##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q

|    |  |                                                                                        
|--- |  | ---------------------------------------------------------------------------------------
|[X] |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the quarter ended June 29, 2001
OR

|      |  |                                                                                          
|----- |  | -----------------------------------------------------------------------------------------
|[   ] |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from _________ to _________

|                                                                                                                                                                                                                                                                                                                                                                                          |  |                                                                                                                                                                                                                                                                                                                                                                                          
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Commission File Number: 33-96858-01                                                                                                                                                                                                                                                                                                                                                       |  | Commission File Number: 33-96858                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                         
|COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION                                                                                                                                                                                                                                                                                                                                     |  | COMMUNICATIONS & POWER INDUSTRIES, INC.                                                                                                                                                                                                                                                                                                                                                  
|                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                         
|(Exact name of registrant as specified in its charter)Delaware
(State of Incorporation)77-0407395
(I.R.S. employer identification number)811 Hansen Way
Palo Alto, California 94303-1110
(650) 846-2800
(Address, including zip code, and telephone number,
including area code, of registrants principal executive offices)
Securities registered pursuant to Section 12(b) of the Act: |  | (Exact name of registrant as specified in its charter)Delaware
(State of Incorporation)77-0405693
(I.R.S. employer identification number)811 Hansen Way
Palo Alto, California 94303-1110
(650) 846-2800
(Address, including zip code, and telephone number,
including area code, of registrants principal executive offices)
Securities registered pursuant to Section 12(b) of the Act:
|                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                         
|None
Securities registered pursuant to Section 12(g) of the Act:                                                                                                                                                                                                                                                                                                                          |  | None
Securities registered pursuant to Section 12(g) of the Act:                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                         
|None                                                                                                                                                                                                                                                                                                                                                                                      |  | None                                                                                                                                                                                                                                                                                                                                                                                     

Indicate by check mark whether each 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 [   ].

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding for each of the Registrants classes
of Common Stock, as of the latest practicable date: Communications & Power
Industries Holding Corporation: 4,908,172 shares of Common Stock, $.01 par
value, at June 29, 2001. Communications & Power Industries, Inc.: 1 share of
Common Stock, $.01 par value, at June 29, 2001.







---

TABLE OF CONTENTS



|                           |                                                                                       |                                                      |  |  |  |  |  | 
|-------------------------- | ------------------------------------------------------------------------------------- | ---------------------------------------------------- |  |  |  |  |  | 
|                           |                                                                                       | CONSOLIDATED CONDENSED BALANCE SHEETS               
|                           |                                                                                       | CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS     
|                           |                                                                                       | CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS     
|                           |                                                                                       | NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
|                           | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|PART II: OTHER INFORMATION
|                           | ITEM 1. LEGAL PROCEEDINGS.                                                           
|                           | ITEM 2: CHANGES IN SECURITIES                                                        
|                           | ITEM 3. DEFAULTS UPON SENIOR SECURITIES.                                             
|                           | ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.                         
|                           | ITEM 5. OTHER INFORMATION.                                                           
|                           | ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.                                            
|SIGNATURES                



---



##### Table of Contents



COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

COMMUNICATIONS & POWER INDUSTRIES, INC.,
and subsidiaries
(A wholly owned subsidiary of Communications & Power Industries Holding Corporation)

|                              |                                                       |                                                                                                               |    |  |    | 
|----------------------------- | ----------------------------------------------------- | ------------------------------------------------------------------------------------------------------------- | -- |  | -- | 
|PART I: FINANCIAL INFORMATION |                                                       |                                                                                                               |    | 
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                              | COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION |                                                                                                               |    |  |   
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                              |                                                       | Consolidated Condensed Balance Sheets, June 29, 2001 and September 29, 2000                                   |    |  | 2  | 
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                              |                                                       | Consolidated Condensed Statements of Operations for the 13-week periods ended June 29, 2001
and June 30, 2000 |    |  | 3  | 
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                              |                                                       | Consolidated Condensed Statements of Operations for the 39-week periods ended June 29, 2001
and June 30, 2000 |    |  | 4  | 
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                              |                                                       | Consolidated Condensed Statements of Cash Flows for the 39-week periods ended June 29, 2001
and June 30, 2000 |    |  | 5  | 
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                              |                                                       | Notes to Consolidated Condensed Financial Statements                                                          |    |  | 10 | 
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                              |                                                       | Managements Discussion and Analysis of Financial Condition and Results of Operations                         |    |  | 14 | 
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                              | COMMUNICATIONS & POWER INDUSTRIES, INC.               |                                                                                                               |    |  |   
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                              |                                                       | Consolidated Condensed Balance Sheets, June 29, 2001 and September 29, 2000                                   |    |  | 6  | 
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                              |                                                       | Consolidated Condensed Statements of Operations for the 13-week periods ended June 29, 2001
and June 30, 2000 |    |  | 7  | 
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                              |                                                       | Consolidated Condensed Statements of Operations for the 39-week periods ended June 29, 2001
and June 30, 2000 |    |  | 8  | 
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                              |                                                       | Consolidated Condensed Statements of Cash Flows for the 39-week periods ended June 29, 2001
and June 30, 2000 |    |  | 9  | 
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                              |                                                       | Notes to Consolidated Condensed Financial Statements                                                          |    |  | 10 | 
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                              |                                                       | Managements Discussion and Analysis of Financial Condition and Results of Operations                         |    |  | 14 | 
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|PART II:OTHER INFORMATION     |                                                       |                                                                                                               |    | 
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                              |                                                       | Other Information                                                                                             |    |  | 19 | 
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|                             
|SIGNATURES                    |                                                       |                                                                                                               | 20 | 



-1-



---



##### Table of Contents






COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands-unaudited)

|                                                             |                                       |      |          |         |      |               |         |         |  
|------------------------------------------------------------ | ------------------------------------- | ---- | -------- | ------- | ---- | ------------- | ------- | ------- | -
|                                                             |                                       |      | June 29, |         |      | September 29, |        
|ASSETS                                                       |                                       | 2001 |          |         | 2000 |              
|                                                             |                                       |      |          |         |      |              
|Current Assets                                               |                                       |      |          |         |      |               |         |        
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Cash and cash equivalents             |      | $        | 3,488   |      |               | $       | 4,766   |  
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Accounts receivable, net              |      |          | 48,078  |      |               |         | 42,434  |  
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Inventories                           |      |          | 68,820  |      |               |         | 63,949  |  
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Deferred taxes                        |      |          | 6,972   |      |               |         | 6,972   |  
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Other current assets                  |      |          | 1,618   |      |               |         | 1,603   |  
|                                                             |                                       |      |          |         |      |              
|Total current assets                                         |                                       |      | 128,976  |         |      |               | 119,724 |        
|                                                            
|                                                            
|                                                            
|                                                            
|Property, plant, and equipment, net                          |                                       |      | 63,363   |         |      |               | 68,656  |        
|                                                            
|                                                            
|                                                            
|                                                            
|Goodwill and other intangibles, net                          |                                       |      | 24,131   |         |      |               | 26,090  |        
|                                                            
|                                                            
|                                                            
|                                                            
|Debt issue costs, net                                        |                                       |      | 5,314    |         |      |               | 4,627   |        
|                                                            
|                                                            
|                                                            
|                                                            
|Deferred taxes                                               |                                       |      | 7,889    |         |      |               | 7,888   |        
|                                                             |                                       |      |          |         |      |              
|Total assets                                                 |                                       | $    | 229,673  |         |      | $             | 226,985 |        
|                                                             |                                       |      |          |         |      |              
|LIABILITIES, PREFERRED STOCK AND
STOCKHOLDERS DEFICIT       |                                       |      |          |         |      |               |         |        
|                                                            
|                                                            
|                                                            
|                                                            
|Current Liabilities                                          |                                       |      |          |         |      |               |         |        
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Revolving credit facility             |      | $        | 25,380  |      |               | $       | 39,800  |  
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Current portion of term loans         |      |          |        |      |               |         | 6,012   |  
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Current portion of capital leases     |      |          | 1,056   |      |               |         | 960     |  
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Current portion of mortgage financing |      |          | 18,000  |      |               |         |        |  
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Accounts payable                      |      |          | 15,562  |      |               |         | 18,462  |  
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Accrued expenses                      |      |          | 21,403  |      |               |         | 16,903  |  
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Accrued dividends                     |      |          | 3,232   |      |               |         |        |  
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Product warranty                      |      |          | 3,740   |      |               |         | 2,978   |  
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Income taxes payable                  |      |          | 9,644   |      |               |         | 9,518   |  
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Advance payments from customers       |      |          | 6,588   |      |               |         | 5,210   |  
|                                                             |                                       |      |          |         |      |              
|Total current liabilities                                    |                                       |      | 104,605  |         |      |               | 99,843  |        
|                                                            
|                                                            
|                                                            
|                                                            
|Senior term loans                                            |                                       |      | 20,000   |         |      |               | 10,000  |        
|                                                            
|                                                            
|                                                            
|                                                            
|Senior subordinated notes                                    |                                       |      | 100,000  |         |      |               | 100,000 |        
|                                                            
|                                                            
|                                                            
|                                                            
|Obligations under capital leases                             |                                       |      | 204      |         |      |               | 895     |        
|                                                             |                                       |      |          |         |      |              
|Total liabilities                                            |                                       |      | 224,809  |         |      |               | 210,738 |        
|                                                             |                                       |      |          |         |      |              
|Senior Redeemable Preferred Stock of
Subsidiary              |                                       |      | 28,425   |         |      |               | 28,265  |        
|                                                             |                                       |      |          |         |      |              
|Junior Preferred Stock of Subsidiary                         |                                       |      | 21,325   |         |      |               | 19,170  |        
|                                                             |                                       |      |          |         |      |              
|Commitments and contingenciesStockholders Deficit           |                                       |      |          |         |      |               |         |        
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Common stock                          |      |          | 49      |      |               |         | 49      |  
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Additional paid-in capital            |      |          | 19,111  |      |               |         | 19,111  |  
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Accumulated deficit                   |      |          | (62,877 | )    |               |         | (49,215 | )
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Stockholder loans                     |      |          | (1,169  | )    |               |         | (1,133  | )
|                                                             |                                       |      |          |         |      |              
|Net stockholders deficit                                    |                                       |      | (44,886  | )       |      |               | (31,188 | )      
|                                                             |                                       |      |          |         |      |              
|Total liabilities, preferred stock and
stockholders deficit |                                       | $    | 229,673  |         |      | $             | 226,985 |        
|                                                             |                                       |      |          |         |      |              

See accompanying notes to the unaudited consolidated condensed financial statements.



-2-



---



##### Table of Contents






COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

CONSOLIDATED CONDENSED
STATEMENTS OF OPERATIONS
(in thousands - unaudited)

|                                      |                                   |   |        |       |              |   |        |              |  |  | 
|------------------------------------- | --------------------------------- | - | ------ | ----- | ------------ | - | ------ | ------------ |  |  | 
|                                      |                                   |   |        |       | 13-Week      |   |        | 13-Week      | 
|                                      |                                   |   |        |       | period ended |   |        | period ended | 
|                                      |                                   |   |        |       | June 29,     |   |        | June 30,     | 
|                                      |                                   |   |        |       | 2001         |   |        | 2000         | 
|                                      |                                   |   |        |       |              |   |        |              | 
|Sales                                 |                                   | $ | 72,724 |       |              | $ | 66,367 |             
|                                     
|                                     
|                                     
|                                     
|Cost of sales                         |                                   |   | 57,071 |       |              |   | 49,894 |             
|                                      |                                   |   |        |       |              |  
|Gross profit                          |                                   |   | 15,653 |       |              |   | 16,473 |             
|                                      |                                   |   |        |       |              |  
|Operating costs and expenses:         |                                   |   |        |       |              |   |        |             
|                                     
|                                     
|                                     
|                                     
|                                      | Research and development          |   |        | 1,466 |              |   |        | 2,476        | 
|                                     
|                                     
|                                     
|                                     
|                                      | Selling and marketing             |   |        | 4,648 |              |   |        | 4,737        | 
|                                     
|                                     
|                                     
|                                     
|                                      | General and administrative        |   |        | 5,704 |              |   |        | 4,876        | 
|                                      |                                   |   |        |       |              |  
|Total operating costs and expenses    |                                   |   | 11,818 |       |              |   | 12,089 |             
|                                      |                                   |   |        |       |              |  
|Operating income                      |                                   |   | 3,835  |       |              |   | 4,384  |             
|                                     
|                                     
|                                     
|                                     
|Foreign currency loss                 |                                   |   | (250   | )     |              |   | (119   | )           
|                                     
|                                     
|                                     
|                                     
|Interest expense                      |                                   |   | (5,208 | )     |              |   | (4,681 | )           
|                                      |                                   |   |        |       |              |  
|Loss before taxes                     |                                   |   | (1,623 | )     |              |   | (416   | )           
|                                     
|                                     
|                                     
|                                     
|Income tax expense                    |                                   |   | 250    |       |              |   | 170    |             
|                                      |                                   |   |        |       |              |  
|Net loss                              |                                   |   | (1,873 | )     |              |   | (586   | )           
|                                     
|                                     
|                                     
|                                     
|Preferred dividends:                  |                                   |   |        |       |              |   |        |             
|                                     
|                                     
|                                     
|                                     
|                                      | Senior redeemable preferred stock |   |        | 1,115 |              |   |        | 972          | 
|                                     
|                                     
|                                     
|                                     
|                                      | Junior preferred stock            |   |        | 743   |              |   |        | 648          | 
|                                      |                                   |   |        |       |              |  
|Net loss attributable to common stock |                                   | $ | (3,731 | )     |              | $ | (2,206 | )           
|                                      |                                   |   |        |       |              |  

See accompanying notes to the unaudited consolidated condensed financial statements.



-3-



---



##### Table of Contents



COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

CONSOLIDATED CONDENSED
STATEMENTS OF OPERATIONS
(in thousands - unaudited)

|                                                  |                                   |   |         |        |              |   |         |              |  |  | 
|------------------------------------------------- | --------------------------------- | - | ------- | ------ | ------------ | - | ------- | ------------ |  |  | 
|                                                  |                                   |   |         |        | 39-Week      |   |         | 39-Week      | 
|                                                  |                                   |   |         |        | period ended |   |         | period ended | 
|                                                  |                                   |   |         |        | June 29,     |   |         | June 30,     | 
|                                                  |                                   |   |         |        | 2001         |   |         | 2000         | 
|                                                  |                                   |   |         |        |              |   |         |              | 
|Sales                                             |                                   | $ | 199,670 |        |              | $ | 181,697 |             
|                                                 
|                                                 
|                                                 
|                                                 
|Cost of sales                                     |                                   |   | 158,596 |        |              |   | 139,772 |             
|                                                  |                                   |   |         |        |              |  
|Gross profit                                      |                                   |   | 41,074  |        |              |   | 41,925  |             
|                                                  |                                   |   |         |        |              |  
|Operating costs and expenses:                     |                                   |   |         |        |              |   |         |             
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Research and development          |   |         | 4,395  |              |   |         | 6,585        | 
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Selling and marketing             |   |         | 12,975 |              |   |         | 13,835       | 
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | General and administrative        |   |         | 16,061 |              |   |         | 13,599       | 
|                                                  |                                   |   |         |        |              |  
|Total operating costs and expenses                |                                   |   | 33,431  |        |              |   | 34,019  |             
|                                                  |                                   |   |         |        |              |  
|Operating income                                  |                                   |   | 7,643   |        |              |   | 7,906   |             
|                                                 
|                                                 
|                                                 
|                                                 
|Gain on the sale of property, plant and
equipment |                                   |   | 887     |        |              |   |        |             
|                                                 
|                                                 
|                                                 
|                                                 
|Foreign currency loss                             |                                   |   | (155    | )      |              |   | (289    | )           
|                                                 
|                                                 
|                                                 
|                                                 
|Interest expense                                  |                                   |   | (15,739 | )      |              |   | (13,908 | )           
|                                                  |                                   |   |         |        |              |  
|Loss before taxes                                 |                                   |   | (7,364  | )      |              |   | (6,291  | )           
|                                                 
|                                                 
|                                                 
|                                                 
|Income tax expense                                |                                   |   | 750     |        |              |   | 571     |             
|                                                  |                                   |   |         |        |              |  
|Net loss                                          |                                   |   | (8,114  | )      |              |   | (6,862  | )           
|                                                 
|                                                 
|                                                 
|                                                 
|Preferred dividends:                              |                                   |   |         |        |              |   |         |             
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Senior redeemable preferred stock |   |         | 3,233  |              |   |         | 2,818        | 
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Junior preferred stock            |   |         | 2,155  |              |   |         | 1,879        | 
|                                                  |                                   |   |         |        |              |  
|Net loss attributable to common stock             |                                   | $ | (13,502 | )      |              | $ | (11,559 | )           
|                                                  |                                   |   |         |        |              |  

See accompanying notes to the unaudited consolidated condensed financial statements.



-4-



---



##### Table of Contents






COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

CONSOLIDATED CONDENSED
STATEMENTS OF CASH FLOWS
(in thousands - unaudited)

|                                                 |                                                     |   |              |         |   |              |        |        |  
|------------------------------------------------ | --------------------------------------------------- | - | ------------ | ------- | - | ------------ | ------ | ------ | -
|                                                 |                                                     |   | 39-Week      |         |   | 39-Week      |       
|                                                 |                                                     |   | period ended |         |   | period ended |       
|                                                 |                                                     |   | June 29,     |         |   | June 30,     |       
|                                                 |                                                     |   | 2001         |         |   | 2000         |       
|                                                 |                                                     |   |              |         |   |              |       
|OPERATING ACTIVITIES                             |                                                     |   |              |         |   |              |        |       
|                                                
|                                                
|                                                
|                                                
|                                                 | Net cash (used in) provided by operating activities |   | $            | (3,984  | ) |              | $      | 8,958  |  
|                                                 |                                                     |   |              |         |   |             
|INVESTING ACTIVITIES                             |                                                     |   |              |         |   |              |        |       
|                                                
|                                                
|                                                
|                                                
|                                                 | Proceeds from sale of property, plant and equipment |   |              | 1,922   |   |              |        |       |  
|                                                
|                                                
|                                                
|                                                
|                                                 | Purchase of property, plant and equipment, net      |   |              | (3,784  | ) |              |        | (4,604 | )
|                                                 |                                                     |   |              |         |   |             
|                                                 | Net cash used in investing activities               |   |              | (1,862  | ) |              |        | (4,604 | )
|                                                 |                                                     |   |              |         |   |             
|FINANCING ACTIVITIES                             |                                                     |   |              |         |   |              |        |       
|                                                
|                                                
|                                                
|                                                
|                                                 | Repayments on capital leases                        |   |              | (595    | ) |              |        | (632   | )
|                                                
|                                                
|                                                
|                                                
|                                                 | Payment of debt issue costs                         |   |              | (2,368  | ) |              |        |       |  
|                                                
|                                                
|                                                
|                                                
|                                                 | Repayment of terminated revolving credit facility   |   |              | (40,000 | ) |              |        |       |  
|                                                
|                                                
|                                                
|                                                
|                                                 | Proceeds from revolving credit facility             |   |              | 25,580  |   |              |        |       |  
|                                                
|                                                
|                                                
|                                                
|                                                 | Repayments on terminated senior term loans          |   |              | (16,049 | ) |              |        | (4,944 | )
|                                                
|                                                
|                                                
|                                                
|                                                 | Proceeds from senior term loan                      |   |              | 20,000  |   |              |        |       |  
|                                                
|                                                
|                                                
|                                                
|                                                 | Proceeds from mortgage financing                    |   |              | 18,000  |   |              |        |       |  
|                                                
|                                                
|                                                
|                                                
|                                                 | Net proceeds from stockholder loans                 |   |              |        |   |              |        | 20     |  
|                                                
|                                                
|                                                
|                                                
|                                                 | Purchase of treasury stock                          |   |              |        |   |              |        | (23    | )
|                                                 |                                                     |   |              |         |   |             
|                                                 | Net cash provided by (used in) financing activities |   |              | 4,568   |   |              |        | (5,579 | )
|                                                 |                                                     |   |              |         |   |             
|NET DECREASE IN CASH AND CASH EQUIVALENTS        |                                                     |   | (1,278       | )       |   |              | (1,225 | )     
|                                                
|                                                
|                                                
|                                                
|Cash and cash equivalents at beginning of period |                                                     |   | 4,766        |         |   |              | 4,247  |       
|                                                 |                                                     |   |              |         |   |             
|Cash and cash equivalents at end of period       |                                                     | $ | 3,488        |         |   | $            | 3,022  |       
|                                                 |                                                     |   |              |         |   |             

See accompanying notes to the unaudited consolidated condensed financial statements.



-5-



---



##### Table of Contents



COMMUNICATIONS & POWER INDUSTRIES, INC.,
and subsidiaries
(A wholly owned subsidiary of Communications & Power Industries Holding Corporation)

CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands-unaudited)

|                                                                               |                                   |                                                     |         |          |      |   |               |         |   | 
|------------------------------------------------------------------------------ | --------------------------------- | --------------------------------------------------- | ------- | -------- | ---- | - | ------------- | ------- | - | 
|                                                                               |                                   |                                                     |         | June 29, |      |   | September 29, |        
|ASSETS                                                                         |                                   | 2001                                                |         |          | 2000 |  
|                                                                               |                                   |                                                     |         |          |      |  
|Current Assets                                                                 |                                   |                                                     |         |          |      |   |               |        
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Cash and cash equivalents         |                                                     | $       | 3,488    |      |   | $             | 4,766   |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Accounts receivable, net          |                                                     |         | 48,793   |      |   |               | 42,434  |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Inventories                       |                                                     |         | 68,820   |      |   |               | 63,949  |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Deferred taxes                    |                                                     |         | 6,972    |      |   |               | 6,972   |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Other current assets              |                                                     |         | 1,618    |      |   |               | 1,603   |  
|                                                                               |                                   |                                                     |         |          |      |  
|Total current assets                                                           |                                   |                                                     | 129,691 |          |      |   | 119,724       |        
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Property, plant, and equipment, net                                            |                                   |                                                     | 49,175  |          |      |   | 68,656        |        
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Goodwill and other intangibles, net                                            |                                   |                                                     | 24,131  |          |      |   | 26,090        |        
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Debt issue costs, net                                                          |                                   |                                                     | 5,092   |          |      |   | 4,627         |        
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Note receivable from parent                                                    |                                   |                                                     | 5,750   |          |      |   |              |        
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Deferred taxes                                                                 |                                   |                                                     | 7,889   |          |      |   | 7,888         |        
|                                                                               |                                   |                                                     |         |          |      |  
|Total assets                                                                   |                                   | $                                                   | 221,728 |          |      | $ | 226,985       |        
|                                                                               |                                   |                                                     |         |          |      |  
|                                                                               |                                   | LIABILITIES, REDEEMABLE
PREFERRED STOCK AND DEFICIT |         |          |      |   |               |         |   | 
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Current Liabilities                                                            |                                   |                                                     |         |          |      |   |               |        
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Revolving credit facility         |                                                     | $       | 25,380   |      |   | $             | 39,800  |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Current portion of term loans     |                                                     |         |         |      |   |               | 6,012   |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Current portion of capital leases |                                                     |         | 1,056    |      |   |               | 960     |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Accounts payable                  |                                                     |         | 16,787   |      |   |               | 18,462  |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Accrued expenses                  |                                                     |         | 21,585   |      |   |               | 16,903  |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Accrued dividends                 |                                                     |         | 3,232    |      |   |               |        |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Product warranty                  |                                                     |         | 3,740    |      |   |               | 2,978   |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Income taxes payable              |                                                     |         | 9,644    |      |   |               | 9,518   |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Advance payments from customers   |                                                     |         | 6,588    |      |   |               | 5,210   |  
|                                                                               |                                   |                                                     |         |          |      |  
|Total current liabilities                                                      |                                   |                                                     | 88,012  |          |      |   | 99,843        |        
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Senior term loans                                                              |                                   |                                                     | 20,000  |          |      |   | 10,000        |        
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Senior subordinated notes                                                      |                                   |                                                     | 100,000 |          |      |   | 100,000       |        
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Deferred income on sale-leaseback                                              |                                   |                                                     | 7,842   |          |      |   |              |        
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Obligations under capital leases                                               |                                   |                                                     | 204     |          |      |   | 895           |        
|                                                                               |                                   |                                                     |         |          |      |  
|Total liabilities                                                              |                                   |                                                     | 216,058 |          |      |   | 210,738       |        
|                                                                               |                                   |                                                     |         |          |      |  
|Senior Redeemable Preferred Stock                                              |                                   |                                                     | 28,425  |          |      |   | 28,265        |        
|                                                                               |                                   |                                                     |         |          |      |  
|Commitments and contingencies                                                  |                                   |                                                     |         |          |      |   |               |        
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|Stockholders Deficit:                                                         |                                   |                                                     |         |          |      |   |               |        
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Junior preferred stock            |                                                     |         | 2        |      |   |               | 2       |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Common stock                      |                                                     |         |         |      |   |               |        |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Additional paid-in capital        |                                                     |         | 40,483   |      |   |               | 38,328  |  
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Accumulated deficit               |                                                     |         | (62,071  | )    |   |               | (49,215 | )
|                                                                              
|                                                                              
|                                                                              
|                                                                              
|                                                                               | Stockholder loans                 |                                                     |         | (1,169   | )    |   |               | (1,133  | )
|                                                                               |                                   |                                                     |         |          |      |  
|Net stockholders deficit                                                      |                                   |                                                     | (22,755 | )        |      |   | (12,018       | )      
|                                                                               |                                   |                                                     |         |          |      |  
|Total liabilities, senior redeemable
preferred stock and stockholders deficit |                                   | $                                                   | 221,728 |          |      | $ | 226,985       |        
|                                                                               |                                   |                                                     |         |          |      |  

See accompanying notes to the unaudited consolidated condensed financial statements.



-6-



---



##### Table of Contents



COMMUNICATIONS & POWER INDUSTRIES, INC.,
and subsidiaries
(A wholly owned subsidiary of Communications & Power Industries Holding Corporation)

CONSOLIDATED CONDENSED
STATEMENTS OF OPERATIONS
(in thousands - unaudited)

|                                      |                                   |   |        |       |              |   |        |              |  |  | 
|------------------------------------- | --------------------------------- | - | ------ | ----- | ------------ | - | ------ | ------------ |  |  | 
|                                      |                                   |   |        |       | 13-Week      |   |        | 13-Week      | 
|                                      |                                   |   |        |       | period ended |   |        | period ended | 
|                                      |                                   |   |        |       | June 29,     |   |        | June 30,     | 
|                                      |                                   |   |        |       | 2001         |   |        | 2000         | 
|                                      |                                   |   |        |       |              |   |        |              | 
|Sales                                 |                                   | $ | 72,724 |       |              | $ | 66,367 |             
|                                     
|                                     
|                                     
|                                     
|Cost of sales                         |                                   |   | 57,071 |       |              |   | 49,894 |             
|                                      |                                   |   |        |       |              |  
|Gross profit                          |                                   |   | 15,653 |       |              |   | 16,473 |             
|                                      |                                   |   |        |       |              |  
|Operating costs and expenses:         |                                   |   |        |       |              |   |        |             
|                                     
|                                     
|                                     
|                                     
|                                      | Research and development          |   |        | 1,466 |              |   |        | 2,476        | 
|                                     
|                                     
|                                     
|                                     
|                                      | Selling and marketing             |   |        | 4,648 |              |   |        | 4,737        | 
|                                     
|                                     
|                                     
|                                     
|                                      | General and administrative        |   |        | 6,109 |              |   |        | 4,876        | 
|                                      |                                   |   |        |       |              |  
|Total operating costs and expenses    |                                   |   | 12,223 |       |              |   | 12,089 |             
|                                      |                                   |   |        |       |              |  
|Operating income                      |                                   |   | 3,430  |       |              |   | 4,384  |             
|                                     
|                                     
|                                     
|                                     
|Foreign currency loss                 |                                   |   | (250   | )     |              |   | (119   | )           
|                                     
|                                     
|                                     
|                                     
|Interest expense                      |                                   |   | (4,530 | )     |              |   | (4,681 | )           
|                                      |                                   |   |        |       |              |  
|Loss before taxes                     |                                   |   | (1,350 | )     |              |   | (416   | )           
|                                     
|                                     
|                                     
|                                     
|Income tax expense                    |                                   |   | 250    |       |              |   | 170    |             
|                                      |                                   |   |        |       |              |  
|Net loss                              |                                   |   | (1,600 | )     |              |   | (586   | )           
|                                     
|                                     
|                                     
|                                     
|Preferred dividends:                  |                                   |   |        |       |              |   |        |             
|                                     
|                                     
|                                     
|                                     
|                                      | Senior redeemable preferred stock |   |        | 1,115 |              |   |        | 972          | 
|                                     
|                                     
|                                     
|                                     
|                                      | Junior preferred stock            |   |        | 743   |              |   |        | 648          | 
|                                      |                                   |   |        |       |              |  
|Net loss attributable to common stock |                                   | $ | (3,458 | )     |              | $ | (2,206 | )           
|                                      |                                   |   |        |       |              |  

See accompanying notes to the unaudited consolidated condensed financial statements.



-7-



---



##### Table of Contents



COMMUNICATIONS & POWER INDUSTRIES, INC.,
and subsidiaries
(A wholly owned subsidiary of Communications & Power Industries Holding Corporation)

CONSOLIDATED CONDENSED
STATEMENTS OF OPERATIONS
(in thousands - unaudited)

|                                                  |                                   |   |         |        |              |   |         |              |  |  | 
|------------------------------------------------- | --------------------------------- | - | ------- | ------ | ------------ | - | ------- | ------------ |  |  | 
|                                                  |                                   |   |         |        | 39-Week      |   |         | 39-Week      | 
|                                                  |                                   |   |         |        | period ended |   |         | period ended | 
|                                                  |                                   |   |         |        | June 29,     |   |         | June 30,     | 
|                                                  |                                   |   |         |        | 2001         |   |         | 2000         | 
|                                                  |                                   |   |         |        |              |   |         |              | 
|Sales                                             |                                   | $ | 199,670 |        |              | $ | 181,697 |             
|                                                 
|                                                 
|                                                 
|                                                 
|Cost of sales                                     |                                   |   | 158,596 |        |              |   | 139,772 |             
|                                                  |                                   |   |         |        |              |  
|Gross profit                                      |                                   |   | 41,074  |        |              |   | 41,925  |             
|                                                  |                                   |   |         |        |              |  
|Operating costs and expenses:                     |                                   |   |         |        |              |   |         |             
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Research and development          |   |         | 4,395  |              |   |         | 6,585        | 
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Selling and marketing             |   |         | 12,975 |              |   |         | 13,835       | 
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | General and administrative        |   |         | 16,741 |              |   |         | 13,599       | 
|                                                  |                                   |   |         |        |              |  
|Total operating costs and expenses                |                                   |   | 34,111  |        |              |   | 34,019  |             
|                                                  |                                   |   |         |        |              |  
|Operating income                                  |                                   |   | 6,963   |        |              |   | 7,906   |             
|                                                 
|                                                 
|                                                 
|                                                 
|Gain on the sale of property, plant and equipment |                                   |   | 887     |        |              |   |        |             
|                                                 
|                                                 
|                                                 
|                                                 
|Foreign currency loss                             |                                   |   | (155    | )      |              |   | (289    | )           
|                                                 
|                                                 
|                                                 
|                                                 
|Interest expense                                  |                                   |   | (14,253 | )      |              |   | (13,908 | )           
|                                                  |                                   |   |         |        |              |  
|Loss before taxes                                 |                                   |   | (6,558  | )      |              |   | (6,291  | )           
|                                                 
|                                                 
|                                                 
|                                                 
|Income tax expense                                |                                   |   | 750     |        |              |   | 571     |             
|                                                  |                                   |   |         |        |              |  
|Net loss                                          |                                   |   | (7,308  | )      |              |   | (6,862  | )           
|                                                 
|                                                 
|                                                 
|                                                 
|Preferred dividends:                              |                                   |   |         |        |              |   |         |             
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Senior redeemable preferred stock |   |         | 3,233  |              |   |         | 2,818        | 
|                                                 
|                                                 
|                                                 
|                                                 
|                                                  | Junior preferred stock            |   |         | 2,155  |              |   |         | 1,879        | 
|                                                  |                                   |   |         |        |              |  
|Net loss attributable to common stock             |                                   | $ | (12,696 | )      |              | $ | (11,559 | )           
|                                                  |                                   |   |         |        |              |  

See accompanying notes to the unaudited consolidated condensed financial statements



-8-



---



##### Table of Contents



COMMUNICATIONS & POWER INDUSTRIES, INC.,
and subsidiaries
(A wholly owned subsidiary of Communications & Power Industries Holding Corporation)

CONSOLIDATED CONDENSED
STATEMENTS OF CASH FLOWS
(in thousands - unaudited)

|                                                 |                                                     |   |              |         |   |              |        |        |  
|------------------------------------------------ | --------------------------------------------------- | - | ------------ | ------- | - | ------------ | ------ | ------ | -
|                                                 |                                                     |   | 39-Week      |         |   | 39-Week      |       
|                                                 |                                                     |   | period ended |         |   | period ended |       
|                                                 |                                                     |   | June 29,     |         |   | June 30,     |       
|                                                 |                                                     |   | 2001         |         |   | 2000         |       
|                                                 |                                                     |   |              |         |   |              |       
|OPERATING ACTIVITIES                             |                                                     |   |              |         |   |              |        |       
|                                                
|                                                
|                                                
|                                                
|                                                 | Net cash (used in) provided by operating activities |   | $            | (3,708  | ) |              | $      | 8,958  |  
|                                                 |                                                     |   |              |         |   |             
|INVESTING ACTIVITIES                             |                                                     |   |              |         |   |              |        |       
|                                                
|                                                
|                                                
|                                                
|                                                 | Proceeds from sale of property to parent            |   |              | 17,250  |   |              |        |       |  
|                                                
|                                                
|                                                
|                                                
|                                                 | Proceeds from sale of property, plant and equipment |   |              | 1,922   |   |              |        |       |  
|                                                
|                                                
|                                                
|                                                
|                                                 | Purchase of property, plant and equipment, net      |   |              | (3,784  | ) |              |        | (4,604 | )
|                                                 |                                                     |   |              |         |   |             
|                                                 | Net cash provided by (used in) investing activities |   |              | 15,388  |   |              |        | (4,604 | )
|                                                 |                                                     |   |              |         |   |             
|FINANCING ACTIVITIES                             |                                                     |   |              |         |   |              |        |       
|                                                
|                                                
|                                                
|                                                
|                                                 | Repayments on capital leases                        |   |              | (595    | ) |              |        | (632   | )
|                                                
|                                                
|                                                
|                                                
|                                                 | Payment of debt issue costs                         |   |              | (1,894  | ) |              |        |       |  
|                                                
|                                                
|                                                
|                                                
|                                                 | Repayments of terminated revolving credit facility  |   |              | (40,000 | ) |              |        |       |  
|                                                
|                                                
|                                                
|                                                
|                                                 | Proceeds from revolving credit facility             |   |              | 25,580  |   |              |        |       |  
|                                                
|                                                
|                                                
|                                                
|                                                 | Repayments of terminated senior term loans          |   |              | (16,049 | ) |              |        | (4,944 | )
|                                                
|                                                
|                                                
|                                                
|                                                 | Proceeds from senior term loan                      |   |              | 20,000  |   |              |        |       |  
|                                                
|                                                
|                                                
|                                                
|                                                 | Net proceeds from stockholder loans                 |   |              |        |   |              |        | 20     |  
|                                                
|                                                
|                                                
|                                                
|                                                 | Purchase of treasury stock                          |   |              |        |   |              |        | (23    | )
|                                                 |                                                     |   |              |         |   |             
|                                                 | Net cash used in financing activities               |   |              | (12,958 | ) |              |        | (5,579 | )
|                                                 |                                                     |   |              |         |   |             
|NET DECREASE IN CASH AND CASH EQUIVALENTS        |                                                     |   | (1,278       | )       |   |              | (1,225 | )     
|                                                
|                                                
|                                                
|                                                
|Cash and cash equivalents at beginning of period |                                                     |   | 4,766        |         |   |              | 4,247  |       
|                                                 |                                                     |   |              |         |   |             
|Cash and cash equivalents at end of period       |                                                     | $ | 3,488        |         |   | $            | 3,022  |       
|                                                 |                                                     |   |              |         |   |             

See accompanying notes to the unaudited consolidated condensed financial statements.



-9-



---



##### Table of Contents






COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

COMMUNICATIONS & POWER INDUSTRIES, INC.,
and subsidiaries
(A wholly owned subsidiary of Communications & Power Industries Holding Corporation)

NOTES TO CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS
(unaudited)

1.  Basis of Presentation

The accompanying unaudited consolidated condensed financial statements of
Communications & Power Industries Holding Corporation (Holding) and
Communications & Power Industries, Inc. (CPI, both companies together
referred to as the Company) have been prepared pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information and
footnote disclosures normally included in annual financial statements have been
condensed or omitted and, accordingly, these financial statements should be
read in conjunction with the financial statements and the notes thereto
contained in the Companys September 29, 2000 Annual Report on Form 10-K.
Management believes that these unaudited interim condensed financial statements
contain all adjustments, all of which are of a normal recurring nature,
necessary to present fairly the financial position of the Company, and its
results of operations and cash flows for the interim periods presented. The
results for the interim periods reported are not necessarily indicative of the
results for the complete fiscal year 2001.

2.  Inventories

Inventories are stated at the lower of average cost or market (net realizable
value). The main components of inventories are as follows:

|                        |  |               |        |  |                    |   |        | 
|----------------------- |  | ------------- | ------ |  | ------------------ | - | ------ | 
|(Dollars in thousands)  |  | June 29, 2001 |        |  | September 29, 2000 |  
|                        |  |               |        |  |                    |  
|Raw materials and parts |  | $             | 48,278 |  |                    | $ | 46,859 | 
|                       
|                       
|                       
|                       
|Work in process         |  |               | 18,124 |  |                    |   | 14,731 | 
|                       
|                       
|                       
|                       
|Finished goods          |  |               | 2,418  |  |                    |   | 2,359  | 
|                        |  |               |        |  |                    |  
|Total inventories       |  | $             | 68,820 |  |                    | $ | 63,949 | 
|                        |  |               |        |  |                    |  

3.  Supplemental Cash Flow Information

Cash paid for interest was $11.6 million and $9.9 million for the 39-week
periods ended June 29, 2001 and June 30, 2000, respectively. Cash paid for
taxes was $0.6 million and $(0.06) million for the 39-week periods ended June
29, 2001 and June 30, 2000, respectively.

Non-cash financing activities of CPI included the payment of preferred stock
dividends on its Junior Preferred Stock through the issuance of 7,432 shares of
its Junior Preferred Stock during the quarter ended June 29, 2001. During the
nine months ended June 29, 2001, CPI paid preferred stock dividends on its
Junior Preferred Stock through the issuance of 21,551 shares of Junior
Preferred Stock.

4.  Segments and Related Information

The Company has two reportable segments: vacuum electronic devices (VEDs) and
satcom equipment. The CEO, identified as the Chief Operating Decision Maker,
evaluates performance and allocates resources based on the Companys principal
performance measure, earnings before income taxes, interest, depreciation and
amortization (EBITDA).



-10-



---



##### Table of Contents



COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

COMMUNICATIONS & POWER INDUSTRIES, INC.,
and subsidiaries
(A wholly owned subsidiary of Communications & Power Industries Holding Corporation)

Summarized financial information concerning Holdings reportable segments is
shown in the following
table. Included in the Other column is financial information for the
Companys Solid State Products Division, which did not meet the quantitative
thresholds, and certain unallocated corporate-level operating expenses.
Intersegment product transfers are recorded at cost.

(Dollars in thousands)

|                                 |  |       |        |  |           |        |        |       |  |   |        |   |  |   |        | 
|-------------------------------- |  | ----- | ------ |  | --------- | ------ | ------ | ----- |  | - | ------ | - |  | - | ------ | 
|                                 |  |       |        |  |           | Satcom |        |       |  |   |        |   |  |   |       
|13-Week Period Ended             |  | VEDs |        |  | Equipment |        |        | Other |  |   | Total  |  
|                                 |  |       |        |  |           |        |        |       |  |   |        |  
|June 29, 2001:                   |  |       |        |  |           |        |        |       |  |   |        |   |  |   |        | 
|                                
|                                
|                                
|                                
|Revenues from external
customers |  | $     | 52,775 |  |           | $      | 17,124 |       |  | $ | 2,825  |   |  | $ | 72,724 | 
|                                
|                                
|                                
|                                
|Intersegment product transfers   |  |       | 6,196  |  |           |        |       |       |  |   | 480    |   |  |   | 6,676  | 
|                                
|                                
|                                
|                                
|EBITDA  Holding                 |  |       | 9,108  |  |           |        | (260   | )     |  |   | (1,929 | ) |  |   | 6,919  | 
|                                
|                                
|                                
|                                
|EBITDA  CPI                     |  |       | 9,108  |  |           |        | (260   | )     |  |   | (2,495 | ) |  |   | 6,353  | 
|                                
|                                
|                                
|                                
|                                
|                                
|                                
|                                
|                                
|                                
|                                
|                                
|June 30, 2000:                   |  |       |        |  |           |        |        |       |  |   |        |   |  |   |        | 
|                                
|                                
|                                
|                                
|Revenues from external
customers |  |       | 51,448 |  |           |        | 12,900 |       |  |   | 2,019  |   |  |   | 66,367 | 
|                                
|                                
|                                
|                                
|Intersegment product transfers   |  |       | 2,730  |  |           |        |       |       |  |   | 404    |   |  |   | 3,134  | 
|                                
|                                
|                                
|                                
|EBITDA  Holding                 |  |       | 9,401  |  |           |        | (932   | )     |  |   | (197   | ) |  |   | 8,272  | 
|                                
|                                
|                                
|                                
|EBITDA  CPI                     |  |       | 9,401  |  |           |        | (932   | )     |  |   | (197   | ) |  |   | 8,272  | 

(Dollars in thousands)

|                                 |  |       |         |  |           |        |        |       |  |   |        |   |  |   |         | 
|-------------------------------- |  | ----- | ------- |  | --------- | ------ | ------ | ----- |  | - | ------ | - |  | - | ------- | 
|                                 |  |       |         |  |           | Satcom |        |       |  |   |        |   |  |   |        
|39-Week Period Ended             |  | VEDs |         |  | Equipment |        |        | Other |  |   | Total  |  
|                                 |  |       |         |  |           |        |        |       |  |   |        |  
|June 29, 2001:                   |  |       |         |  |           |        |        |       |  |   |        |   |  |   |         | 
|                                
|                                
|                                
|                                
|Revenues from external
customers |  | $     | 148,819 |  |           | $      | 44,191 |       |  | $ | 6,660  |   |  | $ | 199,670 | 
|                                
|                                
|                                
|                                
|Intersegment product transfers   |  |       | 14,936  |  |           |        |       |       |  |   | 1,178  |   |  |   | 16,114  | 
|                                
|                                
|                                
|                                
|EBITDA  Holding                 |  |       | 24,189  |  |           |        | (921   | )     |  |   | (4,897 | ) |  |   | 18,371  | 
|                                
|                                
|                                
|                                
|EBITDA  CPI                     |  |       | 24,189  |  |           |        | (921   | )     |  |   | (5,911 | ) |  |   | 17,357  | 
|                                
|                                
|                                
|                                
|                                
|                                
|                                
|                                
|                                
|                                
|                                
|                                
|June 30, 2000:                   |  |       |         |  |           |        |        |       |  |   |        |   |  |   |         | 
|                                
|                                
|                                
|                                
|Revenues from external
customers |  |       | 139,102 |  |           |        | 37,593 |       |  |   | 5,002  |   |  |   | 181,697 | 
|                                
|                                
|                                
|                                
|Intersegment product transfers   |  |       | 7,239   |  |           |        |       |       |  |   | 811    |   |  |   | 8,050   | 
|                                
|                                
|                                
|                                
|EBITDA  Holding                 |  |       | 21,572  |  |           |        | (166   | )     |  |   | (2,098 | ) |  |   | 19,308  | 
|                                
|                                
|                                
|                                
|EBITDA  CPI                     |  |       | 21,572  |  |           |        | (166   | )     |  |   | (2,098 | ) |  |   | 19,308  | 



-11-



---



##### Table of Contents



COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

COMMUNICATIONS & POWER INDUSTRIES, INC.,
and subsidiaries
(A wholly owned subsidiary of Communications & Power Industries Holding Corporation)

A reconciliation of EBITDA from reportable segments to Loss before taxes is as
follows:

|                              |  |                      |        |   |                      |   |       |               |  |   |               |   |  |   |       |  
|----------------------------- |  | -------------------- | ------ | - | -------------------- | - | ----- | ------------- |  | - | ------------- | - |  | - | ----- | -
|                              |  | Holding              |        |   | CPI                  |  
|                              |  |                      |        |   |                      |  
|                              |  | 13-Week Period Ended |        |   | 13-Week Period Ended |  
|                              |  |                      |        |   |                      |  
|(Dollars in thousands)        |  | June 29, 2001        |        |   | June 30, 2000        |   |       | June 29, 2001 |  |   | June 30, 2000 |  
|                              |  |                      |        |   |                      |   |       |               |  |   |               |  
|Segment EBITDA                |  | $                    | 6,919  |   |                      | $ | 8,272 |               |  | $ | 6,353         |   |  | $ | 8,272 |  
|                             
|                             
|                             
|                             
|Less:                         |  |                      |        |   |                      |   |       |               |  |   |               |   |  |   |       |  
|                             
|                             
|                             
|                             
|Depreciation and
amortization |  |                      | 3,334  |   |                      |   | 4,007 |               |  |   | 3,173         |   |  |   | 4,007 |  
|                             
|                             
|                             
|                             
|Interest expense              |  |                      | 5,208  |   |                      |   | 4,681 |               |  |   | 4,530         |   |  |   | 4,681 |  
|                              |  |                      |        |   |                      |   |       |               |  |   |               |  
|Loss before taxes             |  | $                    | (1,623 | ) |                      | $ | (416  | )             |  | $ | (1,350        | ) |  | $ | (416  | )
|                              |  |                      |        |   |                      |   |       |               |  |   |               |  

|                              |  |                      |        |   |                      |   |        |               |  |   |               |   |  |   |        |  
|----------------------------- |  | -------------------- | ------ | - | -------------------- | - | ------ | ------------- |  | - | ------------- | - |  | - | ------ | -
|                              |  | Holding              |        |   | CPI                  |  
|                              |  |                      |        |   |                      |  
|                              |  | 39-Week Period Ended |        |   | 39-Week Period Ended |  
|                              |  |                      |        |   |                      |  
|(Dollars in thousands)        |  | June 29, 2001        |        |   | June 30, 2000        |   |        | June 29, 2001 |  |   | June 30, 2000 |  
|                              |  |                      |        |   |                      |   |        |               |  |   |               |  
|Segment EBITDA                |  | $                    | 18,371 |   |                      | $ | 19,308 |               |  | $ | 17,357        |   |  | $ | 19,308 |  
|                             
|                             
|                             
|                             
|Less:                         |  |                      |        |   |                      |   |        |               |  |   |               |   |  |   |        |  
|                             
|                             
|                             
|                             
|Depreciation and
amortization |  |                      | 9,996  |   |                      |   | 11,691 |               |  |   | 9,662         |   |  |   | 11,691 |  
|                             
|                             
|                             
|                             
|Interest expense              |  |                      | 15,739 |   |                      |   | 13,908 |               |  |   | 14,253        |   |  |   | 13,908 |  
|                              |  |                      |        |   |                      |   |        |               |  |   |               |  
|Loss before taxes             |  | $                    | (7,364 | ) |                      | $ | (6,291 | )             |  | $ | (6,558        | ) |  | $ | (6,291 | )
|                              |  |                      |        |   |                      |   |        |               |  |   |               |  

5.  New Credit Facility

On December 22, 2000, the Company terminated the Senior Credit Agreement and
replaced it with a $61.0 million secured credit facility (Credit Facility).
This new facility consists of a $41.0 million revolving line of credit, with a
sub-facility of $10.0 million for letters of credit, which expires on December
22, 2004, and a $20.0 million term loan that expires on December 22, 2002. The
Credit Facility is secured by substantially all of the assets of CPI and is
guaranteed by Holding and all of CPIs subsidiaries. Availability under the
revolving credit facility is based upon eligible receivables, machinery and
equipment and certain real estate and, as of June 29, 2001, CPI had $10.9
million of availability.

The revolving line of credit provides for borrowings that will bear interest at
a rate equal to LIBOR plus 3.25% per annum or Prime plus 1.75% per annum. The
term loan provides for borrowings that will bear interest at rate equal to
Prime plus 5.50% per annum. Additionally, the terms of the facility require
the Company to maintain certain financial covenants and limit the payment of
cash dividends on the Senior and Junior Preferred Stock. In addition to
customary fronting and other fees, CPI will pay a fee equal to 1.25% per annum
on outstanding but undrawn amounts of letters of credit; and additionally CPI
will pay customary collateral management fees and a commitment fee of 0.375%
per annum on unused facilities under the Credit Facility.



-12-



---



##### Table of Contents



COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

COMMUNICATIONS & POWER INDUSTRIES, INC.,
and subsidiaries
(A wholly owned subsidiary of Communications & Power Industries Holding Corporation)

6.  Sale-Leaseback Transaction

On December 22, 2000, a sale-leaseback transaction related to CPIs facilities
in San Carlos, California
was accomplished between CPI and Holding. Holding paid CPI aggregate
consideration of $23.0 million for the San Carlos real estate, consisting of
$17.25 million in cash and an unsecured promissory note in the principal amount
of $5.75 million maturing in nine years, with interest-only payments on a
quarterly basis at the rate of 15.5% per annum, with up to 35.25% of each
interest payment payable in kind, at Holdings option, by its issuance of
additional notes. CPI and Holding entered into a lease of the San Carlos real
property for a term of twenty (20) years on a net basis with a fixed annual
rent (payable in equal monthly installments) of $2.45 million. Holding
financed the cash portion of the San Carlos purchase price and its fees and
expenses with respect to the transaction by borrowing $18.0 million from Wells
Fargo Bank, which loan matures June 1, 2002, bears interest at Prime or LIBOR
plus 3.25%, and is secured on a non-recourse basis (subject to normal and
customary exceptions) by the San Carlos real property. CPI realized a gain of
approximately $8.5 million on the transaction that will be amortized over the
term of the lease. The current portion of the unrealized gain of $0.4 million
is included in CPIs accrued expenses. The unrealized gain is not shown for
Holding as it is eliminated upon consolidation.

7.  Recent Accounting Pronouncements

In July 2001, the Financial Accounting Standards Board (FASB) issued
Statement No. 141, Business Combinations (SFAS No. 141) and Statement No.
142, Goodwill and Other Intangible Assets (SFAS No. 142). SFAS No. 141
addresses accounting and reporting for business combinations and requires that
all business combinations be accounted for by a single method  the purchase
method. The provisions of this Statement apply to all business combinations
initiated after June 30, 2001. SFAS No. 142 addresses financial accounting and
reporting for acquired goodwill and other intangible assets and supersedes APB
Opinion No. 17, Intangible Assets. SFAS No. 142 is effective for fiscal years
beginning after December 15, 2001, however early application is permitted. The
Company will adopt this Statement beginning in the first quarter of Fiscal
2002. Based on goodwill existing on the Companys balance sheet at June 29,
2001, the adoption of SFAS No.142 will increase income before taxes by $1.3M in
Fiscal 2002.



-13-



---



##### Table of Contents



COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

COMMUNICATIONS & POWER INDUSTRIES, INC.,
and subsidiaries
(A wholly owned subsidiary of Communications & Power Industries Holding Corporation)




MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion reflects the consolidated results of Communications &
Power Industries Holding Corporation, which are materially consistent with
those of CPI except as identified below.

The Company serves the communications, radar, electronic countermeasures,
industrial, medical and scientific markets. In addition, the Company divides
the communications market into applications for ground-based satellite uplinks
for military and commercial uses (satcom) and broadcast sectors. The Company
defines and discusses its orders and sales trends by the end markets to more
clearly relate its business to outside investors. Internally, however, the
Company is organized into six operating units that are differentiated based on
products. Four of these operating units comprise the Companys vacuum
electronic device (VED) segment. The Company also has a satellite
communications equipment segment and a solid state products segment. Segment
data is included in Note 4 of the Notes to Unaudited Consolidated Condensed
Financial Statements.

Orders during the third quarter of Fiscal 2001 were $57.5 million as compared
to $55.8 million for the third quarter of Fiscal 2000. The increase of $1.7
million, or 3.1%, was driven by increases in orders in the communications and
radar markets. Orders for the first nine months of Fiscal 2001 of $203.3
million were slightly higher than the $201.7 million in the same time period of
Fiscal 2000. However, excluding the effect of the $13.6 million XM Radio
satellite service order generated in the second quarter of Fiscal 2000, the
increase in adjusted orders was $15.2 million. There was higher demand in the
first nine months for products in five of the Companys six markets. Radar
orders increased $11.0 million due to higher demand for spare and rebuilt VEDs
primarily for military applications. Industrial orders increased $2.9 million
due to orders for build-to-print power supplies manufactured by CPIs Canadian
operation. Medical orders improved from the first nine months of Fiscal 2000
by $2.7 million due primarily to increased demand for the Companys line of
x-ray generators. Electronic countermeasure orders for the first nine months
of Fiscal 2001 were lower than the comparable period in Fiscal 2000 due to the
timing of a large order for airborne decoy products which was booked in July
2001. Overall, incoming order levels fluctuate significantly on a quarterly
basis and a particular quarters order rate may not be indicative of future
order levels. In particular, the Company is beginning to see a moderate
slowdown in a portion of its communications market due primarily to the excess
capacity in internet based demand and cautious ordering due to concerns about
the economy. However, the demands from the Companys government/military
customers remain consistent and this, along with a large installed base that
requires replacement products, should provide some stability to the Companys
revenue stream. None-the-less, the Companys sales are highly dependent upon
manufacturing scheduling, performance and shipments and, accordingly, it is not
possible to accurately predict when these orders will be recognized as sales.

As of June 29, 2001, the Company had order backlog of $160.7 million,
representing approximately seven-and-a-half months of sales, compared to order
backlog of $164.8 million, or eight months of sales as of June 30, 2000. Order
backlog at the end of the third quarter also decreased slightly from $161.6
million at the end of Fiscal 2000.



-14-



---



##### Table of Contents



COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

COMMUNICATIONS & POWER INDUSTRIES, INC.,
and subsidiaries
(A wholly owned subsidiary of Communications & Power Industries Holding Corporation)

Sales for the third quarter of Fiscal 2001 were $72.7 million, an increase of
$6.4 million, or 9.6%, compared to $66.4 million for the same period in Fiscal
2000. The increase from a year ago was primarily attributable to the
communications market with an increase of $5.8 million, or 24.8%. Sales in the
communications market increased as a result of two new products. The Gen IV,
the Companys next generation, high power amplifier, and the XM Radio project
both began shipping in volume in Fiscal 2001. Sales for the first nine months
of Fiscal 2001 were $199.7 million compared to $181.7 million for the first
nine months of Fiscal 2000, an increase of $18.0 million, or 9.9%. This
increase reflects increased sales of products serving the communications,
medical and industrial markets of $10.7 million, $5.5 million and $2.7 million,
respectively. The increase in the communications market was discussed above.
Medical sales increased as a result of a new line of INDICO generators which
are used in x-ray applications. The improvement in sales in the industrial
market can be attributed to build-to-print power supplies.

Gross profit for the third quarter of Fiscal 2001 was $15.7 million, or 21.5%
of sales, compared with $16.5 million, or 24.8% of sales, generated in the
third quarter of Fiscal 2000. Gross profit for the first nine months of Fiscal
2001 was $41.1 million, or 20.6% compared to $41.9 million, or 23.1% of sales,
for the same period of Fiscal 2000. The decline as a percentage of sales for
both periods was primarily attributable to higher start-up and warranty costs
on several new satcom products, and to a lesser degree, due to increases in
energy related costs at the Companys California operations. Energy related
costs remain a concern going forward and could have a more significant impact
on future margin performance.

Operating costs and expenses were $11.8 million, or 16.2% of sales, for the
third quarter of Fiscal 2001 compared to $12.1 million, or 18.2% of sales, a
year ago. The decrease is attributable to lower research and development costs
in the satcom equipment segment as that segments engineering resources were
predominantly focused on production ramp-up issues rather than new product
development. The decrease in research and development costs were partially
offset by costs associated with certain consolidation activities including the
relocation of the Satcom Divisions production from Palo Alto, California to
the Companys facility in Ontario, Canada, and the relocation of the Companys
administrative offices into a single building in Palo Alto. Costs-to-date
attributable to these consolidation efforts were approximately $0.8 million for
the quarter and $2.6 million year-to-date. Operating costs and expenses for the
first nine months of Fiscal 2001 were $33.4 million, or 16.7% of sales,
compared to $34.0 million, or 18.7% of sales, for the same period of Fiscal
2000. Excluding the effects of the Companys consolidation efforts, operating
costs as a percentage of sales for the first nine months of Fiscal 2001 were
15.4% compared to 18.7% for the same period of Fiscal 2000. The decline in
operating costs and expenses from a year ago reflects cost control measures
implemented in the latter half of Fiscal 2000 as well as lower research and
development costs in the satcom equipment segment.

Earnings before interest, income taxes, depreciation and amortization
(EBITDA)1 for the third quarter of Fiscal 2001 were $6.9 million, or 9.5% of
sales, compared to $8.3 million, or 12.5% of sales, for the



---

|1 |  | EBITDA is presented because some investors may use it as a financial indicator of the
ability to service or incur indebtedness. EBITDA should not be considered as an alternative
to net earnings (loss), as a measure of operating results, cash flows or liquidity.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



-15-



---



##### Table of Contents



COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

COMMUNICATIONS & POWER INDUSTRIES, INC.,
and subsidiaries
(A wholly owned subsidiary of Communications & Power Industries Holding Corporation)

third quarter of
Fiscal 2000. EBITDA for the first nine months of Fiscal 2001 was $18.4
million, or 9.2% of sales, compared to $19.3 million, or 10.6% of sales, for
the same period in Fiscal 2000.
Excluding the effects of the consolidation costs, as previously discussed, and
a $0.9 million gain on the sale of a building in Beverly, Massachusetts,
adjusted EBITDA for the first nine months was $20.0 million, or 10.0% of sales,
compared to $19.3 million, or 10.6% of sales, during the same period in Fiscal
2000. The increase in adjusted EBITDA for the first nine months of Fiscal 2001
was due primarily to lower research and development costs, partially offset by
lower gross profit, as discussed above.

FINANCIAL CONDITION

Holding used cash of $4.0 million in operating activities for the first nine
months of Fiscal 2001, whereas for the corresponding period of Fiscal 2000,
Holding generated cash of $9.0 million. This decrease of $13.0 million was
mainly attributable to changes in accounts receivable and advance payments from
customers that contributed less cash flow of $8.0 million and $4.5 million,
respectively, and a decrease in accounts payable that consumed $4.7 million
more in cash, partially offset by $5.3 million less cash consumed by inventory
changes. Accounts receivable levels have increased as a result of higher
shipments in the third quarter of Fiscal 2001 compared to the same period in
Fiscal 2000 but days sales outstanding has improved to 60 days in June 2001
compared to 64 days in June 2000. Inventory levels, although not consuming as
much cash in Fiscal 2001 as in Fiscal 2000, remain high due to longer
production cycle times of several new products.

CPI used cash of $3.7 million in operating activities for the first nine months
of Fiscal 2001, whereas it generated cash of $9.0 million for the corresponding
period of Fiscal 2000. The decrease in operating cash flows was due primarily
to the factors discussed above.

Net cash used by Holding in investing activities in the first nine months of
Fiscal 2001 was $1.9 million compared to $4.6 million in the first nine months
of Fiscal 2000. This decrease in cash used of $2.7 million was due to a
reduction in capital expenditures compared to the same period of Fiscal 2000 of
$0.8 million, coupled with $1.9 million in proceeds from the sale of the
building in Beverly, Massachusetts in March 2001.

Net cash provided by investing activities for CPI was $15.4 million for the
first nine months of Fiscal 2001 as compared to $4.6 million of net cash used
in investing activities in the same period of Fiscal 2000. The increase in
cash is attributable to proceeds from the sale of CPIs facilities in San
Carlos to its parent as part of a sale-leaseback transaction of $17.25 million
and proceeds from the sale of a building in Beverly, Massachusetts of $1.9
million.

Capital expenditure requirements for both Holding and CPI for Fiscal 2001 are
expected to be similar to the amount spent in Fiscal 2000, including
expenditures related to consolidation efforts discussed below. Capital
expenditures related to the consolidation totaled $1.25 million as of June 29,
2001 and the Company expects to spend approximately $0.3 million on these
efforts during the remainder of Fiscal 2001.

Holdings financing activities during the first nine months of Fiscal 2001 were
related primarily to repayments on its Senior Credit Agreement, which was
terminated on December 22, 2000, and proceeds



-16-



---



##### Table of Contents



COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

COMMUNICATIONS & POWER INDUSTRIES, INC.,
and subsidiaries
(A wholly owned subsidiary of Communications & Power Industries Holding Corporation)

and expenses from its new $61.0
million secured credit facility (Credit Facility). This new facility
consists of a $41.0 million revolving line of credit, with a sub-facility of
$10.0 million for letters of credit, which expires December 22, 2004, and a
$20.0 million term loan which expires December 22,
2002. The facility is secured by substantially all of the assets of CPI, and
is guaranteed by Holding and all of CPIs subsidiaries. Availability under the
revolving credit facility is based upon eligible receivables, machinery and
equipment and certain real estate. Also on December 22, 2000, a sale-leaseback
transaction related to CPIs facilities in San Carlos was accomplished between
CPI and Holding. Holding paid CPI aggregate consideration of $23.0 million for
the San Carlos real estate, consisting of $17.25 million in cash and an
unsecured promissory note of $5.75 million maturing in nine years. CPI and
Holding entered into a lease of the San Carlos real property for a term of
twenty years on a net basis with a fixed annual rent of $2.45 million. Holding
financed the cash portion of the San Carlos purchase price by borrowing $18.0
million, which loan matures June 1, 2002.

CPI used cash of $13.0 million in financing activities during the first nine
months of Fiscal 2001 compared with $5.6 million a year ago. Similar to
Holding, CPIs financing activities in Fiscal 2001 were related primarily to
repayments on its Senior Credit Agreement, and proceeds and expenses from its
new secured Credit Facility, with the exception that the $18.0 million of
mortgage financing and its related debt issue costs of $0.5 million did not
apply to CPI.

The Company continues to focus on strategic consolidation efforts approved by
the Companys Board of Directors on October 18, 2000. As of the end of the
third quarter of Fiscal 2001, the Company has completed the transfer of three
of the five satcom product lines to its facility in Ontario, Canada and is
beginning the process of transferring the remaining two. The Company expects
to complete this consolidation over the next 6 to 9 months. The relocation of
its administrative offices into a single building in Palo Alto is complete and
the Company is actively looking for tenants to sublease up to 52,300 square
feet of office space.

Management believes that as a result of its recent debt restructuring, the
Company will have adequate capital resources and liquidity (including cash flow
from operations and borrowing under its revolving credit facility) to meet its
obligations, fund all required capital expenditures and pursue its business
strategy related to consolidation efforts described above for at least the next
twelve months.

Market Risk

The Companys market risk disclosures set forth in its Annual Report on Form
10-K for the fiscal year ended September 29, 2000, have not changed
significantly.

Forward-Looking Statements

This document contains forward-looking statements that relate to future events
or the Companys future financial performance. In some cases, you can identify
forward-looking statements by terminology such as may, will, should,
except, plan, anticipate, believe, estimate, predict, potential
or continue, the negative of such terms or other comparable terminology.
These statements are only predictions. Actual events or results may differ
materially.



-17-



---



##### Table of Contents



COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

COMMUNICATIONS & POWER INDUSTRIES, INC.,
and subsidiaries
(A wholly owned subsidiary of Communications & Power Industries Holding Corporation)

Although the Company believes that the expectations reflected in the
forward-looking statements are reasonable, the Company cannot guarantee future
results, levels of activity, performance or achievements. Moreover, neither
the Company nor any other person assumes responsibility for the accuracy and
completeness of the forward-looking statements. All written and oral
forward-looking statements made in connection with this report which are
attributable to the Company or persons acting on the Companys behalf are
expressly qualified in their entirety by the risk factors and other
cautionary statements included herein. The Company is under no duty to update
any of the forward-looking statements after the date of this report to conform
such statements to actual results or to changes in the Companys expectations.

The information in this report is not a complete description of the Companys
business or the risks associated with an investment in the Companys
securities. We urge you to carefully review and consider the various
disclosures made by the Company in this report and in the Companys other
reports filed with the SEC.

Risk Factors

You should carefully consider the various risks and uncertainties that impact
the Companys business and the other information in this report and the
Companys other filings with the SEC before you decide to invest in the Company
or to maintain or increase your investment. Such risks and uncertainties
include, but are not limited to, the following: product demand and market
acceptance risks; the effect of general economic conditions; the impact of
competitive products and pricing; new product development and
commercialization; technological difficulties and the ability to increase
margins; production interruptions and cost increases resulting from
Californias energy crisis; U.S. Government export policies; changes in
Governmental appropriations, national defense policies and availability of
Government funds; changes in environmental regulation and legislation;
availability of certain critical materials and raw material price fluctuations;
the Companys ability to generate the significant amount of cash needed to
service its debt; and the Companys ability to obtain financing in the future.
If any of the above risks actually occur, the Companys business, results of
operations, or financial condition would likely suffer and actual results could
differ materially from those projected.



-18-



---



##### Table of Contents



COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

COMMUNICATIONS & POWER INDUSTRIES, INC.,
and subsidiaries
(A wholly owned subsidiary of Communications & Power Industries Holding Corporation)




PART II: OTHER INFORMATION




ITEM 1. LEGAL PROCEEDINGS.

None.




ITEM 2: CHANGES IN SECURITIES

None.




ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.




ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

None.




ITEM 5. OTHER INFORMATION.

None.




ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

None.



-19-



---



##### Table of Contents






SIGNATURES

Pursuant to the requirements 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.



| |                                         |                                                                                              
| | --------------------------------------- | ---------------------------------------------------------------------------------------------
| | COMMUNICATIONS & POWER INDUSTRIES, INC.
| |                                         |                                                                                              
| |                                         |                                                                                              
| | By:                                     | /s/ Bart F. Petrini                                                                          
| |                                         |                                                                                              
| |                                         | Bart F. Petrini                                                                              
| |                                         | Chief Executive Officer and President                                                        
| |                                         | Date: August 9, 2001                                                                         
| |                                         |                                                                                              
| |                                         |                                                                                              
| | By:                                     | /s/ Lynn E. Harvey                                                                           
| |                                         |                                                                                              
| |                                         | Lynn E. Harvey                                                                               
| |                                         | Chief Financial Officer, Treasurer and Secretary
(Principal Financial and Accounting Officer)
| |                                         | Date: August 9, 2001                                                                         



-20-