##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549FORM 10-Q

|      |  |                                                                                          
|----- |  | -----------------------------------------------------------------------------------------
|[X]   |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934  
|     
|      |  | For the quarter ended March 29, 2002                                                     
|     
|      |  | 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)                                                                                           |  | (Exact name of registrant as specified in its charter)Delaware
(State of Incorporation)                                                                                          
|77-0407395                                                                                                                                                                        |  | 77-0405693                                                                                                                                                                       
|(I.R.S. employer identification number)811 Hansen Way                                                                                                                             |  | (I.R.S. employer identification number)811 Hansen Way                                                                                                                            
|Palo Alto, California 94303-1110
(650) 846-2900                                                                                                                                   |  | Palo Alto, California 94303-1110
(650) 846-2900                                                                                                                                  
|(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: |  | (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 XNo .

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 May 6, 2002. Communications & Power Industries, Inc.: 1 share of
Common Stock, $.01 par value, at May 6, 2002.



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TABLE OF CONTENTS



|              |                                                                                       |                                                                                             |  |  |  |  |  | 
|------------- | ------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------- |  |  |  |  |  | 
|              |                                                                                       | COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION CONSOLIDATED CONDENSED BALANCE SHEETS
|              |                                                                                       | COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION STATEMENTS OF OPERATIONS             
|              |                                                                                       | COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION STATEMENTS OF OPERATIONS             
|              |                                                                                       | COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION STATEMENTS OF CASH FLOWS             
|              |                                                                                       | COMMUNICATIONS & POWER INDUSTRIES, INC., CONSOLIDATED CONDENSED BALANCE SHEETS             
|              |                                                                                       | COMMUNICATIONS & POWER INDUSTRIES, INC., STATEMENTS OF OPERATIONS                          
|              |                                                                                       | COMMUNICATIONS & POWER INDUSTRIES, INC., STATEMENTS OF OPERATIONS                          
|              |                                                                                       | COMMUNICATIONS & POWER INDUSTRIES, INC., STATEMENTS OF CASH FLOWS                          
|              | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|              | PART II: OTHER INFORMATION                                                           
|SIGNATURES   
|EXHIBIT INDEX
|Exhibit 3.2  



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##### 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                                                                 |                                                       |                                                                                                                 |    |  |    |  |  | 
|ITEM 1: CONDENSED CONSOLIDATED FINANCIAL STATEMENTS                                           |                                                       |                                                                                                                 |    |  |    |  |  | 
|                                                                                              | COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION |                                                                                                                 |    |  |    |  |  |  | 
|                                                                                              |                                                       | Consolidated Condensed Balance Sheets, March 29, 2002 and September 28, 2001                                    |    |  | 2  |  |  |  |  | 
|                                                                                              |                                                       | Consolidated Condensed Statements of Operations for the 13-week periods ended March 29, 2002
and March 30, 2001 |    |  | 3  |  |  |  |  | 
|                                                                                              |                                                       | Consolidated Condensed Statements of Operations for the 26-week periods ended March 29, 2002
and March 30, 2001 |    |  | 4  |  |  |  |  | 
|                                                                                              |                                                       | Consolidated Condensed Statements of Cash Flows for the 26-week periods March 29, 2002
and March 30, 2001       |    |  | 5  |  |  |  |  | 
|                                                                                              |                                                       | Notes to Consolidated Condensed Financial Statements                                                            |    |  | 10 |  |  |  |  | 
|                                                                                              | COMMUNICATIONS & POWER INDUSTRIES, INC.               |                                                                                                                 |    |  |    |  |  |  | 
|                                                                                              |                                                       | Consolidated Condensed Balance Sheets, March 29, 2002 and September 28, 2001                                    |    |  | 6  |  |  |  |  | 
|                                                                                              |                                                       | Consolidated Condensed Statements of Operations for the 13-week periods ended March 29, 2002
and March 30, 2001 |    |  | 7  |  |  |  |  | 
|                                                                                              |                                                       | Consolidated Condensed Statements of Operations for the 26-week periods ended March 29, 2002
and March 30, 2001 |    |  | 8  |  |  |  |  | 
|                                                                                              |                                                       | Consolidated Condensed Statements of Cash Flows for the 26-week periods March 29, 2002 and
March 30, 2001       |    |  | 9  |  |  |  |  | 
|                                                                                              |                                                       | Notes to Consolidated Condensed Financial Statements                                                            |    |  | 10 |  |  |  |  | 
|ITEM 2: MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS |                                                       |                                                                                                                 | 13 |  |    |  |  | 
|PART II: OTHER INFORMATION                                                                    |                                                       |                                                                                                                 | 20 |  |    |  |  | 
|SIGNATURES                                                                                    |                                                       |                                                                                                                 | 21 |  |    |  |  | 

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##### Table of Contents






COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands-unaudited)

|                                                             |                                   |                                                        |         |           |   |               |         |         |   | 
|------------------------------------------------------------ | --------------------------------- | ------------------------------------------------------ | ------- | --------- | - | ------------- | ------- | ------- | - | 
|                                                             |                                   |                                                        |         | March 29, |   | September 28,
|ASSETS                                                       |                                   | 2002                                                   |         | 2001     
|                                                             |                                   |                                                        |         |          
|Current Assets                                               |                                   |                                                        |         |           |   |               |         |        
|                                                             | Cash and cash equivalents         |                                                        | $       | 3,803     |   |               | $       | 2,903   |  
|                                                             | Accounts receivable, net          |                                                        |         | 37,057    |   |               |         | 46,738  |  
|                                                             | Inventories                       |                                                        |         | 47,930    |   |               |         | 57,678  |  
|                                                             | Deferred taxes                    |                                                        |         | 1,750     |   |               |         | 3,500   |  
|                                                             | Other current assets              |                                                        |         | 1,470     |   |               |         | 2,241   |  
|                                                             |                                   |                                                        |         |           |   |               |         |        
|Total current assets                                         |                                   |                                                        | 92,010  |           |   |               | 113,060 |        
|Property, plant, and equipment, net                          |                                   |                                                        | 58,922  |           |   |               | 62,698  |        
|Goodwill and other intangibles, net                          |                                   |                                                        | 23,574  |           |   |               | 23,452  |        
|Debt issue costs, net                                        |                                   |                                                        | 3,989   |           |   |               | 4,857   |        
|                                                             |                                   |                                                        |         |           |   |               |         |        
|Total assets                                                 |                                   | $                                                      | 178,495 |           |   | $             | 204,067 |        
|                                                             |                                   |                                                        |         |           |   |               |         |        
|                                                             |                                   | LIABILITIES, PREFERRED STOCK AND
STOCKHOLDERS DEFICIT |         |           |   |               |         |         |   | 
|Current Liabilities                                          |                                   |                                                        |         |           |   |               |         |        
|                                                             | Revolving credit facility         |                                                        | $       | 3,506     |   |               | $       | 21,293  |  
|                                                             | Current portion of capital leases |                                                        |         | 449       |   |               |         | 919     |  
|                                                             | Mortgage financing                |                                                        |         | 18,000    |   |               |         | 18,000  |  
|                                                             | Senior term loans                 |                                                        |         | 20,000    |   |               |         | 20,000  |  
|                                                             | Accounts payable                  |                                                        |         | 14,177    |   |               |         | 14,729  |  
|                                                             | Accrued expenses                  |                                                        |         | 14,308    |   |               |         | 17,859  |  
|                                                             | Product warranty                  |                                                        |         | 4,135     |   |               |         | 4,225   |  
|                                                             | Income taxes payable              |                                                        |         | 1,103     |   |               |         | 407     |  
|                                                             | Accrued dividends payable         |                                                        |         | 6,873     |   |               |         | 4,387   |  
|                                                             | Advance payments from customers   |                                                        |         | 8,212     |   |               |         | 9,193   |  
|                                                             |                                   |                                                        |         |           |   |               |         |        
|Total current liabilities                                    |                                   |                                                        | 90,763  |           |   |               | 111,012 |        
|Senior subordinated notes                                    |                                   |                                                        | 100,000 |           |   |               | 100,000 |        
|Obligations under capital leases                             |                                   |                                                        | 40      |           |   |               | 90      |        
|                                                             |                                   |                                                        |         |           |   |               |         |        
|Total liabilities                                            |                                   |                                                        | 190,803 |           |   |               | 211,102 |        
|                                                             |                                   |                                                        |         |           |   |               |         |        
|Senior Redeemable Preferred Stock of Subsidiary              |                                   |                                                        | 28,586  |           |   |               | 28,479  |        
|                                                             |                                   |                                                        |         |           |   |               |         |        
|Junior Preferred Stock of Subsidiary                         |                                   |                                                        | 23,715  |           |   |               | 22,094  |        
|                                                             |                                   |                                                        |         |           |   |               |         |        
|Commitments and contingencies                                |                                   |                                                        |         |           |   |               |         |        
|Stockholders Deficit                                        |                                   |                                                        |         |           |   |               |         |        
|                                                             | Common stock                      |                                                        |         | 49        |   |               |         | 49      |  
|                                                             | Additional paid-in capital        |                                                        |         | 19,111    |   |               |         | 19,111  |  
|                                                             | Accumulated deficit               |                                                        |         | (82,567   | ) |               |         | (75,587 | )
|                                                             | Stockholder loans                 |                                                        |         | (1,202    | ) |               |         | (1,181  | )
|                                                             |                                   |                                                        |         |           |   |               |         |        
|Net stockholders deficit                                    |                                   |                                                        | (64,609 | )         |   |               | (57,608 | )      
|                                                             |                                   |                                                        |         |           |   |               |         |        
|Total liabilities, preferred stock and
stockholders deficit |                                   | $                                                      | 178,495 |           |   | $             | 204,067 |        
|                                                             |                                   |                                                        |         |           |   |               |         |        

See accompanying notes to the unaudited consolidated condensed financial statements.

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COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

CONSOLIDATED CONDENSED
STATEMENTS OF OPERATIONS
(in thousands  unaudited)

|                                      |                                               |                                   |                            |        |              |       |              |        |       |       | 
|------------------------------------- | --------------------------------------------- | --------------------------------- | -------------------------- | ------ | ------------ | ----- | ------------ | ------ | ----- | ----- | 
|                                      |                                               |                                   |                            |        | 13-Week      |       | 13-Week     
|                                      |                                               |                                   |                            |        | period ended |       | period ended
|                                      |                                               |                                   |                            |        | March 29,    |       | March 30,   
|                                      |                                               |                                   |                            |        | 2002         |       | 2001        
|                                      |                                               |                                   |                            |        |              |       |             
|                                      | Sales                                         |                                   | $                          | 60,612 |              |       | $            | 66,570 |      
|                                      | Cost of sales                                 |                                   |                            | 47,666 |              |       |              | 53,947 |      
|                                      |                                               |                                   |                            |        |              |       |              |       
|                                      | Gross profit                                  |                                   |                            | 12,946 |              |       |              | 12,623 |      
|                                      |                                               |                                   |                            |        |              |       |              |       
|                                      | Operating costs and expenses:                 |                                   |                            |        |              |       |              |        |      
|                                      |                                               |                                   | Research and development   |        |              | 1,517 |              |        |       | 1,541 | 
|                                      |                                               |                                   | Selling and marketing      |        |              | 3,639 |              |        |       | 4,415 | 
|                                      |                                               |                                   | General and administrative |        |              | 4,556 |              |        |       | 5,776 | 
|                                      |                                               |                                   |                            |        |              |       |              |       
|                                      | Total operating costs and expenses            |                                   |                            | 9,712  |              |       |              | 11,732 |      
|                                      |                                               |                                   |                            |        |              |       |              |       
|                                      | Operating income                              |                                   |                            | 3,234  |              |       |              | 891    |      
|                                      | Gain on sale of property, plant and equipment |                                   |                            |       |              |       |              | 887    |      
|                                      | Interest expense                              |                                   |                            | (3,814 | )            |       |              | (5,364 | )    
|                                      |                                               |                                   |                            |        |              |       |              |       
|                                      | Loss before taxes                             |                                   |                            | (580   | )            |       |              | (3,586 | )    
|                                      | Income tax expense                            |                                   |                            | 1,153  |              |       |              | 250    |      
|                                      |                                               |                                   |                            |        |              |       |              |       
|                                      | Net loss                                      |                                   |                            | (1,733 | )            |       |              | (3,836 | )    
|Preferred dividends:                  |                                               |                                   |                            |        |              |       |              |       
|                                      |                                               | Senior redeemable preferred stock |                            |        | 1,292        |       |              |        | 1,077 |      
|                                      |                                               | Junior preferred stock            |                            |        | 824          |       |              |        | 718   |      
|                                      |                                               |                                   |                            |        |              |       |              |       
|Net loss attributable to common stock |                                               | $                                 | (3,849                     | )      |              | $     | (5,631       | )     
|                                      |                                               |                                   |                            |        |              |       |              |       

See accompanying notes to the unaudited consolidated condensed financial statements.

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COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

CONSOLIDATED CONDENSED
STATEMENTS OF OPERATIONS
(in thousands  unaudited)

|                                      |                                               |                                   |                            |         |              |       |              |         |       |        | 
|------------------------------------- | --------------------------------------------- | --------------------------------- | -------------------------- | ------- | ------------ | ----- | ------------ | ------- | ----- | ------ | 
|                                      |                                               |                                   |                            |         | 26-Week      |       | 26-Week     
|                                      |                                               |                                   |                            |         | period ended |       | period ended
|                                      |                                               |                                   |                            |         | March 29,    |       | March 30,   
|                                      |                                               |                                   |                            |         | 2002         |       | 2001        
|                                      |                                               |                                   |                            |         |              |       |             
|                                      | Sales                                         |                                   | $                          | 126,840 |              |       | $            | 126,946 |      
|                                      | Cost of sales                                 |                                   |                            | 99,735  |              |       |              | 101,525 |      
|                                      |                                               |                                   |                            |         |              |       |              |        
|                                      | Gross profit                                  |                                   |                            | 27,105  |              |       |              | 25,421  |      
|                                      |                                               |                                   |                            |         |              |       |              |        
|                                      | Operating costs and expenses:                 |                                   |                            |         |              |       |              |         |      
|                                      |                                               |                                   | Research and development   |         |              | 2,772 |              |         |       | 2,929  | 
|                                      |                                               |                                   | Selling and marketing      |         |              | 7,585 |              |         |       | 8,327  | 
|                                      |                                               |                                   | General and administrative |         |              | 9,143 |              |         |       | 10,262 | 
|                                      |                                               |                                   |                            |         |              |       |              |        
|                                      | Total operating costs and expenses            |                                   |                            | 19,500  |              |       |              | 21,518  |      
|                                      |                                               |                                   |                            |         |              |       |              |        
|                                      | Operating income                              |                                   |                            | 7,605   |              |       |              | 3,903   |      
|                                      | Gain on sale of property, plant and equipment |                                   |                            |        |              |       |              | 887     |      
|                                      | Interest expense                              |                                   |                            | (8,539  | )            |       |              | (10,531 | )    
|                                      |                                               |                                   |                            |         |              |       |              |        
|                                      | Loss before taxes                             |                                   |                            | (934    | )            |       |              | (5,741  | )    
|                                      | Income tax expense                            |                                   |                            | 1,833   |              |       |              | 500     |      
|                                      |                                               |                                   |                            |         |              |       |              |        
|                                      | Net loss                                      |                                   |                            | (2,767  | )            |       |              | (6,241  | )    
|Preferred dividends:                  |                                               |                                   |                            |         |              |       |              |        
|                                      |                                               | Senior redeemable preferred stock |                            |         | 2,486        |       |              |         | 2,118 |       
|                                      |                                               | Junior preferred stock            |                            |         | 1,620        |       |              |         | 1,412 |       
|                                      |                                               |                                   |                            |         |              |       |              |        
|Net loss attributable to common stock |                                               | $                                 | (6,873                     | )       |              | $     | (9,771       | )      
|                                      |                                               |                                   |                            |         |              |       |              |        

See accompanying notes to the unaudited consolidated condensed financial statements.

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COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

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

|                                                     |                                                     |   |              |         |              |   |        |         |  
|---------------------------------------------------- | --------------------------------------------------- | - | ------------ | ------- | ------------ | - | ------ | ------- | -
|                                                     |                                                     |   | 26-Week      |         | 26-Week     
|                                                     |                                                     |   | period
ended |         | period
ended
|                                                     |                                                     |   | March 29,    |         | March 30,   
|                                                     |                                                     |   | 2002         |         | 2002        
|                                                     |                                                     |   |              |         |             
|OPERATING ACTIVITIES                                 |                                                     |   |              |         |              |   |        |        
|                                                     | Net cash provided by (used in) operating activities |   | $            | 20,579  |              |   | $      | (4,527  | )
|                                                     |                                                     |   |              |         |              |   |        |        
|INVESTING ACTIVITIES                                 |                                                     |   |              |         |              |   |        |        
|                                                     | Proceeds from sale of property, plant and equipment |   |              |        |              |   |        | 1,922   |  
|                                                     | Purchase of property, plant and equipment, net      |   |              | (1,372  | )            |   |        | (2,332  | )
|                                                     |                                                     |   |              |         |              |   |        |        
|                                                     | Net cash used in investing activities               |   |              | (1,372  | )            |   |        | (410    | )
|                                                     |                                                     |   |              |         |              |   |        |        
|FINANCING ACTIVITIES                                 |                                                     |   |              |         |              |   |        |        
|                                                     | Repayments on capital leases                        |   |              | (520    | )            |   |        | (348    | )
|                                                     | Payment of debt issue costs                         |   |              |        |              |   |        | (2,153  | )
|                                                     | Repayment of terminated revolving credit facility   |   |              |        |              |   |        | (40,000 | )
|                                                     | (Repayment) proceeds from revolving credit facility |   |              | (17,787 | )            |   |        | 24,305  |  
|                                                     | Repayments on terminated senior term loans          |   |              |        |              |   |        | (16,049 | )
|                                                     | Proceeds from senior term loan                      |   |              |        |              |   |        | 20,000  |  
|                                                     | Proceeds from mortgage financing                    |   |              |        |              |   |        | 18,000  |  
|                                                     |                                                     |   |              |         |              |   |        |        
|                                                     | Net cash (used in) provided by financing activities |   |              | (18,307 | )            |   |        | 3,755   |  
|                                                     |                                                     |   |              |         |              |   |        |        
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |                                                     |   | 900          |         |              |   | (1,182 | )      
|Cash and cash equivalents at beginning of period     |                                                     |   | 2,903        |         |              |   | 4,766  |        
|                                                     |                                                     |   |              |         |              |   |        |        
|Cash and cash equivalents at end of period           |                                                     | $ | 3,803        |         |              | $ | 3,584  |        
|                                                     |                                                     |   |              |         |              |   |        |        

See accompanying notes to the unaudited consolidated condensed financial statements.

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

CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands-unaudited)

|                                                                               |                                   |                             |                         |         |           |   |               |         |   |  | 
|------------------------------------------------------------------------------ | --------------------------------- | --------------------------- | ----------------------- | ------- | --------- | - | ------------- | ------- | - |  | 
|                                                                               |                                   |                             |                         |         | March 29, |   | September 28,
|ASSETS                                                                         |                                   | 2002                        |                         | 2001   
|                                                                               |                                   |                             |                         |        
|Current Assets                                                                 |                                   |                             |                         |         |           |   |               |        
|                                                                               | Cash and cash equivalents         |                             | $                       | 3,803   |           |   | $             | 2,903   |  
|                                                                               | Accounts receivable, net          |                             |                         | 37,057  |           |   |               | 46,738  |  
|                                                                               | Inventories                       |                             |                         | 47,930  |           |   |               | 57,678  |  
|                                                                               | Deferred taxes                    |                             |                         | 1,750   |           |   |               | 3,500   |  
|                                                                               | Other current assets              |                             |                         | 1,470   |           |   |               | 2,241   |  
|                                                                               |                                   |                             |                         |         |           |   |               |        
|Total current assets                                                           |                                   |                             | 92,010                  |         |           |   | 113,060       |        
|Property, plant, and equipment, net                                            |                                   |                             | 45,219                  |         |           |   | 48,672        |        
|Goodwill and other intangibles, net                                            |                                   |                             | 23,574                  |         |           |   | 23,452        |        
|Debt issue costs, net                                                          |                                   |                             | 3,963                   |         |           |   | 4,715         |        
|Note receivable from parent                                                    |                                   |                             | 5,750                   |         |           |   | 5,750         |        
|                                                                               |                                   |                             |                         |         |           |   |               |        
|Total assets                                                                   |                                   | $                           | 170,516                 |         |           | $ | 195,649       |        
|                                                                               |                                   |                             |                         |         |           |   |               |        
|                                                                               |                                   |                             | LIABILITIES, REDEEMABLE |         |           |   |               |         |   |  | 
|                                                                               |                                   | PREFERRED STOCK AND DEFICIT |                         |         |           |   |               |         |   | 
|Current Liabilities                                                            |                                   |                             |                         |         |           |   |               |        
|                                                                               | Revolving credit facility         |                             | $                       | 3,506   |           |   | $             | 21,293  |  
|                                                                               | Current portion of capital leases |                             |                         | 449     |           |   |               | 919     |  
|                                                                               | Senior term loans                 |                             |                         | 20,000  |           |   |               | 20,000  |  
|                                                                               | Accounts payable                  |                             |                         | 14,177  |           |   |               | 15,175  |  
|                                                                               | Accrued expenses                  |                             |                         | 15,418  |           |   |               | 18,196  |  
|                                                                               | Product warranty                  |                             |                         | 4,135   |           |   |               | 4,225   |  
|                                                                               | Income taxes payable              |                             |                         | 1,103   |           |   |               | 407     |  
|                                                                               | Accrued dividends                 |                             |                         | 6,873   |           |   |               | 4,387   |  
|                                                                               | Advance payments from customers   |                             |                         | 8,212   |           |   |               | 9,193   |  
|                                                                               |                                   |                             |                         |         |           |   |               |        
|Total current liabilities                                                      |                                   |                             | 73,873                  |         |           |   | 93,795        |        
|Senior subordinated notes                                                      |                                   |                             | 100,000                 |         |           |   | 100,000       |        
|Deferred income on sale-leaseback                                              |                                   |                             | 7,523                   |         |           |   | 7,735         |        
|Obligations under capital leases                                               |                                   |                             | 40                      |         |           |   | 90            |        
|                                                                               |                                   |                             |                         |         |           |   |               |        
|Total liabilities                                                              |                                   |                             | 181,436                 |         |           |   | 201,620       |        
|                                                                               |                                   |                             |                         |         |           |   |               |        
|Senior Redeemable Preferred Stock                                              |                                   |                             | 28,586                  |         |           |   | 28,479        |        
|                                                                               |                                   |                             |                         |         |           |   |               |        
|Commitments and contingencies                                                  |                                   |                             |                         |         |           |   |               |        
|Stockholders Deficit:                                                         |                                   |                             |                         |         |           |   |               |        
|                                                                               | Junior preferred stock            |                             |                         | 2       |           |   |               | 2       |  
|                                                                               | Common stock                      |                             |                         |        |           |   |               |        |  
|                                                                               | Additional paid-in capital        |                             |                         | 42,872  |           |   |               | 41,252  |  
|                                                                               | Accumulated deficit               |                             |                         | (81,178 | )         |   |               | (74,523 | )
|                                                                               | Stockholder loans                 |                             |                         | (1,202  | )         |   |               | (1,181  | )
|                                                                               |                                   |                             |                         |         |           |   |               |        
|Net stockholders deficit                                                      |                                   |                             | (39,506                 | )       |           |   | (34,450       | )      
|                                                                               |                                   |                             |                         |         |           |   |               |        
|Total liabilities, senior redeemable
preferred stock and stockholders deficit |                                   | $                           | 170,516                 |         |           | $ | 195,649       |        
|                                                                               |                                   |                             |                         |         |           |   |               |        

See accompanying notes to the unaudited consolidated condensed financial statements.

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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
|                                      |                                               |                                   |                            |        | March 29,    |       | March 30,   
|                                      |                                               |                                   |                            |        | 2002         |       | 2001        
|                                      |                                               |                                   |                            |        |              |       |             
|                                      | Sales                                         |                                   | $                          | 60,612 |              |       | $            | 66,570 |      
|                                      | Cost of sales                                 |                                   |                            | 47,666 |              |       |              | 53,947 |      
|                                      |                                               |                                   |                            |        |              |       |              |       
|                                      | Gross profit                                  |                                   |                            | 12,946 |              |       |              | 12,623 |      
|                                      |                                               |                                   |                            |        |              |       |              |       
|                                      | Operating costs and expenses:                 |                                   |                            |        |              |       |              |        |      
|                                      |                                               |                                   | Research and development   |        |              | 1,517 |              |        |       | 1,541 | 
|                                      |                                               |                                   | Selling and marketing      |        |              | 3,639 |              |        |       | 4,415 | 
|                                      |                                               |                                   | General and administrative |        |              | 4,898 |              |        |       | 6,062 | 
|                                      |                                               |                                   |                            |        |              |       |              |       
|                                      | Total operating costs and expenses            |                                   |                            | 10,054 |              |       |              | 12,018 |      
|                                      |                                               |                                   |                            |        |              |       |              |       
|                                      | Operating income                              |                                   |                            | 2,892  |              |       |              | 605    |      
|                                      | Gain on sale of property, plant and equipment |                                   |                            |       |              |       |              | 887    |      
|                                      | Interest expense                              |                                   |                            | (3,329 | )            |       |              | (4,636 | )    
|                                      |                                               |                                   |                            |        |              |       |              |       
|                                      | Loss before taxes                             |                                   |                            | (437   | )            |       |              | (3,144 | )    
|                                      | Income tax expense                            |                                   |                            | 1,323  |              |       |              | 250    |      
|                                      |                                               |                                   |                            |        |              |       |              |       
|                                      | Net loss                                      |                                   |                            | (1,760 | )            |       |              | (3,394 | )    
|Preferred dividends:                  |                                               |                                   |                            |        |              |       |              |       
|                                      |                                               | Senior redeemable preferred stock |                            |        | 1,292        |       |              |        | 1,077 |      
|                                      |                                               | Junior preferred stock            |                            |        | 824          |       |              |        | 718   |      
|                                      |                                               |                                   |                            |        |              |       |              |       
|Net loss attributable to common stock |                                               | $                                 | (3,876                     | )      |              | $     | (5,189       | )     
|                                      |                                               |                                   |                            |        |              |       |              |       

See accompanying notes to the unaudited consolidated condensed financial statements.

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

CONSOLIDATED CONDENSED
STATEMENTS OF OPERATIONS(in thousands  unaudited)

|                                      |                                               |                                   |                            |         |              |       |              |         |       |        | 
|------------------------------------- | --------------------------------------------- | --------------------------------- | -------------------------- | ------- | ------------ | ----- | ------------ | ------- | ----- | ------ | 
|                                      |                                               |                                   |                            |         | 26-Week      |       | 26-Week     
|                                      |                                               |                                   |                            |         | period ended |       | period ended
|                                      |                                               |                                   |                            |         | March 29,    |       | March 30,   
|                                      |                                               |                                   |                            |         | 2002         |       | 2001        
|                                      |                                               |                                   |                            |         |              |       |             
|                                      | Sales                                         |                                   | $                          | 126,840 |              |       | $            | 126,946 |      
|                                      | Cost of sales                                 |                                   |                            | 99,735  |              |       |              | 101,525 |      
|                                      |                                               |                                   |                            |         |              |       |              |        
|                                      | Gross profit                                  |                                   |                            | 27,105  |              |       |              | 25,421  |      
|                                      |                                               |                                   |                            |         |              |       |              |        
|                                      | Operating costs and expenses:                 |                                   |                            |         |              |       |              |         |      
|                                      |                                               |                                   | Research and development   |         |              | 2,772 |              |         |       | 2,929  | 
|                                      |                                               |                                   | Selling and marketing      |         |              | 7,585 |              |         |       | 8,327  | 
|                                      |                                               |                                   | General and administrative |         |              | 9,831 |              |         |       | 10,537 | 
|                                      |                                               |                                   |                            |         |              |       |              |        
|                                      | Total operating costs and expenses            |                                   |                            | 20,188  |              |       |              | 21,793  |      
|                                      |                                               |                                   |                            |         |              |       |              |        
|                                      | Operating income                              |                                   |                            | 6,917   |              |       |              | 3,628   |      
|                                      | Gain on sale of property, plant and equipment |                                   |                            |        |              |       |              | 887     |      
|                                      | Interest expense                              |                                   |                            | (7,526  | )            |       |              | (9,723  | )    
|                                      |                                               |                                   |                            |         |              |       |              |        
|                                      | Loss before taxes                             |                                   |                            | (609    | )            |       |              | (5,208  | )    
|                                      | Income tax expense                            |                                   |                            | 1,833   |              |       |              | 500     |      
|                                      |                                               |                                   |                            |         |              |       |              |        
|                                      | Net loss                                      |                                   |                            | (2,442  | )            |       |              | (5,708  | )    
|Preferred dividends:                  |                                               |                                   |                            |         |              |       |              |        
|                                      |                                               | Senior redeemable preferred stock |                            |         | 2,486        |       |              |         | 2,118 |       
|                                      |                                               | Junior preferred stock            |                            |         | 1,620        |       |              |         | 1,412 |       
|                                      |                                               |                                   |                            |         |              |       |              |        
|Net loss attributable to common stock |                                               | $                                 | (6,548                     | )       |              | $     | (9,238       | )      
|                                      |                                               |                                   |                            |         |              |       |              |        

See accompanying notes to the unaudited consolidated condensed financial statements.

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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)

|                                                     |                                                      |   |              |         |              |   |        |         |  
|---------------------------------------------------- | ---------------------------------------------------- | - | ------------ | ------- | ------------ | - | ------ | ------- | -
|                                                     |                                                      |   | 26-Week      |         | 26-Week     
|                                                     |                                                      |   | period ended |         | period ended
|                                                     |                                                      |   | March 29,    |         | March 30,   
|                                                     |                                                      |   | 2002         |         | 2001        
|                                                     |                                                      |   |              |         |             
|OPERATING ACTIVITIES                                 |                                                      |   |              |         |              |   |        |        
|                                                     | Net cash provided by (used in) operating activities  |   | $            | 20,579  |              |   | $      | (4,677  | )
|                                                     |                                                      |   |              |         |              |   |        |        
|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       |   |              | (1,372  | )            |   |        | (2,332  | )
|                                                     |                                                      |   |              |         |              |   |        |        
|                                                     | Net cash (used in) provided by investing activities  |   |              | (1,372  | )            |   |        | 16,840  |  
|                                                     |                                                      |   |              |         |              |   |        |        
|FINANCING ACTIVITIES                                 |                                                      |   |              |         |              |   |        |        
|                                                     | Repayments on capital leases                         |   |              | (520    | )            |   |        | (348    | )
|                                                     | Payment of debt issue costs                          |   |              |        |              |   |        | (1,709  | )
|                                                     | Repayments of terminated revolving credit facility   |   |              |        |              |   |        | (40,000 | )
|                                                     | (Repayments) proceeds from revolving credit facility |   |              | (17,787 | )            |   |        | 24,305  |  
|                                                     | Repayments of terminated senior term loans           |   |              |        |              |   |        | (16,049 | )
|                                                     | Proceeds from senior term loan                       |   |              |        |              |   |        | 20,000  |  
|                                                     |                                                      |   |              |         |              |   |        |        
|                                                     | Net cash used by financing activities                |   |              | (18,307 | )            |   |        | (13,801 | )
|                                                     |                                                      |   |              |         |              |   |        |        
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |                                                      |   | 900          |         |              |   | (1,638 | )      
|Cash and cash equivalents at beginning of period     |                                                      |   | 2,903        |         |              |   | 4,766  |        
|                                                     |                                                      |   |              |         |              |   |        |        
|Cash and cash equivalents at end of period           |                                                      | $ | 3,803        |         |              | $ | 3,128  |        
|                                                     |                                                      |   |              |         |              |   |        |        

See accompanying notes to the unaudited consolidated condensed financial statements.

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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 28, 2001 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 period presented. The
results for the interim periods reported are not necessarily indicative of the
results for the complete fiscal year 2002.

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)  |  | March 29, 2002 |        | September 28, 2001
|                        |  |                |        |                   
|Raw materials and parts |  | $              | 35,730 |                    |  | $ | 40,776 | 
|Work in process         |  |                | 8,973  |                    |  |   | 14,874 | 
|Finished goods          |  |                | 3,227  |                    |  |   | 2,028  | 
|                        |  |                |        |                    |  |   |        | 
|Total inventories       |  | $              | 47,930 |                    |  | $ | 57,678 | 
|                        |  |                |        |                    |  |   |        | 

3. Supplemental Cash Flow Information

|                                                |  |                      |     |                      |  |           |      |           |  |   |     |  |  |   |     | 
|----------------------------------------------- |  | -------------------- | --- | -------------------- |  | --------- | ---- | --------- |  | - | --- |  |  | - | --- | 
|                                                |  | Holding              |     | CPI                 
|                                                |  |                      |     |                     
|                                                |  | 26-Week Period Ended |     | 26-Week Period Ended
|                                                |  |                      |     |                     
|                                                |  | March 29,            |     | March 30,            |  | March 29, |      | March 30,
|(In millions)                                   |  | 2002                 |     | 2001                 |  | 2002      |      | 2001     
|                                                |  |                      |     |                      |  |           |      |          
|Cash Payments                                   |  |                      |     |                      |  |           |      |           |  |   |     |  |  |   |     | 
|Interest payments                               |  | $                    | 8.2 |                      |  | $         | 10.0 |           |  | $ | 7.7 |  |  | $ | 9.7 | 
|Tax payments                                    |  | $                    | 0.5 |                      |  | $         | 0.6  |           |  | $ | 0.5 |  |  | $ | 0.6 | 
|Non-cash Financing                              |  |                      |     |                      |  |           |      |           |  |   |     |  |  |   |     | 
|Unpaid cash dividends on
senior preferred stock |  | $                    | 2.5 |                      |  | $         | 2.1  |           |  | $ | 2.5 |  |  | $ | 2.1 | 

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##### 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)

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).

Summarized financial information concerning the Company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.

|                                             |  |       |        |           |  |        |        |       |  |   |        |   |  |   |         | 
|-------------------------------------------- |  | ----- | ------ | --------- |  | ------ | ------ | ----- |  | - | ------ | - |  | - | ------- | 
|                                             |  |       |        |           |  | Satcom |        |       |  |   |        |   |  |  
|(Dollars in thousands)                       |  | VED's |        | Equipment |  | Other  |        | Total
|                                             |  |       |        |           |  |        |        |      
|For the 13-Week Period Ended
March 29, 2002: |  |       |        |           |  |        |        |       |  |   |        |   |  |   |         | 
|Revenues from external customers             |  | $     | 47,530 |           |  | $      | 11,044 |       |  | $ | 2,038  |   |  | $ | 60,612  | 
|Intersegment product transfers               |  |       | 2,610  |           |  |        |       |       |  |   | 550    |   |  |   | 3,160   | 
|EBITDA  Holding                             |  |       | 8,116  |           |  |        | (54    | )     |  |   | (1,866 | ) |  |   | 6,196   | 
|EBITDA  CPI                                 |  |       | 8,116  |           |  |        | (54    | )     |  |   | (2,369 | ) |  |   | 5,693   | 
|                                            
|For the 13-Week Period EndedMarch 30, 2001:  |  |       |        |           |  |        |        |       |  |   |        |   |  |   |         | 
|Revenues from external customers             |  | $     | 48,700 |           |  | $      | 15,551 |       |  | $ | 2,319  |   |  | $ | 66,570  | 
|Intersegment product transfers               |  |       | 4,469  |           |  |        |       |       |  |   | 284    |   |  |   | 4,753   | 
|EBITDA  Holding                             |  |       | 7,621  |           |  |        | (599   | )     |  |   | (1,918 | ) |  |   | 5,104   | 
|EBITDA  CPI                                 |  |       | 7,621  |           |  |        | (599   | )     |  |   | (2,366 | ) |  |   | 4,656   | 
|                                            
|For the 26-Week Period EndedMarch 29, 2002:  |  |       |        |           |  |        |        |       |  |   |        |   |  |   |         | 
|Revenues from external customers             |  | $     | 98,859 |           |  | $      | 26,905 |       |  | $ | 1,076  |   |  | $ | 126,840 | 
|Intersegment product transfers               |  |       | 4,869  |           |  |        |       |       |  |   | 626    |   |  |   | 5,495   | 
|EBITDA  Holding                             |  |       | 16,189 |           |  |        | 227    |       |  |   | (2,755 | ) |  |   | 13,661  | 
|EBITDA  CPI                                 |  |       | 16,189 |           |  |        | 227    |       |  |   | (3,767 | ) |  |   | 12,649  | 
|                                            
|For the 26-Week Period Ended
March 30, 2001: |  |       |        |           |  |        |        |       |  |   |        |   |  |   |         | 
|Revenues from external customers             |  | $     | 96,044 |           |  | $      | 27,067 |       |  | $ | 3,835  |   |  | $ | 126,946 | 
|Intersegment product transfers               |  |       | 8,740  |           |  |        |       |       |  |   | 698    |   |  |   | 9,438   | 
|EBITDA  Holding                             |  |       | 15,081 |           |  |        | (661   | )     |  |   | (2,968 | ) |  |   | 11,452  | 
|EBITDA  CPI                                 |  |       | 15,081 |           |  |        | (661   | )     |  |   | (3,416 | ) |  |   | 11,004  | 

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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)        | March 29, 2002 |                      | March 30, 2001 |                      | March 29, 2002 |   | March 30, 2001
|                              |                |                      |                |                     
|Segment EBITDA                |                | $                    | 6,196          |                      |                | $ | 5,104          |   |  | $ | 5,693 |   |  | $ | 4,656  |  
|Less:                         |                |                      |                |                      |                |   |                |   |  |   |       |   |  |   |        |  
|Depreciation and
amortization |                |                      | 2,962          |                      |                |   | 3,326          |   |  |   | 2,801 |   |  |   | 3,164  |  
|Interest expense              |                |                      | 3,814          |                      |                |   | 5,364          |   |  |   | 3,329 |   |  |   | 4,636  |  
|                              |                |                      |                |                      |                |   |                |   |  |   |       |   |  |   |        |  
|Loss before taxes             |                | $                    | (580           | )                    |                | $ | (3,586         | ) |  | $ | (437  | ) |  | $ | (3,144 | )
|                              |                |                      |                |                      |                |   |                |   |  |   |       |   |  |   |        |  

|                              |                |                       |                |                       |                |   |                |   |  |   |        |   |  |   |        |  
|----------------------------- | -------------- | --------------------- | -------------- | --------------------- | -------------- | - | -------------- | - |  | - | ------ | - |  | - | ------ | -
|                              |                | Holding               |                | CPI                  
|                              |                |                       |                |                      
|                              |                | 26 -Week Period Ended |                | 26 -Week Period Ended
|                              |                |                       |                |                      
|(Dollars in thousands)        | March 29, 2002 |                       | March 30, 2001 |                       | March 29, 2002 |   | March 30, 2001
|                              |                |                       |                |                      
|Segment EBITDA                |                | $                     | 13,661         |                       |                | $ | 11,452         |   |  | $ | 12,649 |   |  | $ | 11,004 |  
|Less:                         |                |                       |                |                       |                |   |                |   |  |   |        |   |  |   |        |  
|Depreciation and
amortization |                |                       | 6,056          |                       |                |   | 6,662          |   |  |   | 5,732  |   |  |   | 6,489  |  
|Interest expense              |                |                       | 8,539          |                       |                |   | 10,531         |   |  |   | 7,526  |   |  |   | 9,723  |  
|                              |                |                       |                |                       |                |   |                |   |  |   |        |   |  |   |        |  
|Loss before taxes             |                | $                     | (934           | )                     |                | $ | (5,741         | ) |  | $ | (609   | ) |  | $ | (5,208 | )
|                              |                |                       |                |                       |                |   |                |   |  |   |        |   |  |   |        |  

Sales by geographic area to unaffiliated customers (based on the location of
customer) are as follows:

|                       |  |                        |        |                        |  |           |        |           |  |   |         |  |  |   |         | 
|---------------------- |  | ---------------------- | ------ | ---------------------- |  | --------- | ------ | --------- |  | - | ------- |  |  | - | ------- | 
|(Dollars in thousands) |  | 13 - Week Period Ended |        | 26 - Week Period Ended
|                       |  |                        |        |                       
|                       |  | March 29,              |        | March 30,              |  | March 29, |        | March 30,
|                       |  | 2002                   |        | 2001                   |  | 2002      |        | 2001     
|                       |  |                        |        |                        |  |           |        |          
|United States          |  | $                      | 42,972 |                        |  | $         | 47,491 |           |  | $ | 92,789  |  |  | $ | 88,671  | 
|All foreign countries  |  |                        | 17,640 |                        |  |           | 19,079 |           |  |   | 34,051  |  |  |   | 38,275  | 
|                       |  |                        |        |                        |  |           |        |           |  |   |         |  |  |   |         | 
|Total Sales            |  | $                      | 60,612 |                        |  | $         | 66,570 |           |  | $ | 126,840 |  |  | $ | 126,946 | 
|                       |  |                        |        |                        |  |           |        |           |  |   |         |  |  |   |         | 

CPI has a single customer that accounts for 10% or more of consolidated sales.
Sales to this customer were $10.3 million and $11.1 million of the Companys
consolidated sales for the 13-week period ended March 29, 2002 and March 30,
2001, respectively. Sales to this customer were $20.3 million and $21.0
million of the Companys consolidated sales for the 26-week period ended March
29, 2002 and March 30, 2001, respectively. A substantial majority of these
sales were VED segment products, but this customer also purchased satcom
equipment products.

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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 condensed consolidated results of
Communications & Power Industries Holding Corporation, which are materially
consistent with those of CPI except as identified below and should be read in
conjunction with the condensed consolidated financial statements and notes
thereto:

CRITICAL ACCOUNTING POLICIES

Management is required to make judgements, assumptions and estimates in
preparing its financial statements and related disclosures in conformity with
accounting principles generally accepted in the United States. The Companys
significant accounting policies are described in Note 2 to the Consolidated
Financial Statements in the Annual Report on Form 10-K for the fiscal year
ended September 28, 2001. The following critical accounting policies are those
policies that management believes can affect its financial statements
materially and involves subjective assumptions, judgements, or estimates.

Revenue is recognized on a sale to a customer when persuasive evidence of an
arrangement exists, delivery has occurred, the price is fixed or determinable,
and collectibility is reasonably assured. The Company monitors the
creditworthiness of its customers and does not record revenue on sales if
collection is not reasonably assured. The Companys products are generally
subject to warranties, and the Company provides for the estimated future costs
of repair, replacement or customer accommodation at the time of sale as an
additional cost of product.

Inventories are stated at the lower of average cost or market. The carrying
value of inventory is reduced for estimated obsolescence or unmarketable
inventory based upon assumptions about future demand and market conditions. If
actual demand were to be substantially lower than estimated, further
write-downs could be required. While these estimates require management to make
assumptions and judgements, management believes its understanding of the
markets and customers the Company serves as well as the mature nature of many
of the products the Company manufactures provides it with the ability to make
reliable estimates. Management also evaluates the carrying value of inventory
for lower of cost or market on an individual product or contract basis.
Analyses are performed based on the estimated costs at completion and if
necessary, a provision is recorded to properly reflect the product or contract
at the lower of cost or net realizable value (selling price less estimated cost
of disposal). If actual contract costs were to be substantially higher than
estimated, further provisions could be required.

The Company reviews long-lived assets for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of long-lived assets is measured by comparison of
its carrying amount to future net cash flows expected to be generated from the
operation and sale of long-lived assets. If such assets are considered to be
impaired, the Companys carrying value is reduced to its estimated fair value.
Adverse changes in the customers and markets served by the Company could result
in future impairments of long-lived assets.

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COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

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

Goodwill represents the excess of the purchase price over the fair value of the
net assets acquired. The Company assesses the recoverability of the carrying
amount of goodwill by determining whether the carrying amount of goodwill can
be recovered through undiscounted net cash flows of the acquired operation over
the remaining amortization period. If determined to be impaired, the carrying
amount is reduced to its estimated fair value which is based on an estimate of
discounted future net cash flows. Adverse changes in the industries served by
the Company, customer demand or other market conditions could result in future
impairments of goodwill.

RESULTS OF OPERATIONS

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 unit, which is a separate segment, and a solid state
products unit, which is not reported as a separate segment. Segment data for
VED and satcom equipment segments are included in Note 4 of the Notes to
Consolidated Condensed Financial Statements.

Orders during the second quarter of Fiscal 2002 were $65.3 million as compared
to $78.1 million for the second quarter of Fiscal 2001. This decrease of $12.8
million for the quarter primarily reflects a weakness in the commercial
communications market (down $ 3.2 million) coupled with fluctuations in the
timing of order receipts in other non-communication markets (down $ 9.6
million) when compared to the second quarter of Fiscal 2001. Orders for the
first six months of Fiscal 2002 of $136.7 million were down approximately $9.2
million or 6.3% from the $145.9 million in the same period of Fiscal 2001. The
decrease from Fiscal 2001 levels was expected and can primarily be attributed
to the decrease in orders in the commercial communications market as
communications companies continue to delay capital spending. The total of all
other non-communication orders were essentially unchanged from the first six
months of Fiscal 2001.

When orders for the first six months of Fiscal 2002 are reviewed by specific
market, radar and electronic countermeasures decreased by $2.9 million, and
$3.6 million, respectively, from the comparable period last year due primarily
to timing of order releases from quarter to quarter. The Company expects orders
in the radar market to increase during the remainder of the year with the total
for the year consistent with Fiscal 2001 figures. Industrial orders are also
down approximately $3.0 million from the first six months of Fiscal 2001 due to
lower demand resulting from weak economic conditions. Medical and scientific
orders have increased from the first six months of Fiscal 2001 by $6.8 million
and $2.5 million, respectively. Medical orders increased due to the receipt of
a few large orders for VEDs used in the treatment of cancer. Although these
orders reoccur annually, their timing was accelerated and their value has
increased from the prior year.Scientific orders have increased on a
year-to-date basis compared to

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COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

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

Fiscal 2001 due primarily to the receipt of the
final phase on an order from a government research laboratory. 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 addition, 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 March 29, 2002, the Company had an order backlog of $158.7 million,
representing approximately seven-and-a-half months of sales, compared to order
backlog of $173.7 million, or approximately eight months of sales, as of March
30, 2001. Order backlog as of March 29, 2002 increased by $7.2 million from
$151.5 million at the end of Fiscal 2001.

Sales for the second quarter of Fiscal 2002 were $60.6 million, a decrease of
$6.0 million, or 9.0%, from the same period in Fiscal 2001. This decrease was
driven primarily by sales in the commercial communications and industrial
markets. Sales for the first six months of Fiscal 2002 were $126.8 million,
flat from the comparable period of Fiscal 2001. Although year-to-date sales
were flat, the allocation between market segments has shifted. Sales in the
commercial communications and industrial market decreased $4.8 million from the
first six months of Fiscal 2001, while sales in the radar and scientific
markets have increased by $5.8 million. Commercial communications and
industrial sales have been negatively affected by lower demand in these
markets. Sales in the radar and scientific markets have benefited from
increased military and research spending. Medical and electronic
countermeasures were down $0.4 million and $0.7 million, respectively, from the
first six months of Fiscal 2001.

Gross margin as a percentage of sales increased 2.4% to 21.4% for the second
quarter of Fiscal 2002, compared with the second quarter of Fiscal 2001. The
gross margin percentage also increased for the six month period from 20.0% of
sales in Fiscal 2001 to 21.4% of sales in Fiscal 2002. Gross margins were
negatively effected in Fiscal 2001 by start-up costs on several new satcom
products. In addition, margin fluctuations are expected due to the mix of
products sold during any period.

Operating costs and expenses were $9.7 million, or 16.0% of sales, for the
second quarter of Fiscal 2002 as compared to $11.7 million, or 17.6 % of sales,
for the second quarter of Fiscal 2001. For the six months ended March 29, 2002,
operating costs and expenses decreased $2.0 million compared with a year ago
from $21.5 million or 17.0 % of sales in Fiscal 2001 to $19.5 million, or 15.4%
of sales in Fiscal 2002. A portion of this decrease reflects a $1.1 million
reduction in costs associated with the relocation of the Satcom Division
operation from Palo Alto, California to the facility in Ontario, Canada for the
first six months of Fiscal 2002 as compared to the comparable period of Fiscal
2001. The remainder of the decrease reflects the Companys continuing efforts
to reduce costs and improve operating efficiency.

Earnings before interest, income taxes, depreciation and amortization
(EBITDA)1 for the second quarter of Fiscal 2002 were $6.2 million, or 10.2%
of sales, compared to $5.1 million, or 7.7% of sales, for the second quarter of
Fiscal 2001. EBITDA for the first six months of Fiscal 2002 were $13.7



---

| | 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.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

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

million, or 10.8% of sales, compared to $11.5 million, or 9.0% of sales, for the first
six months of Fiscal 2001. This increase in EBITDA can be attributed to the
improved margins coupled with the impact of lower operating costs.

Income tax expense for the second quarter of Fiscal 2002 was $1.2 million
compared to $0.3 million for the second quarter of Fiscal 2001. For the six
months ended March 29, 2002, the income tax expense was $1.8 million compared
to $0.5 million for the corresponding period of Fiscal 2001. The increase in
income tax expense relates primarily to taxable income resulting from timing
differences.

Net loss was $1.7 million for the second quarter of Fiscal 2002 compared to a
net loss of $3.8 million for the second quarter of Fiscal 2001. For the six
months ended March 29, 2002, the net loss was $2.8 million compared to net loss
of $6.2 million for the corresponding period of Fiscal 2001. The decrease in
the net loss for both periods resulted from decreased operating costs and
interest expense partially offset by the increase in income tax expense.
Interest expense has decreased primarily as a result of lower interest rates
and a reduction in outstanding debt.

CPIs operating results differ slightly from Holding due to a sale-leaseback
transaction between CPI and Holding which took place in December 2000. In the
first six months of Fiscal 2002, CPIs net loss before taxes was $0.6 million,
which was approximately $0.3 million lower than Holdings net loss before taxes
of $0.9 million. As a result of this transaction, operating costs for CPI were
approximately $0.7 million higher than those of Holding due to rental payments
paid by CPI to Holding for use of the San Carlos facility offset by
amortization of the deferred gain on the sales-leaseback and additional
depreciation on the San Carlos facility. Interest expense, net, for CPI was
approximately $1.0 million lower than that of Holding. The decrease primarily
relates to the fact that Holdings interest expense includes interest paid on
the mortgage financing of the San Carlos facility. All other operations data
for CPI is consistent with Holdings for the second quarter of Fiscal 2002.

FINANCIAL CONDITION

Cash flows provided by operating activities for the first six months of Fiscal
2002 were $20.6 million, compared with cash used in operating activities of
$4.5 million during the first six months of Fiscal 2001. The positive cash flow
was generated primarily from reductions in accounts receivable and inventories
from Fiscal 2001 balances.

Investing activities were comprised principally of investment in property,
plant and equipment totaling $1.4 million for the first six months of Fiscal
2002. Purchases of property, plant and equipment decreased approximately $1.0
million from the comparable period of Fiscal 2001 as the Company continues to
manage cash. The Company currently anticipates that capital expenditure
requirements for Fiscal 2002 will be approximately $4.0 million, down slightly
from amounts spent in Fiscal 2001 and 2000 for ongoing capital improvement
requirements.

Financing activities during the first six months of Fiscal 2002 were related to
repayments on the Companys secured credit facility (Credit Facility) of
$17.8 million and repayments on capital leases of $0.5 million.

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COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

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

As of March 29, 2002, the Company had $15.9 million available under its
revolving line of credit that expires December 22, 2004. The following is a
summary of certain obligations and commitments of the Company as of March 29,
2002:

|                                                      |                        |       |         |         |           |           |        |           |        |         |           |     |  |  |         |         |  |  |        |        | 
|----------------------------------------------------- | ---------------------- | ----- | ------- | ------- | --------- | --------- | ------ | --------- | ------ | ------- | --------- | --- |  |  | ------- | ------- |  |  | ------ | ------ | 
|                                                      |                        |       |         |         |           |           | Due in |           |        |         |           |     |  |  |         |         |  |  |       
|                                                      |                        |       |         |         | less than |           | Due in |           | Due in |         | Due after
|(dollars in thousands)                                |                        | Total |         | 1 year  |           | 1-3 years |        | 4-5 years |        | 5 years
|                                                      |                        |       |         |         |           |           |        |           |        |         |          
|Debt obligations, including
capital lease obligations |                        |       | 141,995 |         |           |           | 41,955 |           |        |         | 40        |     |  |  | 100,000 |         |  |  |       |       
|Noncancellable operating leases                       |                        |       | 1,902   |         |           |           | 873    |           |        |         | 874       |     |  |  | 155     |         |  |  |       |       
|Senior Redeemable Preferred Stock                     |                        |       | 28,586  |         |           |           |       |           |        |         |          |     |  |  |        |         |  |  | 28,586 |       
|                                                      |                        |       |         |         |           |           |        |           |        |         |           |     |  |  |         |         |  |  |        |       
|                                                      | Total cash obligations |       |         | 172,483 |           |           |        | 42,828    |        |         |           | 914 |  |  |         | 100,155 |  |  |        | 28,586 | 
|Standby letters of credit                             |                        |       | 4,251   |         |           |           | 3,739  |           |        |         | 512       |     |  |  |        |         |  |  |       |       

The Companys debt obligations include mortgage financing of $18.0 million and
senior term loans of $20.0 million which are due on June 1, 2002 and December
22, 2002, respectively. The Company has received verbal notification from the
bank that the mortgage loan will be extended for one year, until June 1, 2003,
with terms similar to those on the existing mortgage. With respect to the
senior term loans due December 22, 2002, management expects that cash to be
generated by operations and borrowing under its Credit Facility in conjunction
with either extending or finding alternative financing will allow it to meet
this obligation. However, there can be no assurance that the combination of
cash generated by operations, borrowing availability from the Companys Credit
Facility and additional collateral-based financing will be sufficient to meet
the Companys cash requirements. If the Company is unable to satisfy such cash
requirements from these sources, the Company will adopt one or more
alternatives, such as reducing or delaying capital expenditures, reducing
discretionary costs, negotiating an increase to the Companys borrowing
capacity under its line of credit, and selling and leasing back its facility in
San Carlos, California in a transaction with an outside party.

Market Risk

The Companys market risk disclosures set forth in its Annual Report on Form
10-K for the fiscal year ended September 28, 2001, have not changed
significantly.

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COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

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

Recent Accounting Pronouncements

In July 2001, the FASB issued SFAS No. 142, Goodwill and Other Intangible
Assets. SFAS No. 142 addresses financial accounting and reporting for acquired
goodwill and other intangible assets. SFAS No. 142 changes the accounting for
goodwill from an amortization method to an impairment-only approach. Goodwill
will be tested annually and whenever events or circumstances occur indicating
that goodwill might be impaired. Upon adoption of SFAS No. 142, amortization of
goodwill recorded for business combinations will cease. Companies are required
to adopt SFAS No. 142 for fiscal years beginning after December 15, 2001, but
early adoption is permitted. The Company plans to adopt this Statement
beginning in the first quarter of Fiscal 2003 and therefore has not yet
determined the impact on its consolidated financial position or results of
operations. At the beginning of Fiscal 2003, the goodwill balance, net of
amortization, is expected to be $21.7 million.

The FASB issued SFAS No. 143, Accounting for Asset Retirement Obligations, in
August 2001, and SFAS No. 144, Accounting for the Impairment or Disposal of
Long-lived Assets, in October 2001. SFAS No. 143 is effective for fiscal years
beginning after June 15, 2002 and will require that the fair value of an asset
retirement obligation be recorded as a liability in the period in which it
incurs the obligation. It provides a single accounting model for long-lived
assets to be disposed of and replaces SFAS No. 121 Accounting for the
Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of. The
Company does not expect the adoption of these statements to have a material
effect on the Companys consolidated financial position or results of
operations. The Company will adopt this Statement beginning in the first
quarter of Fiscal 2003

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,
expect, 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.

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.

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COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

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

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 due to power shutdowns and volatility in
energy costs; 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. Any of the foregoing
factors could cause the Companys business, results of operations, or financial
condition to suffer and actual results could differ materially from those
expected.

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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.

(a)  The following exhibits are being filed as part of this report:

|            |  |                                                        
|----------- |  | -------------------------------------------------------
|Exhibit No. |  | Description                                            
|            |  |                                                        
|3.2         |  | Amended and Restated Bylaws of CPI dated March 19, 2002

(b)  Reports on Form 8-K:

No reports were filed on Form 8-K during the quarter ended March 29, 2002.

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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/ O. Joe Caldarelli
| |                                                            
| | O. Joe Caldarelli
Chief Executive Officer
Date: May 9, 2002

| |     |                                                                                                                             
| | --- | ----------------------------------------------------------------------------------------------------------------------------
| | By: | /s/ Joel Littman                                                                                                            
| |     |                                                                                                                             
| |     | Joel Littman
Chief Financial Officer,
Treasurer and Secretary
(Principal Financial and
Accounting Officer)
Date: May 9, 2002

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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 HOLDING
CORPORATION      
|
| | By:                                                         | /s/ O. Joe Caldarelli
| |                                                            
| | O. Joe Caldarelli
Chief Executive Officer
Date: May 9, 2002

| |     |                                                                                                                             
| | --- | ----------------------------------------------------------------------------------------------------------------------------
| | By: | /s/ Joel Littman                                                                                                            
| |     |                                                                                                                             
| |     | Joel Littman
Chief Financial Officer,
Treasurer and Secretary
(Principal Financial and
Accounting Officer)
Date: May 9, 2002

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EXHIBIT INDEX

|            |  |                                                        
|----------- |  | -------------------------------------------------------
|Exhibit No. |  | Description                                            
|            |  |                                                        
|3.2         |  | Amended and Restated Bylaws of CPI dated March 19, 2002