395GBP
    
    CAD
    
    
    1.8981
    
    
    
    1,282USD
    
    EUR
    
    
    0.7154
    
    
    
    862GBP
    
    USD
    
    
    1.6325
    
    
    
    373AUD
    
    CAD
    
    
    0.9279
    
    
    
    265USD
    
    GBP
    
    
    0.6126
    
    
    
    102EUR
    
    CAD
    
    
    1.6258
    
    
    
    98SGD
    
    USD
    
    
    0.6880
    
    
    
    92AED
    
    USD
    
    
    3.6734
    
    
    
    41EUR
    
    GBP
    
    
    0.8565
    
    
    
    20EUR
    
    USD
    
    
    1.3978
    
    
    
    19EUR
    
    SEK
    
    
    10.8750
    
    
    
    7$
    9,556
  Average
    
    
    FairNotional
    
    
    Contract
    
    
    ValueAmount
    
    
    Rate
    
    

(USD)Foreign currency forward contracts:U.S. dollars (sell for Canadian dollars)
    
    25,000
    
    USD
    
    1.1856
    
    
    $
    568U.S. dollars (sell for British pounds)
    
    3,570
    
    USD
    
    1.7000
    
    
    
    56Euros (sell for U.S. dollars)
    
    275
    
    EUR
    
    1.3975
    
    
    
    1British pounds (sell for U.S. dollars)
    
    60
    
    GBP
    
    1.6380
    
    
    
    Swedish Krona (sell for U.S. dollars)
    
    3,000
    
    SEK
    
    0.1274
    
    
    
    (10
    )$
    615
 32




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##### Table of Contents



Item 4. Controls and Procedures
 (a) Evaluation of Disclosure Controls and Procedures
   (b) Changes in Internal Control Over Financial Reporting
  33




---



##### Table of Contents



PART II
 OTHER INFORMATION
 
 Item 1A. Risk Factors
  Unfavorable economic conditions or other developments may affect the fair value of one or more
of our business units and increase the potential for asset impairment charges which could
adversely affect our earnings.
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  ISSUER PURCHASES OF EQUITY SECURITIES
 (c) Total Number
    
    
    (d) Maximum Numberof Shares
    
    
    (or ApproximatePurchased as
    
    
    Dollar Value) ofPart of Publicly
    
    
    Shares that May Yet(a) Total Number
    
    
    (b) Average
    
    
    Announced
    
    
    Be Purchasedof Shares
    
    
    Price Paid
    
    
    Plans or
    
    
    Under the Plans orPeriod
    
    Purchased (1)
    
    
    Per Share
    
    
    Program (2)
    
    
    Programs (3)February 2009 (February 1 to 28)
    
    
    1,633
    
    
    
    
    
    
    
    June 2009 (May 31 to July 4)
    
    
    3,904
    
    
    
    
    
    
    
    Total
    
    
    5,537
    
    
    
    
    
    
    
    
    
    
    $10.2 million
 
 (1)
    
    The category includes 5,537 shares delivered to us by employees to pay withholding
taxes due upon vesting of restricted share awards.(2)
    
    During the period covered by this Quarterly Report on Form 10-Q, no shares were
repurchased under the Companys $20 million repurchase program (the Program) which was
initially announced on July 30, 2008. Unless terminated earlier by resolution of the
Companys Board of Directors, the Program will expire when the Company has purchased all
shares authorized for repurchase. The Program does not obligate the Company to repurchase
any particular amount of common shares, and may be suspended or discontinued at any time
without notice.(3)
    
    This balance represents the value of shares that could be repurchased under the Program
as of July 4, 2009. 34




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##### Table of Contents



Item 4. Submission of Matters to a Vote of Security Holders
  Abstain orBrokerFor
    
    Withheld
    
    Non-VotesHermann Buerger
    
    
    8,712,653
    
    
    
    5,312,968
    
    
    Paul B. Domorski
    
    
    8,764,496
    
    
    
    5,261,125
    
    
    Francis J. Erbrick
    
    
    8,765,881
    
    
    
    5,259,740
    
    
    John R. Kreick
    
    
    8,766,455
    
    
    
    5,259,166
    
    
    John B. Mowell
    
    
    8,404,150
    
    
    
    5,621,471
    
    
    Thomas W. OConnell
    
    
    8,714,792
    
    
    
    5,310,829
    
    
    Bradford W. Parkinson
    
    
    8,717,574
    
    
    
    5,308,047
    
    
    Norman E. Thagard
    
    
    8,707,436
    
    
    
    5,318,185
    
    
    John L. Woodward, Jr.
    
    
    8,755,002
    
    
    
    5,270,619
    
    
    
 Abstain orBrokerFor
    
    Against
    
    Non-VotesSelection of KPMG LLP
    
    
    13,928,353
    
    
    
    90,363
    
    
    
    6,905
 35




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##### Table of Contents



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 4, 2009).3.2
    
    Bylaws of EMS Technologies, Inc., as amended through November 2, 2007 (incorporated by
reference to Exhibit 3.2 to the Companys Quarterly Report on Form 10-Q for the quarter ended March
29, 2008).4.1
    
    EMS Technologies, Inc. Shareholder Rights Plan dated as of August 6, 2009 (incorporated by
reference to Exhibit 4.1 to the Companys Report on Form 8-K dated July 27, 2009).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
    
    Certification of the Companys Chief Executive Officer and Chief Financial Officer pursuant
to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *
 
 *
    
    Filed herewith 36




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##### Table of Contents



SIGNATURES
  EMS TECHNOLOGIES, INC.By:
    
    /s/ Paul B. Domorski
    
    
    
    Date: August 12, 2009Paul B. Domorski
President, and Chief Executive Officer
(Principal Executive Officer)By:
    
    /s/ Gary B. Shell
    
    
    
    Date: August 12, 2009Gary B. Shell
Senior Vice President, Chief Financial
Officer and Treasurer (Principal Financial Officer)
 37