##### 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 October 3, 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
    
    Smaller reporting company o
 o þ
  Class
    
    Number of SharesCommon Stock, $.10 par value
    
    15,271,231
 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
    
    
    19Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    32Item 4. Controls and Procedures
    
    
    35PART II  OTHER INFORMATION
    
    
    36Item 1A. Risk Factors
    
    
    36Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    36Item 6. Exhibits
    
    
    37SIGNATURES
    
    
    38Exhibit 31.1Exhibit 31.2Exhibit 32




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##### Table of Contents



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
    
    
    Nine Months EndedOctober 3
    
    
    September 27
    
    
    October 3
    
    
    September 272009
    
    
    2008
    
    
    2009
    
    
    2008Product net sales
    
    $
    65,766
    
    
    
    71,508
    
    
    
    210,464
    
    
    
    201,133Service net sales
    
    
    19,965
    
    
    
    16,334
    
    
    
    64,483
    
    
    
    43,482Net sales
    
    
    85,731
    
    
    
    87,842
    
    
    
    274,947
    
    
    
    244,615Product cost of sales
    
    
    46,289
    
    
    
    45,413
    
    
    
    139,237
    
    
    
    127,555Service cost of sales
    
    
    10,738
    
    
    
    10,161
    
    
    
    45,070
    
    
    
    26,568Cost of sales
    
    
    57,027
    
    
    
    55,574
    
    
    
    184,307
    
    
    
    154,123Selling, general and administrative expenses
    
    
    21,079
    
    
    
    19,999
    
    
    
    67,359
    
    
    
    60,837Research and development expenses
    
    
    5,274
    
    
    
    5,064
    
    
    
    13,995
    
    
    
    15,606Acquisition-related items
    
    
    (215
    )
    
    
    
    
    
    
    5,307
    
    
    
    Operating income
    
    
    2,566
    
    
    
    7,205
    
    
    
    3,979
    
    
    
    14,049Interest income
    
    
    14
    
    
    
    598
    
    
    
    179
    
    
    
    2,341Interest expense
    
    
    (549
    )
    
    
    (402
    )
    
    
    (1,837
    )
    
    
    (1,199
    )Foreign exchange loss, net
    
    
    (154
    )
    
    
    (449
    )
    
    
    (386
    )
    
    
    (226
    )Earnings from continuing operations before
income taxes
    
    
    1,877
    
    
    
    6,952
    
    
    
    1,935
    
    
    
    14,965Income tax benefit (expense)
    
    
    4,112
    
    
    
    (875
    )
    
    
    4,272
    
    
    
    (1,317
    )Earnings from continuing operations
    
    
    5,989
    
    
    
    6,077
    
    
    
    6,207
    
    
    
    13,648Discontinued operations:Loss from discontinued operations before
income taxes
    
    
    (1,143
    )
    
    
    
    
    
    
    (1,143
    )
    
    
    Income tax benefit
    
    
    434
    
    
    
    
    
    
    
    434
    
    
    
    Loss from discontinued operations
    
    
    (709
    )
    
    
    
    
    
    
    (709
    )
    
    
    Net earnings
    
    $
    5,280
    
    
    
    6,077
    
    
    
    5,498
    
    
    
    13,648Net earnings per share:Basic:Earnings from continuing operations
    
    $
    0.39
    
    
    
    0.39
    
    
    
    0.41
    
    
    
    0.88Loss from discontinued operations
    
    
    (0.05
    )
    
    
    
    
    
    
    (0.05
    )
    
    
    Net earnings
    
    $
    0.34
    
    
    
    0.39
    
    
    
    0.36
    
    
    
    0.88Diluted:Earnings from continuing operations
    
    $
    0.39
    
    
    
    0.39
    
    
    
    0.41
    
    
    
    0.87Loss from discontinued operations
    
    
    (0.05
    )
    
    
    
    
    
    
    (0.05
    )
    
    
    Net earnings
    
    $
    0.34
    
    
    
    0.39
    
    
    
    0.36
    
    
    
    0.87Weighted-average number of shares outstanding:Basic
    
    
    15,175
    
    
    
    15,537
    
    
    
    15,161
    
    
    
    15,548Diluted
    
    
    15,258
    
    
    
    15,681
    
    
    
    15,250
    
    
    
    15,736
   2




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EMS Technologies, Inc. and Subsidiaries
 
 Consolidated Balance Sheets (Unaudited)
 (in thousands)
 October 3
    
    
    December 312009
    
    
    2008ASSETSCurrent assets:Cash and cash equivalents
    
    $
    40,686
    
    
    
    86,979Trade accounts receivable, net of allowance for doubtful accounts of
$1,328 in 2009 and $856 in 2008
    
    
    60,477
    
    
    
    65,831Costs and estimated earnings in excess of billings on long-term contracts
    
    
    27,634
    
    
    
    30,485Inventories
    
    
    44,887
    
    
    
    35,670Deferred income taxes
    
    
    2,374
    
    
    
    1,632Other current assets
    
    
    21,294
    
    
    
    12,184Total current assets
    
    
    197,352
    
    
    
    232,781Property, plant and equipment:Land
    
    
    1,150
    
    
    
    1,150Buildings and leasehold improvements
    
    
    18,934
    
    
    
    16,238Machinery and equipment
    
    
    104,904
    
    
    
    92,100Furniture and fixtures
    
    
    10,089
    
    
    
    10,059Total property, plant and equipment
    
    
    135,077
    
    
    
    119,547Less accumulated depreciation and amortization
    
    
    87,220
    
    
    
    78,975Net property, plant and equipment
    
    
    47,857
    
    
    
    40,572Deferred income taxes
    
    
    5,728
    
    
    
    7,318Goodwill
    
    
    79,949
    
    
    
    31,402Other intangible assets, net of accumulated amortization
of $16,485 in 2009 and $8,219 in 2008
    
    
    51,227
    
    
    
    11,166Other assets
    
    
    6,010
    
    
    
    4,126Total assets
    
    $
    388,123
    
    
    
    327,365
   3




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EMS Technologies, Inc. and Subsidiaries
Consolidated Balance Sheets (Unaudited), continued
(in thousands, except share data)
 October 3
    
    
    December 312009
    
    
    2008LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Current installments of long-term debt
    
    $
    1,373
    
    
    
    1,302Accounts payable
    
    
    31,224
    
    
    
    25,361Billings in excess of costs and estimated earnings on long-term contracts
    
    
    9,373
    
    
    
    8,172Accrued compensation and retirement costs
    
    
    12,946
    
    
    
    14,456Deferred service revenue
    
    
    9,850
    
    
    
    7,998Other current liabilities
    
    
    19,217
    
    
    
    10,073Total current liabilities
    
    
    83,983
    
    
    
    67,362Long-term debt, excluding current installments
    
    
    26,711
    
    
    
    9,250Deferred income taxes
    
    
    5,837
    
    
    
    Other liabilities
    
    
    12,378
    
    
    
    8,011Total liabilities
    
    
    128,909
    
    
    
    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 15,271 in 2009 and 15,188 in 2008
    
    
    1,527
    
    
    
    1,519Additional paid-in capital
    
    
    135,418
    
    
    
    133,270Accumulated other comprehensive income (loss)  foreign currency translation
adjustment
    
    
    3,318
    
    
    
    (5,500
    )Retained earnings
    
    
    118,951
    
    
    
    113,453Total shareholders equity
    
    
    259,214
    
    
    
    242,742Commitments and contingenciesTotal liabilities and shareholders equity
    
    $
    388,123
    
    
    
    327,365
   4




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EMS Technologies, Inc. and Subsidiaries
 
 Consolidated Statements of Cash Flows (Unaudited)
 (in thousands)
 Nine Months EndedOctober 3
    
    
    September 272009
    
    
    2008Cash flows from operating activities:Net earnings
    
    $
    5,498
    
    
    
    13,648Adjustments to reconcile net earnings to net cash provided by
operating activities:Depreciation and amortization
    
    
    15,050
    
    
    
    9,549Deferred income taxes
    
    
    (2,865
    )
    
    
    (795
    )Loss from discontinued operations
    
    
    709
    
    
    
    Loss (gain) on sale of assets
    
    
    68
    
    
    
    (7
    )Stock-based compensation expense
    
    
    1,662
    
    
    
    1,708Change in fair value of contingent consideration liability
    
    
    1,510
    
    
    
    Changes in operating assets and liabilities, net of effects of acquisitions:Trade accounts receivable
    
    
    12,624
    
    
    
    (15,668
    )Costs and estimated earnings in excess of billings on long-term contracts
    
    
    2,625
    
    
    
    1,777Inventories
    
    
    2,467
    
    
    
    (5,193
    )Accounts payable
    
    
    (1,479
    )
    
    
    5,631Accrued compensation and retirement costs
    
    
    (2,433
    )
    
    
    (2,014
    )Other
    
    
    (2,476
    )
    
    
    3,616Net cash provided by operating activities in continuing operations
    
    
    32,960
    
    
    
    12,252Net cash used in operating activities in discontinued operations
    
    
    (484
    )
    
    
    Net cash provided by operating activities
    
    
    32,476
    
    
    
    12,252Cash flows from investing activities:Purchases of property, plant and equipment
    
    
    (10,689
    )
    
    
    (10,835
    )Payments for acquisitions of businesses, net of cash acquired
    
    
    (87,264
    )
    
    
    (31,406
    )Proceeds from sales of assets
    
    
    58
    
    
    
    1,119Net cash used in investing activities
    
    
    (97,895
    )
    
    
    (41,122
    )Cash flows from financing activities:Net borrowings under revolving credit facility
    
    
    18,500
    
    
    
    Repayment of other debt
    
    
    (961
    )
    
    
    (2,852
    )Deferred financing costs paid
    
    
    (251
    )
    
    
    (1,163
    )Proceeds from the exercise of stock options
    
    
    620
    
    
    
    732Payments for repurchase and retirement of common shares
    
    
    (125
    )
    
    
    (4,829
    )Net cash provided by (used in) financing activities
    
    
    17,783
    
    
    
    (8,112
    )Effect of changes in exchange rates on cash and cash equivalents
    
    
    1,343
    
    
    
    (1,236
    )Net change in cash and cash equivalents
    
    
    (46,293
    )
    
    
    (38,218
    )Cash and cash equivalents at beginning of period
    
    
    86,979
    
    
    
    133,959Cash and cash equivalents at end of period
    
    $
    40,686
    
    
    
    95,741
   5




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EMS Technologies, Inc. and Subsidiaries
 
 Notes to Consolidated Financial Statements (Unaudited)
 October 3, 2009 and September 27, 2008
 1. Basis of Presentation
     Accounting Changes
 FASB Accounting Standards
Codification and Hierarchy of GAAP The Hierarchy of Generally
Accepted Accounting Principles TM
 Fair Value Measurements Fair Value Measurements and Disclosures
  6




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Business Combinations 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, Fair Value Measurements, which is now included in ASC Topic 820;
 
    
    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
 Subsequent Events Subsequent Events
  Managements Use of Estimates
   7




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 Recently Issued Pronouncements Not Yet Adopted
 Fair Value
Measurements and Disclosures  Measuring Liabilities at Fair Value
  Revenue Recognition  Multiple-Deliverable Revenue Arrangements,
 
    
    Eliminates the requirement for objective evidence of fair value of an undelivered item
for treatment of the delivered item as a separate unit of accounting;
 
    
    Requires use of the relative selling price method for allocating total consideration to
elements of the arrangement instead of the relative-fair-value method or the residual
method;
 
    
    Allows the use of an estimated selling price for any element within the arrangement to
allocate consideration to individual elements when vendor-specific objective evidence or
other third party evidence of selling price do not exist; and
 
    
    Expands the required disclosures.
 Software  Certain Revenue Arrangements That Include Software Elements
  8




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2. Business Combinations
    ,
     9




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Acquisition Date Fair Value MeasurementsMeasurementAs of
    
    
    Period
    
    
    As ofApril 4, 2009
    
    
    Adjustments
    
    
    October 3, 2009Cash
    
    $
    5.0
    
    
    
    
    
    
    
    5.0Receivables
    
    
    4.7
    
    
    
    
    
    
    
    4.7Inventories
    
    
    10.4
    
    
    
    (0.1
    )
    
    
    10.3Developed technology
    
    
    21.2
    
    
    
    2.1
    
    
    
    23.3Customer relationships
    
    
    11.8
    
    
    
    3.7
    
    
    
    15.5Other identifiable
intangible assets
    
    
    8.2
    
    
    
    (0.6
    )
    
    
    7.6Other assets
    
    
    4.1
    
    
    
    0.7
    
    
    
    4.8Payables and accrued expenses
    
    
    (8.5
    )
    
    
    (0.2
    )
    
    
    (8.7
    )Net deferred tax liabilities
    
    
    (9.9
    )
    
    
    0.4
    
    
    
    (9.5
    )47.0
    
    
    
    6.0
    
    
    
    53.0Goodwill
    
    
    54.2
    
    
    
    (6.0
    )
    
    
    48.2$
    101.2
    
    
    
    
    
    
    
    101.2
     10




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Three Months Ended
    
    
    Nine Months EndedOctober 3
    
    
    September 27
    
    
    October 3
    
    
    September 272009
    
    
    2008
    
    
    2009
    
    
    2008Net sales
    
    $
    85,731
    
    
    
    100,664
    
    
    
    277,946
    
    
    
    279,696Earnings from continuing operations
    
    
    5,989
    
    
    
    4,909
    
    
    
    6,673
    
    
    
    2,726
 3. Goodwill and Other Intangible Assets
   Communications& Tracking
    
    
    LXE
    
    
    TotalBalance as of December 31, 2008
    
    $
    11,007
    
    
    
    20,395
    
    
    
    31,402Goodwill acquired during period
    
    
    48,184
    
    
    
    
    
    
    
    48,184Foreign currency translation adjustment
    
    
    
    
    
    
    363
    
    
    
    363Balance as of October 3, 2009
    
    $
    59,191
    
    
    
    20,758
    
    
    
    79,949
   11




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Gross
    
    
    
    
    
    
    NetCarrying
    
    
    Accumulated
    
    
    CarryingAmount
    
    
    Amortization
    
    
    AmountDeveloped technology
    
    $
    39,979
    
    
    
    12,032
    
    
    
    27,947Customer relationships
    
    
    19,081
    
    
    
    1,956
    
    
    
    17,125Trade names and trademarks
    
    
    6,224
    
    
    
    811
    
    
    
    5,413Other
    
    
    2,428
    
    
    
    1,686
    
    
    
    742$
    67,712
    
    
    
    16,485
    
    
    
    51,227
  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.
    12




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Three Months
    
    
    Nine MonthsEnded
    
    
    EndedOctober 3, 2009
    
    

October 3, 2009Balance at the beginning of the period
    
    $
    12,267
    
    
    
    Acquisitions
    
    
    
    
    
    
    10,500Fair value adjustment, including accretion
    
    
    (257
    )
    
    
    1,510Balance at the end of the period
    
    $
    12,010
    
    
    
    12,010
   13




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5. Interim Segment Disclosures
  Three Months Ended
    
    
    Nine Months EndedOctober 3
    
    
    September 27
    
    
    October 3
    
    
    September 272009
    
    
    2008
    
    
    2009
    
    
    2008Net sales:Communications & Tracking
    
    $
    36,438
    
    
    
    31,131
    
    
    
    119,806
    
    
    
    81,744Defense & Space
    
    
    23,056
    
    
    
    18,944
    
    
    
    75,153
    
    
    
    53,351LXE
    
    
    26,237
    
    
    
    37,767
    
    
    
    79,988
    
    
    
    109,520Total
    
    $
    85,731
    
    
    
    87,842
    
    
    
    274,947
    
    
    
    244,615Operating income (loss):Communications & Tracking
    
    $
    432
    
    
    
    5,173
    
    
    
    8,534
    
    
    
    9,653Defense & Space
    
    
    2,140
    
    
    
    1,467
    
    
    
    7,333
    
    
    
    3,902LXE
    
    
    (1,348
    )
    
    
    1,676
    
    
    
    (6,195
    )
    
    
    2,879Corporate & Other
    
    
    1,342
    
    
    
    (1,111
    )
    
    
    (5,693
    )
    
    
    (2,385
    )Total
    
    $
    2,566
    
    
    
    7,205
    
    
    
    3,979
    
    
    
    14,049Earnings (loss) from continuing operations
before income taxes:Communications & Tracking
    
    $
    168
    
    
    
    4,955
    
    
    
    9,555
    
    
    
    9,964Defense & Space
    
    
    2,218
    
    
    
    1,445
    
    
    
    7,411
    
    
    
    3,876LXE
    
    
    (1,213
    )
    
    
    1,647
    
    
    
    (6,373
    )
    
    
    2,879Corporate & Other
    
    
    704
    
    
    
    (1,095
    )
    
    
    (8,658
    )
    
    
    (1,754
    )Total
    
    $
    1,877
    
    
    
    6,952
    
    
    
    1,935
    
    
    
    14,965Depreciation and amortization:Communications & Tracking
    
    $
    3,048
    
    
    
    1,912
    
    
    
    9,205
    
    
    
    3,896Defense & Space
    
    
    838
    
    
    
    813
    
    
    
    2,493
    
    
    
    2,200LXE
    
    
    728
    
    
    
    826
    
    
    
    2,511
    
    
    
    2,681Corporate & Other
    
    
    276
    
    
    
    305
    
    
    
    841
    
    
    
    772Total
    
    $
    4,890
    
    
    
    3,856
    
    
    
    15,050
    
    
    
    9,549
   14




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##### Table of Contents



October 3
    
    
    December 312009
    
    
    2008Assets:Communications & Tracking
    
    $
    216,993
    
    
    
    99,323Defense & Space
    
    
    56,901
    
    
    
    47,417LXE
    
    
    91,739
    
    
    
    107,230Corporate & Other
    
    
    22,490
    
    
    
    73,395Total
    
    $
    388,123
    
    
    
    327,365Concentration of net assets by geographic region:United States
    
    $
    97,517
    
    
    
    128,692Canada
    
    
    56,819
    
    
    
    53,252Europe
    
    
    99,040
    
    
    
    53,801Other
    
    
    5,838
    
    
    
    6,997Total
    
    $
    259,214
    
    
    
    242,742
 6. Earnings Per Share
  Three Months Ended
    
    
    Nine Months EndedOctober 3
    
    
    September 27
    
    
    October 3
    
    
    September 272009
    
    
    2008
    
    
    2009
    
    
    2008Basic weighted-average number of common shares
outstanding
    
    
    15,175
    
    
    
    15,537
    
    
    
    15,161
    
    
    
    15,548Dilutive potential shares using the treasury share method
    
    
    83
    
    
    
    144
    
    
    
    89
    
    
    
    188Diluted weighted-average number of common shares
outstanding
    
    
    15,258
    
    
    
    15,681
    
    
    
    15,250
    
    
    
    15,736Shares 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
    
    
    526
    
    
    
    341
    
    
    
    557
    
    
    
    206
 7. Comprehensive Income
  Three Months Ended
    
    
    Nine Months EndedOctober 3
    
    
    September 27
    
    
    October 3
    
    
    September 272009
    
    
    2008
    
    
    2009
    
    
    2008Net earnings
    
    $
    5,280
    
    
    
    6,077
    
    
    
    5,498
    
    
    
    13,648Other comprehensive income (loss):Foreign currency translation adjustment
    
    
    5,922
    
    
    
    (4,578
    )
    
    
    8,818
    
    
    
    (3,573
    )$
    11,202
    
    
    
    1,499
    
    
    
    14,316
    
    
    
    10,075
  15




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##### Table of Contents



8. Inventories
  October 3
    
    
    December 312009
    
    
    2008Parts and materials
    
    $
    29,201
    
    
    
    26,730Work-in-process
    
    
    6,465
    
    
    
    2,404Finished goods
    
    
    9,221
    
    
    
    6,536$
    44,887
    
    
    
    35,670
 9. Revolving Credit Facility
   10. Warranty Liability
  Three Months Ended
    
    
    Nine Months EndedOctober 3
    
    
    September 27
    
    
    October 3
    
    
    September 272009
    
    
    2008
    
    
    2009
    
    
    2008Balance at beginning of the period
    
    $
    3,796
    
    
    
    2,982
    
    
    
    2,789
    
    
    
    2,647Additions at dates of acquisition for businesses
acquired during period
    
    
    
    
    
    
    
    
    
    
    516
    
    
    
    Accruals for warranties issued during the period
    
    
    734
    
    
    
    1,026
    
    
    
    2,987
    
    
    
    2,832Settlements made during the period
    
    
    (694
    )
    
    
    (935
    )
    
    
    (2,456
    )
    
    
    (2,406
    )Balance at end of period
    
    $
    3,836
    
    
    
    3,073
    
    
    
    3,836
    
    
    
    3,073
 11. Stock-Based Compensation
   16




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12. Income Taxes
   13. Discontinued Operations
    17




---



##### Table of Contents



14. Common Shares
   15. Litigation
   18




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##### 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. In the third quarter and first nine months of 2009, these
newly acquired product lines along with Sky Connect, LLC (Sky Connect), which was
acquired in August of 2008, generated $15.6 million and $51.9 million of net sales, and
incurred losses of $1.8 million and $1.2 million before income taxes, respectively. The
results include amortization of intangible assets of $1.8 million and $6.1 million for the
three months and nine months ended October 3, 2009. In addition, lower-than-expected net
sales were generated from these businesses in the third quarter of 2009, reflecting a delay
in shipments due to changes in scheduled deliveries requested by a customer. Shipments for
these products are expected to resume in the fourth quarter of 2009.
 
    
    Consolidated net sales were lower by 2.4% in the third quarter of 2009, and grew by
12.4% in the first nine months of 2009 as compared with same periods in 2008, respectively.
Growth in net sales at Communications & Tracking (principally reflecting the newly
acquired product lines) and D&S was offset in the third quarter of 2009, and partially
offset in the first nine months of 2009, by lower net sales at LXE (reflecting the
challenging global economic climate). Net sales from Communications & Trackings organic
product line were down for the third quarter and first nine months of 2009, as compared
with the same periods of 2008, due to lower net sales from aeronautical products and from
the Inmarsat development project that was not included in the 2009 results.
  19




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##### Table of Contents




    
    Our earnings from continuing operations of $6.2 million for the nine months ended
October 3, 2009 included $5.3 million of acquisition-related charges that are required to
be reported as a current expense per the provisions of Statement of Financial Accounting
Standards (SFAS) No. 141(R), Business Combinations(which is now included in Financial
Accounting Standards Board (FASB) Accounting
Standards CodificationTM(ASC) Topic 805, Business Combinations), $6.1 million
of amortization of intangible assets related to our new acquisitions, and approximately $2.8
million of severance costs, but also included a tax benefit of $1.9 million for prior-year
research and development credits, and an additional tax benefit of $1.8 million related to
changes in estimated earnings projected for 2009. Our earnings from continuing operations
of $6.0 million for the three months ended October 3, 2009 included $1.8 million of
amortization of intangible assets related to our new acquisitions, and approximately $0.5
million of severance costs, but also included tax benefits of $3.9 million.
 
    
    Our markets are seeing the unfavorable impact of the economy and they are 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
through 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 it is reasonably possible that we may be required to
recognize an impairment loss related to goodwill or other long-lived assets.
 Description of Net Sales, Costs and Expenses
 Net sales
 Revenue Arrangements with Multiple Deliverables Revenue Recognition-Multiple-Element Arrangements Software Revenue Recognition Software-Revenue Recognition
  Cost of sales
     20




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Selling, general and administrative expenses
  Research and development expenses
  Acquisition-related items
  Interest income
  Interest expense
  Foreign exchange gains and losses
   21




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Income taxes
  Discontinued operations
  Results of Operations
  Three Months Ended
    
    
    Nine Months EndedOctober 3
    
    
    September 27
    
    
    October 3
    
    
    September 272009
    
    
    2008
    
    
    2009
    
    
    2008Product net sales
    
    
    76.7
    %
    
    
    81.4
    
    
    
    76.5
    
    
    
    82.2Service net sales
    
    
    23.3
    
    
    
    18.6
    
    
    
    23.5
    
    
    
    17.8Net sales
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.0Product cost of sales as a percentage of product net sales
    
    
    70.4
    
    
    
    63.5
    
    
    
    66.2
    
    
    
    63.4Service cost of sales as a percentage of service net sales
    
    
    53.8
    
    
    
    62.2
    
    
    
    69.9
    
    
    
    61.1Cost of sales
    
    
    66.5
    
    
    
    63.3
    
    
    
    67.0
    
    
    
    63.0Selling, general and administrative expenses
    
    
    24.6
    
    
    
    22.7
    
    
    
    24.5
    
    
    
    24.9Research and development expenses
    
    
    6.2
    
    
    
    5.8
    
    
    
    5.1
    
    
    
    6.4Acquisition-related charges
    
    
    (0.3
    )
    
    
    
    
    
    
    1.9
    
    
    
    Operating income
    
    
    3.0
    
    
    
    8.2
    
    
    
    1.5
    
    
    
    5.7Interest income
    
    
    0.0
    
    
    
    0.7
    
    
    
    0.1
    
    
    
    1.0Interest expense
    
    
    (0.6
    )
    
    
    (0.5
    )
    
    
    (0.7
    )
    
    
    (0.5
    )Foreign exchange loss, net
    
    
    (0.2
    )
    
    
    (0.5
    )
    
    
    (0.2
    )
    
    
    (0.1
    )Earnings from continuing operations before
income taxes
    
    
    2.2
    
    
    
    7.9
    
    
    
    0.7
    
    
    
    6.1Income tax benefit (expense)
    
    
    4.8
    
    
    
    (1.0
    )
    
    
    1.6
    
    
    
    (0.5
    )Net earnings from continuing operations
    
    
    7.0
    
    
    
    6.9
    
    
    
    2.3
    
    
    
    5.6Discontinued operations:Loss from discontinued operations before
income taxes
    
    
    (1.3
    )
    
    
    
    
    
    
    (0.4
    )
    
    
    Income tax benefit
    
    
    0.5
    
    
    
    
    
    
    
    0.1
    
    
    
    Loss from discontinued operations
    
    
    (0.8
    )
    
    
    
    
    
    
    (0.3
    )
    
    
    Net earnings
    
    
    6.2
    %
    
    
    6.9
    
    
    
    2.0
    
    
    
    5.6
  22




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Three Months ended October 3, 2009 and September 27, 2008:
          23




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Nine Months ended October 3, 2009 and September 27, 2008:
      24




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##### Table of Contents



Segment Analysis
  Percentage IncreaseThree Months Ended
    
    
    Nine Months Ended
    
    
    (Decrease)October 3
    
    
    September 27
    
    
    October 3
    
    
    September 27
    
    
    Three
    
    
    Nine2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    Months
    
    
    MonthsNet sales:Communications & Tracking
    
    $
    36,438
    
    
    
    31,131
    
    
    
    119,806
    
    
    
    81,744
    
    
    
    17.0
    %
    
    
    46.6Defense & Space
    
    
    23,056
    
    
    
    18,944
    
    
    
    75,153
    
    
    
    53,351
    
    
    
    21.7
    
    
    
    40.9LXE
    
    
    26,237
    
    
    
    37,767
    
    
    
    79,988
    
    
    
    109,520
    
    
    
    (30.5
    )
    
    
    (27.0
    )Total
    
    $
    85,731
    
    
    
    87,842
    
    
    
    274,947
    
    
    
    244,615
    
    
    
    (2.4
    )
    
    
    12.4Cost of sales percentage:Communications & Tracking
    
    
    60.9
    %
    
    
    56.4
    
    
    
    61.2
    
    
    
    57.7
    
    
    
    4.5
    
    
    
    3.5Defense & Space
    
    
    79.6
    
    
    
    77.7
    
    
    
    79.5
    
    
    
    76.8
    
    
    
    1.9
    
    
    
    2.7LXE
    
    
    62.9
    
    
    
    60.8
    
    
    
    63.5
    
    
    
    59.5
    
    
    
    2.1
    
    
    
    4.0Total
    
    
    66.5
    
    
    
    63.3
    
    
    
    67.0
    
    
    
    63.0
    
    
    
    3.2
    
    
    
    4.0Operating income (loss):Communications & Tracking
    
    $
    432
    
    
    
    5,173
    
    
    
    8,534
    
    
    
    9,653
    
    
    
    (91.6
    )
    
    
    (11.6
    )Defense & Space
    
    
    2,140
    
    
    
    1,467
    
    
    
    7,333
    
    
    
    3,902
    
    
    
    45.9
    
    
    
    87.9LXE
    
    
    (1,348
    )
    
    
    1,676
    
    
    
    (6,195
    )
    
    
    2,879
    
    
    
    (180.4
    )
    
    
    (315.2
    )Corporate & Other
    
    
    1,342
    
    
    
    (1,111
    )
    
    
    (5,693
    )
    
    
    (2,385
    )
    
    
    220.8
    
    
    
    138.7Total
    
    $
    2,566
    
    
    
    7,205
    
    
    
    3,979
    
    
    
    14,049
    
    
    
    (64.4
    )
    
    
    (71.7
    )
  25




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##### Table of Contents



Communications & Tracking:
   Defense & Space
   LXE:
  26




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##### Table of Contents



Corporate & Other:
 Discontinued Operations:
  Backlog
  October 3
    
    
    December 312009
    
    
    2008Defense & Space
    
    $
    92.9
    
    
    
    114.9Communications & Tracking
    
    
    65.0
    
    
    
    58.4LXE
    
    
    13.5
    
    
    
    12.6Total
    
    $
    171.4
    
    
    
    185.9
  27




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Liquidity and Capital Resources
          28




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Off-Balance Sheet Arrangements
     Commitments and Contractual Obligations
   29




---



##### Table of Contents



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 potential for realizing foreign exchange gains
and losses associated with assets or liabilities denominated in foreign currencies;
 
    
    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 increased potential for asset impairment charges as unfavorable economic or
financial market conditions, or other developments might affect the fair value of one or
more of our business units;
 
    
    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;
  30




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##### Table of Contents




    
    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 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-out agreements, 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 our ability to obtain sales from customers outside the
U.S. or to perform contracts with the desired level of efficiency or profitability.
  Effect of New Accounting Pronouncements
  Adoption of Shareholder Rights Plan
   31




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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 0.3% at October 3, 2009)
    
    $
    10,883Revolving credit agreement with U.S. and Canadian banks, maturing
in February 2013, interest payable quarterly at a variable rate
(4.0% at October 3, 2009)
    
    $
    18,500
   Exchange Rate
    
    USD(USD per unit of
    
    in thousandslocal currency)
    
    (reporting currency)Australia
    
    0.8634 /AUD
    
    $
    2,118Sweden
    
    0.1421 /SEK
    
    
    1,171Canada
    
    0.9238 /CAD
    
    
    641Italy
    
    1.4571 /EUR
    
    
    389Netherlands
    
    1.4571 /EUR
    
    
    302Belgium
    
    1.4571 /EUR
    
    
    274France
    
    1.4571 /EUR
    
    
    255Germany
    
    1.4571 /EUR
    
    
    209United Kingdom
    
    1.5913 /GBP
    
    
    121Total amount subject to foreign currency risk
    
    
    
    $
    5,480
  32




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##### Table of Contents



Exchange RateFunctionalCurrency per
    
    
    USDCurrency
    
    Functional
    
    Denominated
    
    
    EquivalentDenomination
    
    Currency
    
    Currency
    
    
    (in thousands)Accounts ReceivableUSD
    
    CAD
    
    
    1.0825
    
    
    $
    13,612EUR
    
    SEK
    
    
    10.2670
    
    
    
    393AUD
    
    CAD
    
    
    0.9386
    
    
    
    362USD
    
    EUR
    
    
    0.6863
    
    
    
    249EUR
    
    GBP
    
    
    0.9189
    
    
    
    209Other currencies
    
    
    
    
    
    
    
    
    209Total amount
subject to foreign
currency risk
    
    
    
    
    
    
    
    $
    15,034Accounts PayableGBP
    
    CAD
    
    
    1.7218
    
    
    $
    2,386USD
    
    CAD
    
    
    1.0825
    
    
    
    1,480EUR
    
    USD
    
    
    1.4571
    
    
    
    266GBP
    
    USD
    
    
    1.5913
    
    
    
    236EUR
    
    GBP
    
    
    0.9189
    
    
    
    161EUR
    
    CAD
    
    
    1.5822
    
    
    
    117Other currencies
    
    
    
    
    
    
    
    
    125Total amount
subject to foreign
currency risk
    
    
    
    
    
    
    
    $
    4,771
  Exchange RateFunctionalCurrency per
    
    
    USDCurrency
    
    Functional
    
    Denominated
    
    
    EquivalentDenomination
    
    Currency
    
    Currency
    
    
    (in thousands)USD
    
    CAD
    
    
    1.0825
    
    
    $
    7,807GBP
    
    USD
    
    
    1.5913
    
    
    
    1,519GBP
    
    CAD
    
    
    1.7218
    
    
    
    1,279AUD
    
    CAD
    
    
    0.9386
    
    
    
    631Other currencies
    
    
    
    
    
    
    
    
    365Total amount
subject to foreign
currency risk
    
    
    
    
    
    
    
    $
    11,601
  33




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##### Table of Contents



Average
    
    
    FairNotional
    
    Contract
    
    
    ValueAmount
    
    Rate
    
    
    (USD)Foreign currency forward contracts:U.S. dollars (sell for British pounds)
    
    
    1,785
    
    
    USD
    
    
    1.7000
    
    
    $
    5British
pounds (sell for U.S. dollars)
    
    
    40
    
    
    GBP
    
    
    1.5930
    
    
    
    Euros (sell for U.S. dollars)
    
    
    830
    
    
    EUR
    
    
    1.4529
    
    
    
    (3
    )U.S. dollars (sell for Canadian dollars)
    
    
    18,000
    
    
    USD
    
    
    1.0792
    
    
    
    (66
    )$
    (64
    )
  34




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Item 4. Controls and Procedures
 (a) Evaluation of Disclosure Controls and Procedures
   (b) Changes in Internal Control Over Financial Reporting
   35




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##### Table of Contents



PART II
 OTHER INFORMATION
 
 Item 1A. Risk Factors
  Unfavorable economic or financial market 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
  (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)July 2009 (July 5 to August 1)
    
    
    635
    
    
    $
    22.70
    
    
    
    August 2009 (August 2 to August 29)
    
    
    
    
    
    
    
    
    
    
    September 2009 (August 30 to October 3)
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    635
    
    
    $
    22.70
    
    
    
    
    
    
    $
    10.2 million
 (1)
    
    The category includes 635 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 October 3, 2009.  36




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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).10.1
    
    Severance Agreement dated August 17, 2009, and effective September 17, 2009, between EMS
Technologies, Inc. and David A. Smith (incorporated by reference to Exhibit 10.1 to the Companys
Report on Form 8-K dated September 17, 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  37




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##### Table of Contents



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

Paul B. Domorski
    
    Date: November 11, 2009President, and Chief Executive Officer
(Principal Executive Officer)By:
    
    /s/ Gary B. Shell

Gary B. Shell
    
    Date: November 11, 2009Senior Vice President, Chief FinancialOfficer and Treasurer (Principal Financial Officer)
  38