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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 29, 2003

Commission file number 0-6072

EMS TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)


Georgia
    
    58-1035424(State or other jurisdiction of
    
    (IRS Employer ID Number)incorporation or organization)


660 Engineering DriveNorcross, Georgia
    
    30092(Address of principal executive offices)
    
    (Zip Code)


(770) 263-9200
Registrants Telephone Number, Including Area Code

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [  ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). Yes [X] No [  ]

The number of shares outstanding of each of the issuers classes of common
stock, as of the close of business on May 13, 2003:

Class
    
    Number of SharesCommon Stock, $.10 par Value
    
    10,658,038


AVAILABLE INFORMATION

EMS Technologies, Inc. makes available free of charge, on or through its
website at www.ems-t.com, its annual, quarterly and current reports, and any
amendments to those reports, as soon as reasonably practicable after
electronically filing such reports with the Securities and Exchange Commission.
Information contained on the Companys website is not part of this report.

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|                                                   |  |  |  |  |  |  |  | 
|-------------------------------------------------- |  |  |  |  |  |  |  | 
|PART I FINANCIAL INFORMATION                      
|PART II  OTHER INFORMATION                        
|SIGNATURES                                        
|CERTIFICATIONS                                    
|EX-99.1 SECTION 906 CERTIFICATION OF THE CEO & CFO



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PART I

FINANCIAL INFORMATION

ITEM 1.       Financial Statements

EMS Technologies, Inc. and Subsidiaries
Consolidated Statements of Earnings (Unaudited)
(In thousands, except net earnings per share data)

Quarters EndedMar 29
    
    Mar 302003
    
    2002Net sales
    
    $
    66,536
    
    
    
    70,439Cost of sales
    
    
    44,797
    
    
    
    45,289Selling, general and administrative expenses
    
    
    14,769
    
    
    
    14,863Research and development expenses
    
    
    6,334
    
    
    
    6,651Operating income
    
    
    636
    
    
    
    3,636Non-operating expense
    
    
    (78
    )
    
    
    (66
    )Foreign exchange gain
    
    
    272
    
    
    
    284Interest expense
    
    
    (796
    )
    
    
    (837
    )Earnings before income taxes
    
    
    34
    
    
    
    3,017Income tax expense
    
    
    (12
    )
    
    
    (905
    )Net earnings
    
    $
    22
    
    
    
    2,112Net earnings per share:Basic
    
    
    
    
    
    
    0.20Diluted
    
    
    
    
    
    
    0.20Weighted average number of shares:Basic
    
    
    10,658
    
    
    
    10,439Diluted
    
    
    10,671
    
    
    
    10,660


See accompanying notes to interim consolidated financial statements.

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EMS Technologies, Inc. and Subsidiaries
Consolidated Balance Sheets (Unaudited)
(in thousands)

Mar 29
    
    Dec 312003
    
    2002ASSETSCurrent assets:Cash and cash equivalents
    
    $
    9,596
    
    
    
    12,430Trade accounts receivable
    
    
    92,360
    
    
    
    101,828Inventories
    
    
    45,494
    
    
    
    41,003Deferred income taxes
    
    
    1,693
    
    
    
    1,693Total current assets
    
    
    149,143
    
    
    
    156,954Property, plant and equipment:Land
    
    
    3,625
    
    
    
    3,450Building and leasehold improvements
    
    
    21,003
    
    
    
    20,512Machinery and equipment
    
    
    86,119
    
    
    
    81,516Furniture and fixtures
    
    
    6,902
    
    
    
    6,751Total property, plant and equipment
    
    
    117,649
    
    
    
    112,229Less accumulated depreciation and amortization
    
    
    64,455
    
    
    
    60,821Net property, plant and equipment
    
    
    53,194
    
    
    
    51,408Investment in SkyBridge LLP
    
    
    17,909
    
    
    
    17,909Deferred income taxes  non-current
    
    
    1,875
    
    
    
    1,780Accrued pension asset
    
    
    2,764
    
    
    
    2,739Intangible assets, net
    
    
    3,622
    
    
    
    3,499Goodwill, net
    
    
    13,526
    
    
    
    13,526Other assets
    
    
    11,510
    
    
    
    8,487$
    253,543
    
    
    
    256,302


See accompanying notes to interim consolidated financial statements.

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EMS Technologies, Inc. and Subsidiaries
Consolidated Balance Sheets (Unaudited), continued
(in thousands, except share data)

Mar 29
    
    Dec 312003
    
    2002LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Current installments of long-term debt
    
    $
    36,796
    
    
    
    33,920Accounts payable
    
    
    29,750
    
    
    
    35,734Accrued compensation
    
    
    5,013
    
    
    
    7,297Accrued retirement costs
    
    
    3,172
    
    
    
    2,511Accrued post-retirement benefit
    
    
    3,062
    
    
    
    2,767Deferred service revenue
    
    
    5,609
    
    
    
    4,108Other liabilities
    
    
    2,388
    
    
    
    3,212Total current liabilities
    
    
    85,790
    
    
    
    89,549Long-term debt, excluding current installments
    
    
    18,671
    
    
    
    20,768Total liabilities
    
    
    104,461
    
    
    
    110,317Stockholders 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 10,658,000 in 2003
and 2002
    
    
    1,066
    
    
    
    1,066Additional paid-in capital
    
    
    60,867
    
    
    
    60,867Accumulated other comprehensive income
    
    
    (2,746
    )
    
    
    (5,821
    )Retained earnings
    
    
    89,895
    
    
    
    89,873Total stockholders equity
    
    
    149,082
    
    
    
    145,985$
    253,543
    
    
    
    256,302


See accompanying notes to interim consolidated financial statements.

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EMS Technologies, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
(in thousands)

Quarters EndedMar 29
    
    Mar 302003
    
    2002Cash flows from operating activities:Net earnings
    
    $
    22
    
    
    
    2,112Adjustments to reconcile net earnings to net cash from
operating activities:Depreciation and amortization
    
    
    3,063
    
    
    
    2,460Changes in operating assets and liabilities:Trade accounts receivable
    
    
    12,398
    
    
    
    (2,211
    )Inventories
    
    
    (3,165
    )
    
    
    (4,331
    )Accounts payable
    
    
    (8,443
    )
    
    
    (1,095
    )Income taxes payable
    
    
    (1,117
    )
    
    
    1,018Accrued costs, deferred revenue and other current
liabilities
    
    
    (828
    )
    
    
    (1,343
    )Other
    
    
    (1,533
    )
    
    
    (400
    )Net cash provided by (used in) operating activities
    
    
    397
    
    
    
    (3,790
    )Cash flows from investing activities:Purchase of property, plant and equipment
    
    
    (2,991
    )
    
    
    (3,838
    )Cash flows from financing activities:Proceeds from new term debt
    
    
    
    
    
    
    2,331Repayments of term debt
    
    
    (454
    )
    
    
    (536
    )Net (decrease) increase in revolving debt
    
    
    (121
    )
    
    
    2,658Proceeds from exercise of stock options, net of withholding
    
    
    
    
    
    
    398Net cash provided by (used in) financing activities
    
    
    (575
    )
    
    
    4,851Net change in cash and cash equivalents
    
    
    (3,169
    )
    
    
    (2,777
    )Effect of exchange rates on cash
    
    
    335
    
    
    
    270Cash and cash equivalents at beginning of period
    
    
    12,430
    
    
    
    11,777Cash and cash equivalents at end of period
    
    $
    9,596
    
    
    
    9,270Supplemental disclosure of cash flow information:Cash paid for interest
    
    $
    978
    
    
    
    964Cash paid for income taxes
    
    
    156
    
    
    
    117


See accompanying notes to interim consolidated financial statements.

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EMS Technologies, Inc. and Subsidiaries
Notes to Interim Consolidated Financial Statements (Unaudited)



|1. |  | Basis of Presentation
|-- |  | ---------------------



| |  | The interim consolidated financial statements include the accounts of EMS
Technologies, Inc. and its wholly-owned subsidiaries LXE Inc. and EMS
Technologies Canada, Ltd. (collectively, the Company). In the opinion of
management, the interim consolidated financial statements reflect all normal
and recurring adjustments necessary for a fair presentation of results for
such periods. The results of operations for any interim period are not
necessarily indicative of results for the full year. Certain prior period
financial statement balances have been reclassified to conform to the
current periods classification. These consolidated financial statements
should be read in conjunction with the consolidated financial statements and
related notes contained in the Companys Annual Report on Form 10-K for the
year ended December 31, 2002.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  Stock Option Plans
| |  | --------------------



| |  | Prior to January 1, 1996, the Company accounted for its stock option plans
in accordance with the provisions of Accounting Principles Board (APB)
Opinion No. 25, Accounting for Stock Issued to Employees, and related
interpretations. As such, compensation expense would be recorded on the date
of grant only if the current market price of the underlying stock exceeded
the exercise price. On January 1, 1996, the Company adopted
Statement of Financial Accounting Standards (SFAS) No. 123,
Accounting for Stock-Based Compensation, which permits entities to
recognize as expense, over the vesting period, the fair value of all
stock-based awards on the date of grant. Alternatively, SFAS No. 123 also
allows entities to continue to apply the provisions of APB Opinion No. 25
and provide pro forma net earnings and pro forma earnings per share
disclosures for employee stock option grants made in 1995 and future years
as if the fair-value-based method defined in SFAS No. 123 had been applied.
The Company has elected to continue to apply the provisions of APB Opinion
No. 25 and provide the pro forma disclosure required by SFAS No. 123.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The Company has adopted SFAS No. 148, Accounting for Stock-Based
Compensation  Transition and Disclosure, including the interim reporting
requirements. The following table illustrates the effect on net earnings and
earnings per share if the Company had applied the fair value method to
measure stock-based compensation (in thousands, except net earnings per
share):
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Quarters EndedMar 29
    
    Mar 302003
    
    2002Net
earnings (loss):As reported
    
    $
    22
    
    
    
    2,112Stock-based employee compensation expense
determined under the fair value method, net
of tax
    
    
    612
    
    
    
    439Pro forma
    
    $
    (590
    )
    
    
    1,673Basic
net earnings (loss) per share:As reported
    
    $
    
    
    
    
    0.20Pro forma
    
    
    (0.06
    )
    
    
    0.16Diluted
net earnings (loss) per share:As reported
    
    
    
    
    
    
    0.20Pro forma
    
    
    (0.06
    )
    
    
    0.16


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|2. |  | Derivative Financial Instruments
|-- |  | --------------------------------



| |  | The Company uses derivative financial instruments (forward exchange
contracts) to hedge currency fluctuations in future cash flows denominated
in foreign currencies, thereby limiting the Companys risk that would
otherwise result from changes in exchange rates. The Company has established
policies and procedures for risk assessment and the approval, reporting and
monitoring of derivative financial instrument activities. The Company does
not enter into derivative financial instruments for trading or speculative
purposes.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities, requires the Company to
recognize all derivatives on the balance sheet at fair value. Under SFAS
No. 133, certain of the Companys routine long-term contracts to deliver
Space & Technology products are considered to be derivative instruments,
because these contracts create long-term obligations for non-U.S. customers
to pay the Companys Canadian subsidiary in U.S. dollars. Changes in the
fair values of these embedded derivatives are included in current earnings.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The derivative activity as reported in the Companys financial statements
during the quarters was (in thousands):
| |  | -----------------------------------------------------------------------------------------------------------------

Quarters EndedMar 29
    
    Mar 302003
    
    2002Net liability for derivatives, beginning of quarter
    
    $
    (246
    )
    
    
    (166
    )Sales:Gain in value of embedded derivatives
    
    
    88
    
    
    
    159Foreign exchange gain on derivative instruments:Gain in value on derivative instruments that
do not qualify as hedging instruments
    
    
    1,051
    
    
    
    149Net statement of earnings gain from changes in
value of derivative instruments
    
    
    1,139
    
    
    
    308Net asset for derivatives, end of quarter
    
    $
    893
    
    
    
    142




| |  | All of the foreign currency contracts currently in place will expire by the
end of the third quarter of 2003.
| |  | -------------------------------------------------------------------------------------------------------------



|3. |  | Earnings per Share
|-- |  | ------------------



| |  | Basic earnings per share is the per share allocation of income available to
common stockholders based only on the weighted average number of common
shares actually
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| |  | outstanding during the period. Diluted earnings per share
represents the per share allocation of income attributable to common
stockholders based on the weighted average number of common shares actually
outstanding plus all dilutive potential common shares outstanding during the
period.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The Company has granted stock options that are potentially dilutive to basic
earnings per share, summarized as follows (shares in thousands):
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------

Quarters EndedMar 29
    
    Mar 302003
    
    2002Dilutive stock options, included in earnings
per share calculations:Shares
    
    
    531
    
    
    
    1,600Average price per share
    
    $
    13.74
    
    
    
    15.15Anti-dilutive stock options, excluded from
earnings per share calculations:Shares
    
    
    1,363
    
    
    
    258Average price per share
    
    $
    18.60
    
    
    
    23.01




| |  | For each earnings per share calculation reported for the first quarter
of 2003 and 2002, the numerators were the same as reported in the income
statement. Following is a reconciliation of the denominator for basic and
diluted earnings per share calculations for the first quarter (in
thousands):
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Quarters EndedMar 29
    
    Mar 302003
    
    2002Basic-weighted average common shares outstanding
    
    
    10,658
    
    
    
    10,439Common equivalent shares from stock options
    
    
    13
    
    
    
    221Diluted-weighted average common and common
equivalent shares outstanding
    
    
    10,671
    
    
    
    10,660




|4. |  | Comprehensive Income (Loss)
|-- |  | ---------------------------



| |  | Following is a summary of comprehensive income (loss) (in thousands):
| |  | ---------------------------------------------------------------------

Quarters EndedMar 29
    
    Mar 302003
    
    2002Net income
    
    $
    22
    
    
    
    2,112Other comprehensive income (loss) -Foreign currency translation adjustment
    
    
    3,230
    
    
    
    270Change in value of investment security
available for sale
    
    
    (155
    )
    
    
    Comprehensive income
    
    $
    3,097
    
    
    
    2,382


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|5. |  | Inventories
|-- |  | -----------



| |  | Inventories included the following (in thousands):
| |  | --------------------------------------------------

Mar 29
    
    Dec 312003
    
    2002Parts and materials
    
    $
    30,275
    
    
    
    27,073Work in process
    
    
    12,007
    
    
    
    9,569Finished goods
    
    
    3,212
    
    
    
    4,361Inventories, net
    
    $
    45,494
    
    
    
    41,003




|6. |  | Interim Segment Disclosures
|-- |  | ---------------------------



| |  | The Company is organized into five reportable segments: Space &
Technology/Atlanta, Space & Technology/Montreal, LXE, EMS Wireless and
SATCOM. Each segment is separately managed and comprises a range of products
and services that share distinct operating characteristics. The Company
evaluates each segment primarily upon operating profit.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The Space & Technology segments manufacture custom-designed, highly
engineered hardware for use in advanced communications. The Space &
Technology/Atlanta segment primarily serves the defense market, while the
Space & Technology/Montreal segment provides products for the commercial
satellite market. Orders in both these segments typically involve
development and production schedules that can extend a year or more, and
most revenues are recognized under percentage-of-completion long-term
contract accounting. Hardware is sold to prime contractors or systems
integrators rather than to end-users.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The LXE segment manufactures wireless local area networks (LAN) products
for use mainly in logistics. The manufacturing cycle for each order is
generally just a few days, and revenues are recognized upon shipment of
hardware. Hardware is marketed to end-users and to third parties that
incorporate their products and services with the Companys hardware for
delivery to end-users.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The EMS Wireless segment manufactures antennas and repeaters for
PCS/cellular communications systems. The manufacturing cycle for each order
is generally just a few days, and revenues are generally recognized upon
shipment of hardware. Hardware is marketed to wireless service providers and
to original equipment manufacturers (OEMs) for mobile voice/paging
services, as well as for other emerging high-speed wireless systems.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The SATCOM segment manufactures antennas and other hardware for satellite
communications systems. The manufacturing cycle for most orders is generally
just a few days, and revenues are recognized upon shipment of hardware. The
SATCOM segment also has orders that involve development and production
schedules that can extend a year or more, and these revenues are recognized
under percentage-of-completion long-term contract accounting. Hardware is
marketed to third parties that incorporate their products and services with
the Companys hardware for delivery to end-users.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| |  | Following is a summary of the Companys interim segment data (in thousands):
| |  | ----------------------------------------------------------------------------

Quarters EndedMar 29
    
    Mar 302003
    
    2002Net sales:Space & Technology/Atlanta
    
    $
    12,088
    
    
    
    11,707Space & Technology/Montreal
    
    
    10,292
    
    
    
    18,264LXE
    
    
    22,099
    
    
    
    19,885EMS Wireless
    
    
    8,806
    
    
    
    12,733SATCOM
    
    
    10,582
    
    
    
    6,305Other
    
    
    2,669
    
    
    
    1,545Total
    
    $
    66,536
    
    
    
    70,439Operating income (loss):Space & Technology/Atlanta
    
    $
    1,008
    
    
    
    632Space & Technology/Montreal
    
    
    (2,995
    )
    
    
    605LXE
    
    
    1,347
    
    
    
    694EMS Wireless
    
    
    123
    
    
    
    907SATCOM
    
    
    1,539
    
    
    
    853Other
    
    
    (386
    )
    
    
    (55
    )Total
    
    $
    636
    
    
    
    3,636Net earnings (loss):Space & Technology/Atlanta
    
    $
    533
    
    
    
    289Space & Technology/Montreal
    
    
    (2,711
    )
    
    
    590LXE
    
    
    806
    
    
    
    286EMS Wireless
    
    
    72
    
    
    
    506SATCOM
    
    
    1,241
    
    
    
    714Other
    
    
    (258
    )
    
    
    (40
    )Corporate
    
    
    339
    
    
    
    (233
    )Total
    
    $
    22
    
    
    
    2,112


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Mar 29
    
    Dec 312003
    
    2002Assets:Space & Technology/Atlanta
    
    $
    41,845
    
    
    
    52,009Space & Technology/Montreal
    
    
    71,838
    
    
    
    68,172LXE
    
    
    63,011
    
    
    
    67,152EMS Wireless
    
    
    21,289
    
    
    
    21,277SATCOM
    
    
    24,277
    
    
    
    23,261Other
    
    
    6,186
    
    
    
    5,185Corporate
    
    
    25,097
    
    
    
    19,246Total
    
    $
    253,543
    
    
    
    256,302Goodwill:LXE
    
    $
    9,982
    
    
    
    9,982EMS Wireless
    
    
    3,544
    
    
    
    3,544Total
    
    $
    13,526
    
    
    
    13,526


ITEM 2.       Managements Discussion and Analysis of Financial Condition and Results of Operations.



| |  | The following discussion and analysis should be read in conjunction with the
Companys consolidated financial statements and related notes included in
Item 1 of Part 1 of this quarterly report and the audited consolidated
financial statements and notes and Managements Discussion and Analysis of
Financial Condition and Results of Operations contained in our Annual Report
on Form 10-K for the year ended December 31, 2002.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Critical Accounting Policies
| |  | ----------------------------



| |  | Our consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America,
which often require the judgment of management in the selection and
application of certain accounting principles and methods. We consider the
following to be critical to an understanding of our financial statements
because their application requires significant judgment, and because
differences, between actual future events and the expectations on which
these judgments were based, can have significant effects on our financial
results reported for future periods.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| |  | Revenue recognition on long-term contracts
| |  | ------------------------------------------



| |  | Revenue recognition for fixed-price, long-term contracts in the two Space &
Technology segments, and in the SATCOM segment, is a critical accounting
policy involving significant management estimates. These segments
long-term contracts use the ratio of cost-incurred to total-estimated-cost,
as the measure of performance that determines how much revenue should be
recognized. The calculation of total-estimated-cost relies on engineering
estimates of the cost to complete the contract, with allowances for
identifiable risks and uncertainties. These engineering estimates are
frequently reviewed and updated. However, unforeseen problems can occur to
substantially reduce the rate of future revenue recognition in relation to
costs incurred.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Most of the Space & Technology segments contracts involve development of
new or unproven applications of technology. Due to technological
uncertainties, a contract may be broadly defined in its early stages, with a
structure to accommodate future changes in the scope of work or contract
value as technical development progresses. In such cases, management must
estimate the future expected levels of scope of work and likely contract
value changes to determine the appropriate level of current revenue
associated with current costs incurred. Actual future changes may vary from
expected changes, resulting in a reduction (or increase) in revenues
recognized in future periods.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Accounting for government research incentives
| |  | ---------------------------------------------



| |  | Our accrual of research incentives from the Canadian government is a
critical accounting policy involving management estimates for our Space &
Technology/Montreal segment. These incentives are in the form of a cash
reimbursement for a portion of certain qualified research expenditures.
Incentives are recorded as a reduction of cost of sales, because the
underlying research efforts primarily apply to development of technological
capabilities for specific business opportunities. For the quarter ended
March 29, 2003, total incentives earned were approximately $621,000,
compared with $685,000 for the quarter ended March 30, 2002. We have
established procedures to identify qualified costs and to submit appropriate
claims for reimbursement; all of these claims are subject to financial and
scientific audits by the Canadian government concerning whether certain
expenses qualified for incentive programs. Although there have historically
been no significant disallowances of previously accrued incentives that
resulted from these audits, such disallowances in the future would have an
unfavorable effect on our statement of earnings.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Evaluation of long-lived assets for impairment
| |  | ----------------------------------------------



| |  | All long-lived assets on the balance sheet are periodically reviewed for
impairment. The most significant long-lived asset is a less-than-5% equity
investment in a limited partnership, SkyBridge LLP, with a carrying value on
the balance sheet of $17.9 million at March 29, 2003. The goal of this
investment is to enable us to participate in the development and
implementation of a satellite network to provide high-data-rate wireless
services. The partnership is an active and financially viable entity, and
management representatives attend partners meetings to receive updates on
the entitys progress. Since we acquired our equity investment four years
ago, new equity partners have invested in the partnership at a higher
subscription price than we paid. As a result, we believe that the asset is
not impaired and that it is appropriately accounted for as of March 29,
2003. However, due to current difficult economic conditions in the
commercial space market, the partnership has delayed construction of its
satellite network and is instead developing a new business strategy based
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

12



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##### Table of Contents





| |  | on an architecture with GEO (geosynchronous earth orbit) satellites rather
than LEO (low earth orbit) satellites. If the current difficult market
conditions persist for commercial space ventures, we may determine at some
future date that the asset has become impaired, which would require a charge
to non-operating income.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Establishment of reserves for deferred income tax assets
| |  | --------------------------------------------------------



| |  | It is managements expectation that in the future our Canadian operations
will earn more than enough research-related tax benefits each year to offset
any Canadian federal tax liability for any given year. As a result, we have
reserved substantially all the net deferred tax assets associated with these
research-related tax benefits (totaling approximately $17 million at March
29, 2003), because they are unlikely to be realized. However, this reserve
may be reduced, resulting in an income tax benefit to a future statement of
earnings, if (1) the level of our qualified research in Canada decreases,
which would lower the tax benefits earned in future years, or (2) our
profitability in Canada increases, which would increase the tax liability
incurred in future years.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Results of Operations
| |  | ---------------------



| |  | Net Sales
| |  | ---------



| |  | Consolidated net sales decreased to $66.5 million in the first quarter of
2003, compared with $70.4 million in the first quarter of 2002. The most
significant decrease was in our Space & Technology/Montreal (S&T/Montreal)
segment. S&T/Montreal mainly serves the commercial space markets, which are
currently experiencing very difficult conditions. This segments revenues
decreased $8.0 million from the same period in the prior year. Sales at
the EMS Wireless segment decreased by $3.9 million from the prior year due
to the slowdown in capital spending in the telecommunications market. The
Space & Technology/ Atlanta, LXE and SATCOM segments experienced increases
in revenue from the prior year.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Net Sales and Operating Income by Segment
| |  | -----------------------------------------



| |  | Our segment net sales and operating income (loss) were as follows (in
thousands):
| |  | ---------------------------------------------------------------------------------

Quarters EndedMarch 29
    
    March 302003
    
    2002Net sales:Space & Technology/Atlanta
    
    $
    12,088
    
    
    
    11,707Space & Technology/Montreal
    
    
    10,292
    
    
    
    18,264LXE
    
    
    22,099
    
    
    
    19,885EMS Wireless
    
    
    8,806
    
    
    
    12,733SATCOM
    
    
    10,582
    
    
    
    6,305Other
    
    
    2,669
    
    
    
    1,545Total
    
    $
    66,536
    
    
    
    70,439Operating income (loss):Space & Technology/Atlanta
    
    $
    1,008
    
    
    
    632Space & Technology/Montreal
    
    
    (2,995
    )
    
    
    605LXE
    
    
    1,347
    
    
    
    694EMS Wireless
    
    
    123
    
    
    
    907SATCOM
    
    
    1,539
    
    
    
    853Other
    
    
    (386
    )
    
    
    (55
    )Total
    
    $
    636
    
    
    
    3,636


13



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| |  | Space & Technology/Atlanta:Sales in our Space & Technology/Atlanta
(S&T/Atlanta) segment, which primarily serves the defense markets,
increased by $381,000 from the same quarter last year. We expect that
defense markets will continue to improve during the current fiscal year.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Space & Technology/Montreal:Sales in our S&T/Montreal segment, which
primarily serves the commercial space markets, decreased by $8.0 million
from the first quarter of last year. Increasingly difficult market
conditions caused commercial space orders to decline over the last three
years, with the result that commercial space revenues and profits peaked in
2001 and decreased significantly in 2002 and in the first quarter of 2003.
We expect that difficult market conditions in commercial space will persist
in 2003. We also believe that we have reduced our continuing financial risk
on most of the large long-term contracts that over recent years have
presented serious technical, schedule and contractual challenges. However,
on a small number of relatively large programs, we continue to address
technical, schedule and contractual issues that, if not satisfactorily
resolved, would materially affect our 2003 S&T/Montreal revenues under the
percentage-completion method of accounting described in our critical
accounting policies.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | LXE:LXE net sales increased to $22.1 million for the first quarter of 2003
compared with $19.9 million in the same period last year. The increase is
due to higher international revenues, particularly from increased capital
spending in our European markets and a stronger euro.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | EMS Wireless:Net sales in our EMS Wireless segment decreased by $3.9
million from the first quarter of 2002 due to slowdown in capital spending
in the telecommunications markets. Despite the slowdown, the EMS Wireless
segment was able to report a modest profit. We are uncertain whether the
market for base-station antennas will significantly improve during the
remainder of 2003, but we are seeking to generate additional revenues
through introduction of new products and broader market acceptance of our
repeater products.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | SATCOM:Net sales in our SATCOM segment increased $4.3 million from the
first quarter of 2002, primarily from sales of our high-speed-data products.
We expect that our corporate jet sales will significantly slow in 2003, but
SATCOMs overall sales should continue to grow based on defense and security
opportunities for both our land-mobile and aeronautical products.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| |  | Cost of Sales
| |  | -------------



| |  | Cost of sales, as a percentage of consolidated net sales, was 67.3% in the
first quarter of 2003 compared with 64.3% in the first quarter of 2002. The
increase in the cost of sales percentage was mostly in the S&T/Montreal and
SATCOM segments. The increase in the S&T/Montreal segment was due to
supplier delays and technical difficulties on commercial space contracts.
The increase in the SATCOM segment was due to the effect of the
strengthening Canadian dollar against the U.S. dollar.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Selling, General and Administrative Expenses
| |  | --------------------------------------------



| |  | Selling, general and administrative expenses (SG&A) were $14.8 million and
$14.9 million for the first quarters of 2003 and 2002, respectively. The
increase in SG&A expenses in the LXE segment from increased international
expenses and in the SATCOM segment from the introduction of new products,
was more than offset by the reduction in SG&A expenses in the S&T/Atlanta,
S&T/Montreal and EMS Wireless segments due to cost-control measures.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Research and Development Expenses
| |  | ---------------------------------



| |  | Research and development expenses (R&D) represent the cost of our
internally funded efforts. Significant R&D efforts also occur under specific
customer orders in the Space & Technology segments and, accordingly, are
reflected in cost of sales. Consolidated R&D decreased to $6.3 million in
the first quarter of 2003 from $6.7 million in the first quarter of 2002.
The decrease is due to reductions in internally funded R&D, as development
was completed on a high-speed aeronautical terminal for SATCOM, and certain
repeater products for EMS Wireless.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Foreign Exchange Gain (Loss)
| |  | ----------------------------



| |  | We recognize foreign exchange gains and losses related to an asset or
liability denominated in a foreign currency, and if applicable, any embedded
derivatives. We use foreign currency forward contracts to hedge our
exposure to fluctuations in the foreign currency exchange rates.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Because of U.S. dollar-denominated contracts from customers of our Canadian
subsidiary, a stronger U.S. dollar against the Canadian dollar usually
results in foreign exchange gains. Due to our Canadian subsidiarys
operations in the United Kingdom, a stronger Canadian dollar against the
British pound usually results in foreign exchange gains. We also recognize
net gains and losses from translation of the LXE European subsidiaries
short-term intercompany liabilities (payable in U.S. dollars). These
liabilities arise when the subsidiaries buy LXE products from the parent for
resale in Europe. A weaker U.S. dollar against the euro usually results in
foreign exchange gains.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | In the first quarter of 2003, the net foreign currency gain of $272,000 was
a result of the weaker U.S. dollar against the euro and the stronger
Canadian dollar against the British pound. In the first quarter of 2002,
the net foreign currency gain of $284,000 was a result of the stronger U.S.
dollar against the Canadian dollar.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| |  | Interest Expense
| |  | ----------------



| |  | Interest expense decreased to $796,000 in 2003 compared with $837,000 in
2002. The decrease in 2003 was due to decreased average debt levels that
resulted from positive cash flow and to lower interest rates.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Income Tax Expense
| |  | ------------------



| |  | The effective income tax rate was 35% for the first quarter of 2003 compared
with 30% for the first quarter of 2002. The effective income tax rate
increased because management expected that, for the year 2003, a higher
portion of pre-tax profits would derive from the Companys U.S. operations.
The U.S. operations have an effective income tax rate of approximately 38%,
as compared with the Companys Canadian operations that have a much lower
effective income tax rate due to research-related tax credits. The interim
effective income tax rate is based upon managements expectations for the
full year. This rate could increase in subsequent interim periods if the
Company earns more profits than expected in the U.S. or fewer profits than
expected in Canada.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | New Accounting Pronouncements
| |  | -----------------------------



| |  | In April 2002, the Financial Accounting
Standards Board (FASB) issued SFAS No. 145, Rescission of FASB Statements
No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections. SFAS No. 145 rescinds SFAS No. 4, Reporting Gains and Losses
from Extinguishment of Debt, and an amendment of that statement, SFAS No.
64, Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements.
This statement also amends SFAS No. 13, Accounting for Leases, to
eliminate an inconsistency between the required accounting for
sale-leaseback transactions and the required accounting for certain lease
modifications that have economic effects that are similar to sale-leaseback
transactions. In addition, this statement amends other existing
authoritative pronouncements to make various technical corrections, clarify
meanings, or describe their applicability under changed conditions. SFAS No.
145 is effective for the Companys fiscal year beginning in 2003 with
earlier application encouraged. Adoption did not have a material impact on
the consolidated financial statements of the Company.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | In November 2002, the FASB issued Interpretation No. 45, Guarantors
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others, which requires the guarantor to: (1)
recognize a liability for the fair value of the obligation to stand ready
to perform under a guarantee, and (2) provide disclosure information
concerning specified other guarantees, such as product warranties. The
recognition and measurement provisions of Interpretation No. 45 apply to
guarantees entered into or modified after December 31, 2002, and the
implementation of these provisions did not have a material impact on the
Companys consolidated financial statements. The Company has adopted the
disclosure requirements of Interpretation No. 45 for specified guarantees,
including product warranties, contingent consideration from a business
combination, and a parents guarantee of a portion of a subsidiarys debt to
a third party.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| |  | In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based
Compensation  Transition and Disclosure. SFAS No. 148 amends SFAS No.
123, Accounting for Stock-Based Compensation, to provide alternative
methods of transition for a voluntary change to the fair-value based method
of accounting for stock-based employee compensation. In addition, SFAS No.
148 amends the disclosure requirements of SFAS No. 123 to require prominent
disclosure in both annual and interim financial statements about the method
of accounting for stock-based employee compensation and the effect of the
method used on reporting results. The transition guidance and annual
disclosure provisions of SFAS No. 148 are effective for fiscal years ending
after December 15, 2002. The interim disclosure provisions are effective
for financial reports containing financial statements for interim periods
beginning after December 15, 2002. The disclosures required by SFAS No. 148
are included above in Note 1 of the Notes to Interim Consolidated Financial
Statements.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | In January 2003, the FASB issued Interpretation No. 46, Consolidation of
Variable Interest Entities. The interpretation provides guidance on
consolidating variable interest entities and applies immediately to variable
interests created after January 31, 2003. The interpretation requires
variable interest entities to be consolidated if the equity investment at
risk is not sufficient to permit an entity to finance its activities without
support from other parties, or if the equity investors lack certain
specified characteristics. Adoption of Interpretation No. 46 did not have a
material impact on the Companys consolidated financial statements.
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133 on
Derivative Instruments and Hedging Activities, which amends SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities, to address
decisions reached by the Derivatives Implementation Group, developments in
other Board projects that address financial instruments, and implementation
issues related to the definition of a derivative. The Company is currently
evaluating the impact that SFAS No. 149 will have on the Companys
consolidated financial statements.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Liquidity and Capital Resources
| |  | -------------------------------



| |  | Net cash provided by operating activities was $397,000 in the first quarter
of 2003, compared with net cash used in operating activities of $3.8 million
in the first quarter of 2002. The main source of cash in the first quarter of
2003 was the reduction in accounts receivable which includes cash receipts from large
contracts in S&T/Atlanta. This was partially offset by
the use of cash to decrease accounts payable and to increase inventories.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | During 2003, the net repayment of long-term debt was $575,000. This change
included a $121,000 net decrease in the balances due under revolving credit
arrangements and net repayments of term debt of approximately $454,000.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | At March 29, 2003, the Company had $8.6 million available for borrowing
under its U.S. revolving credit agreement and $2.5 million available for
borrowing under its Canadian revolving credit agreement. At March 29, 2003,
the Company was either in compliance with or had received a bank waiver of
compliance relating to all covenants. These credit agreements mature in
2003, and the Company expects to renew these agreements on terms that are
comparable with the existing terms.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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##### Table of Contents





| |  | The Company expects that capital expenditures in 2003 will range from $10
million to $15 million. These expenditures will be used primarily to
purchase equipment that increases or enhances capacity and productivity.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The Companys material contractual cash commitments and material other
commercial commitments have not changed significantly from those disclosed
in the Annual Report on Form 10-K for the year ended December 31, 2002.
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Management believes that cash flows from operations and borrowings
available under its credit agreements will provide sufficient liquidity to
meet the operating and capital expenditure needs for existing operations
during the next twelve months. To fund long-term growth, the Company may
consider such measures as offerings of common stock or convertible
securities, or revised long-term credit arrangements.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Risk Factors and Forward-Looking Statements
| |  | -------------------------------------------



| |  | The Company has included forward-looking statements in Managements
Discussion and Analysis of Financial Condition and Results of Operations.
Actual results could differ materially from those suggested in any
forward-looking statements as a result of a variety of factors. Such factors
include, but are not limited to:
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | economic conditions in the U.S. and abroad and their effect on
capital spending in the Companys principal markets;
| | - |  | -------------------------------------------------------------------------------------------------------------------



| |  |  | volatility of foreign exchange rates relative to the U.S. dollar
and their effect on purchasing power by international customers, as
well as the potential for realizing foreign exchange gains or losses
associated with net foreign assets 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 completion of technological development programs by the
Company and the effects of technology that may be developed by
competitors;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 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);
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the availability of financing for satellite data communications
systems and for expansion of terrestrial PCS/cellular phone systems;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the extent to which terrestrial systems succeed in providing
extensive broadband Internet access on a dependable and economical
basis;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------

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##### Table of Contents





| |  |  | development of successful working relationships with local business
and government personnel in connection with the distribution and
manufacture of products in foreign countries;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the growth rate of demand 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.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------

ITEM 3.       Quantitative and Qualitative Disclosures About Market Risk

As of March 29, 2003, the Company had the following market risk sensitive
instruments (in thousands):

Mar 292003Revolving credit loan with a U.S. bank, $10.0 million maturing in November
2003, the remainder payable on demand, interest payable quarterly at a
variable rate (average rate of 3.41% at the end of the quarter)
    
    $
    16,850Revolving credit loan with a bank in Canada, no specific maturity but subject
to review at least annually, interest payable at a variable rate (5.75% at the
end of the quarter)
    
    
    13,880Term installment loan with a bank in Canada, maturing in December 2005,
principal and interest payable quarterly at a variable rate (6.00% at the
end of the quarter)
    
    
    2,861Revolving credit loan with a bank in the United Kingdom, maturing in
April 2004, interest payable monthly at a variable rate (5.25% at the end
arter)
of the quarter)
    
    
    1,555Total market-sensitive debt
    
    $
    35,146


19



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##### Table of Contents



As of March 29, 2003, the Company also had intercompany accounts that eliminate
in consolidation but that are considered market risk sensitive instruments.
Short-Term Due to Parent, payable by European and Australian subsidiaries and
arising from purchase of the Parents products for sale, were as follows:

Exchange Rate($U.S. per unit of
    
    
    $U.S. in thousandslocal currency)
    
    
    (Reporting Currency)Belgium
    
    1.0780
    /Euro
    
    
    $
    1,092Germany
    
    1.0780
    /Euro
    
    
    
    996Italy
    
    1.0780
    /Euro
    
    
    
    916Australia
    
    0.6009
    /Dollar
    
    
    
    738France
    
    1.0780
    /Euro
    
    
    
    483Sweden
    
    0.1170
    /Krona
    
    
    
    77Netherlands
    
    1.0780
    /Euro
    
    
    
    66United Kingdom
    
    1.5748
    /Pound
    
    
    
    (632
    )Total short-term due to parent
    
    
    
    
    
    $
    3,736


The Company has foreign currency risks associated with forward contracts as
follows (in thousands, except average contract rate):

Average
    
    ($U.S.)Notional
    
    Contract
    
    FairAmount
    
    Rate
    
    ValueForeign currency forward exchange contracts:Euros (sell for U.S. dollars)
    
    3,250
    Euros
    
    
    0.9615
    
    
    $
    (124
    )U.S. dollars (sell for Canadian dollars)
    
    19,500
    USD
    
    
    1.5665
    
    
    
    860


The Company enters into foreign currency forward contracts in order to mitigate
the risks associated with currency fluctuations on future cash flows.

ITEM 4.       Controls and Procedures

The Company has established and maintains disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14 and 15d-14). The objective of these
controls and procedures is to ensure that information relating to the Company,
including its consolidated subsidiaries, and required to be filed by it in
reports under the Securities Exchange Act, as amended, is effectively
communicated to the Companys CEO and CFO, and is recorded, processed,
summarized and reported on a timely basis.

The CEO and CFO have evaluated the Companys disclosure controls and procedures
within 90 days prior to the filing date of this quarterly report. Based upon
this evaluation, the CEO and CFO have concluded that the Companys disclosure
controls and procedures are adequate to accomplish their objective and are
functioning effectively.

20



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##### Table of Contents



Subsequent to the most recent evaluations by the CEO and CFO, there have been
no significant changes in the Companys internal controls (including corrective
actions for significant deficiencies or material weaknesses) or other factors
that could significantly affect these internal controls.




PART II

OTHER INFORMATION

ITEM 6.       Exhibits and Reports on Form 8-K



| | (a) |  | Exhibits  The following exhibits are filed as part of this
report:
| | --- |  | -------------------------------------------------------------------

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 Annual Report on
Form 10-K for the year ended December 31, 1998)3.2
    
    Bylaws of EMS Technologies, Inc., as amended through
March 15, 1999 (incorporated by reference to Exhibit 3.2 to the
Companys Annual Report on Form 10-K for the year ended December
31, 1998)99.1
    
    Certifications of the Registrants Chief Executive and
Chief Financial Officers, pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.




| | (b) |  | Reports on Form 8-K. On February 25, 2003, the Registrant filed a
Report on Form 8-K, reporting with respect to Item 5, Other Events and
Required FD Disclosure.
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

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##### Table of Contents






SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

EMS TECHNOLOGIES, INC.By:
    
    /s/
    
    Alfred G. Hansen
    
    Date:       5/13/03Alfred G. HansenPresident, Chief Executive
Officer and Director (Principal
Executive Officer)By:
    
    /s/
    
    Don T. Scartz
    
    Date:       5/13/03Don T. ScartzExecutive Vice President, Chief
Financial Officer and Treasurer
(Principal Financial and
Accounting Officer)


22



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##### Table of Contents






CERTIFICATIONS

I, Alfred G. Hansen, certify that:

1.        I have reviewed this quarterly report on Form 10-Q of EMS Technologies,
Inc.;

2.        Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3.        Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.        The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a)    Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;

b)    Evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and

c)    Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

5.        The registrants other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):

a)    All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to record,
process, summarize and report financial data and have identified for the
registrants auditors any material weakness in internal controls; and

b)    Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls;
and

6.        The registrants other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

By:
    
    /s/
    
    Alfred G. Hansen
    
    Date:       5/13/03Alfred G. HansenPresident and Chief Executive Officer(Principal Executive Officer)


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##### Table of Contents



I, Don T. Scartz, certify that:

1.        I have reviewed this quarterly report on Form 10-Q of EMS Technologies,
Inc.;

2.        Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3.        Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.        The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a)    Designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;

b)    Evaluated the effectiveness of the registrants disclosure controls
and procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and

c)    Presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;

5.        The registrants other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):

a)    All significant deficiencies in the design or operation of internal
controls which could adversely affect the registrants ability to record,
process, summarize and report financial data and have identified for the
registrants auditors any material weakness in internal controls; and

b)    Any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls;
and

6.        The registrants other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

By:
    
    /s/
    
    Don T. Scartz
    
    Date:       5/13/03Don T. ScartzExecutive Vice President, Chief Financial Officerand Treasurer (Principal Financial Officer)


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