##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q

|           |  |                                                                                        
|---------- |  | ---------------------------------------------------------------------------------------
|(Mark One)
|x          |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|           |  |                                                                                        
|           |  | For the quarterly period ended January 2, 2004                                         

or

|  |  |                                                                                          
|- |  | -----------------------------------------------------------------------------------------
|o |  | 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)                             |  | (Exact Name of Registrant as Specified in Its Charter)                            
|Delaware                                                                           |  | Delaware                                                                          
|(State or Other Jurisdiction of Incorporation or Organization)                     |  | (State or Other Jurisdiction of Incorporation or Organization)                    
|77-0407395                                                                         |  | 77-0405693                                                                        
|(I.R.S. Employer Identification No.)                                               |  | (I.R.S. Employer Identification No.)                                              
|811 Hansen Way                                                                     |  | 811 Hansen Way                                                                    
|Palo Alto, California 94303-1110                                                   |  | Palo Alto, California 94303-1110                                                  
|(650) 846-2900                                                                     |  | (650) 846-2900                                                                    
|(Address of Principal Executive Offices and Telephone Number,
Including Area Code) |  | (Address of Principal Executive Offices and Telephone Number,
Including Area Code)

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
o   No x

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

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: 100 shares of Common Stock, $.01 par value, at
February 6, 2004. Communications & Power Industries, Inc.: 1 share of Common
Stock, $.01 par value, at February 6, 2004.





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TABLE OF CONTENTS



|                             |                                                                                               |                                                       |                                                      |  |  |  |  | 
|---------------------------- | --------------------------------------------------------------------------------------------- | ----------------------------------------------------- | ---------------------------------------------------- |  |  |  |  | 
|PART I: FINANCIAL STATEMENTS
|                             | ITEM 1: CONSOLIDATED CONDENSED FINANCIAL STATEMENTS                                          
|                             |                                                                                               | COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
|                             |                                                                                               |                                                       | CONSOLIDATED CONDENSED BALANCE SHEETS               
|                             |                                                                                               |                                                       | CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS     
|                             |                                                                                               |                                                       | CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS     
|                             |                                                                                               | COMMUNICATIONS & POWER INDUSTRIES, INC.              
|                             |                                                                                               |                                                       | CONSOLIDATED CONDENSED BALANCE SHEETS               
|                             |                                                                                               |                                                       | CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS     
|                             |                                                                                               |                                                       | CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS     
|                             |                                                                                               |                                                       | NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
|                             | ITEM 2: MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                             | ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|                             | ITEM 4: CONTROLS AND PROCEDURES                                                              
|PART II: OTHER INFORMATION  
|SIGNATURES                  
|Exhibit Index               
|EXHIBIT 3.1                 
|EXHIBIT 4.1                 
|EXHIBIT 4.2                 
|EXHIBIT 10.1                
|EXHIBIT 10.2                
|EXHIBIT 10.3                
|EXHIBIT 10.4                
|EXHIBIT 10.5                
|EXHIBIT 31                  
|EXHIBIT 32                  
|EXHIBIT 99                  



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##### Table of Contents



COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

|                                                                                              |                                                       |                                                                                                                                           |    |  |   | 
|--------------------------------------------------------------------------------------------- | ----------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------- | -- |  | - | 
|PART I: FINANCIAL INFORMATION                                                                 |                                                       |                                                                                                                                           |    | 
|ITEM 1: CONSOLIDATED CONDENSED FINANCIAL STATEMENTS                                           |                                                       |                                                                                                                                           |    | 
|                                                                                              | COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION |                                                                                                                                           |    |  |  
|                                                                                              |                                                       | Consolidated Condensed Balance Sheets, January 2, 2004 and October 3, 2003                                                                |    |  | 2 | 
|                                                                                              |                                                       | Consolidated Condensed Statements of Operations for the 13-week period ended January 2, 2004 and the 14-week period ended January 3, 2003 |    |  | 3 | 
|                                                                                              |                                                       | Consolidated Condensed Statements of Cash Flows for the 13-week period ended January 2, 2004 and the 14-week period ended January 3, 2003 |    |  | 4 | 
|                                                                                              |                                                       | Notes to Consolidated Condensed Financial Statements                                                                                      |    |  | 8 | 
|                                                                                              | COMMUNICATIONS & POWER INDUSTRIES, INC.               |                                                                                                                                           |    |  |  
|                                                                                              |                                                       | Consolidated Condensed Balance Sheets, January 2, 2004 and October 3, 2003                                                                |    |  | 5 | 
|                                                                                              |                                                       | Consolidated Condensed Statements of Operations for the 13-week period ended January 2, 2004 and the 14-week period ended January 3, 2003 |    |  | 6 | 
|                                                                                              |                                                       | Consolidated Condensed Statements of Cash Flows for the 13-week period ended January 2, 2004 and the 14-week period ended January 3, 2003 |    |  | 7 | 
|                                                                                              |                                                       | Notes to Consolidated Condensed Financial Statements                                                                                      |    |  | 8 | 
|ITEM 2: MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |                                                       |                                                                                                                                           | 15 | 
|ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                            |                                                       |                                                                                                                                           | 25 | 
|ITEM 4: CONTROLS AND PROCEDURES                                                               |                                                       |                                                                                                                                           | 25 | 
|PART II: OTHER INFORMATION                                                                    |                                                       |                                                                                                                                           | 26 | 
|SIGNATURES                                                                                    |                                                       |                                                                                                                                           | 28 | 

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##### Table of Contents












COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries




CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands-unaudited)

|                                                             |                                 |   |            |         |            |  |         |         |  
|------------------------------------------------------------ | ------------------------------- | - | ---------- | ------- | ---------- |  | ------- | ------- | -
|                                                             |                                 |   | January 2, |         | October 3,
|                                                             |                                 |   | 2004       |         | 2003      
|                                                             |                                 |   |            |         |           
|ASSETS                                                      
|Current Assets                                               |                                 |   |            |         |            |  |         |        
|                                                             | Cash and cash equivalents       |   | $          | 38,067  |            |  |         | 33,751  |  
|                                                             | Accounts receivable, net        |   |            | 35,255  |            |  |         | 33,128  |  
|                                                             | Inventories                     |   |            | 36,380  |            |  |         | 37,358  |  
|                                                             | Other current assets            |   |            | 2,191   |            |  |         | 2,210   |  
|                                                             |                                 |   |            |         |            |  |         |         |  
|Total current assets                                         |                                 |   | 111,893    |         |            |  | 106,447 |        
|Property, plant, and equipment, net                          |                                 |   | 51,834     |         |            |  | 52,947  |        
|Goodwill                                                     |                                 |   | 19,149     |         |            |  | 19,149  |        
|Intangibles, net                                             |                                 |   | 1,045      |         |            |  | 1,140   |        
|Debt issue costs, net                                        |                                 |   | 1,940      |         |            |  | 2,285   |        
|                                                             |                                 |   |            |         |            |  |         |         |  
|Total assets                                                 |                                 | $ | 185,861    |         |            |  | 181,968 |        
|                                                             |                                 |   |            |         |            |  |         |         |  
|LIABILITIES, PREFERRED STOCK ANDSTOCKHOLDERS DEFICIT       
|Current Liabilities                                          |                                 |   |            |         |            |  |         |        
|                                                             | Senior subordinated notes       |   | $          | 26,000  |            |  |         |        |  
|                                                             | Mortgage financing              |   |            | 17,500  |            |  |         | 17,500  |  
|                                                             | Accounts payable                |   |            | 12,876  |            |  |         | 15,624  |  
|                                                             | Accrued expenses                |   |            | 21,126  |            |  |         | 21,445  |  
|                                                             | Product warranty                |   |            | 6,130   |            |  |         | 5,401   |  
|                                                             | Income taxes payable            |   |            | 6,132   |            |  |         | 3,584   |  
|                                                             | Accrued dividends payable       |   |            | 17,058  |            |  |         | 15,449  |  
|                                                             | Advance payments from customers |   |            | 8,961   |            |  |         | 10,203  |  
|                                                             |                                 |   |            |         |            |  |         |         |  
|Total current liabilities                                    |                                 |   | 115,783    |         |            |  | 89,206  |        
|Senior subordinated notes                                    |                                 |   | 74,000     |         |            |  | 100,000 |        
|                                                             |                                 |   |            |         |            |  |         |         |  
|Total liabilities                                            |                                 |   | 189,783    |         |            |  | 189,206 |        
|                                                             |                                 |   |            |         |            |  |         |         |  
|Senior Redeemable Preferred Stock of CPI                     |                                 |   | 28,960     |         |            |  | 28,907  |        
|                                                             |                                 |   |            |         |            |  |         |         |  
|Junior Preferred Stock of CPI                                |                                 |   | 30,349     |         |            |  | 29,300  |        
|                                                             |                                 |   |            |         |            |  |         |         |  
|Commitments and contingencies                                |                                 |   |            |         |            |  |         |        
|Stockholders Deficit                                        |                                 |   |            |         |            |  |         |        
|                                                             | Common stock                    |   |            | 50      |            |  |         | 50      |  
|                                                             | Additional paid-in capital      |   |            | 21,519  |            |  |         | 21,519  |  
|                                                             | Deferred compensation           |   |            | (1,195  | )          |  |         | (1,289  | )
|                                                             | Accumulated deficit             |   |            | (82,341 | )          |  |         | (84,469 | )
|                                                             | Stockholder loans               |   |            | (1,264  | )          |  |         | (1,256  | )
|                                                             |                                 |   |            |         |            |  |         |         |  
|Net stockholders deficit                                    |                                 |   | (63,231    | )       |            |  | (65,445 | )      
|                                                             |                                 |   |            |         |            |  |         |         |  
|Total liabilities, preferred stock and
stockholders deficit |                                 | $ | 185,861    |         |            |  | 181,968 |        
|                                                             |                                 |   |            |         |            |  |         |         |  

See accompanying notes to the unaudited consolidated condensed financial statements.

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##### Table of Contents



COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries




CONSOLIDATED CONDENSED
STATEMENTS OF OPERATIONS
(in thousands - unaudited)

|                                        |                                   |   |              |       |              |  |        |       | 
|--------------------------------------- | --------------------------------- | - | ------------ | ----- | ------------ |  | ------ | ----- | 
|                                        |                                   |   | 13-Week      |       | 14-Week     
|                                        |                                   |   | period ended |       | period ended
|                                        |                                   |   | January 2,   |       | January 3,  
|                                        |                                   |   | 2004         |       | 2003        
|                                        |                                   |   |              |       |             
|Sales                                   |                                   | $ | 68,313       |       |              |  | 61,626 |      
|Cost of sales                           |                                   |   | 47,141       |       |              |  | 44,936 |      
|                                        |                                   |   |              |       |              |  |        |      
|Gross profit                            |                                   |   | 21,172       |       |              |  | 16,690 |      
|                                        |                                   |   |              |       |              |  |        |      
|Operating costs and expenses:           |                                   |   |              |       |              |  |        |      
|                                        | Research and development          |   |              | 1,733 |              |  |        | 1,445 | 
|                                        | Selling and marketing             |   |              | 3,624 |              |  |        | 3,924 | 
|                                        | General and administrative        |   |              | 4,130 |              |  |        | 3,878 | 
|                                        |                                   |   |              |       |              |  |        |      
|Total operating costs and expenses      |                                   |   | 9,487        |       |              |  | 9,247  |      
|                                        |                                   |   |              |       |              |  |        |      
|Operating income                        |                                   |   | 11,685       |       |              |  | 7,443  |      
|Other income                            |                                   |   |             |       |              |  | 267    |      
|Interest expense                        |                                   |   | (3,559       | )     |              |  | (3,670 | )    
|                                        |                                   |   |              |       |              |  |        |      
|Income before taxes                     |                                   |   | 8,126        |       |              |  | 4,040  |      
|Income tax expense                      |                                   |   | 3,287        |       |              |  | 1,504  |      
|                                        |                                   |   |              |       |              |  |        |      
|Net income                              |                                   |   | 4,839        |       |              |  | 2,536  |      
|Preferred dividends:                    |                                   |   |              |       |              |  |        |      
|                                        | Senior redeemable preferred stock |   |              | 1,609 |              |  |        | 1,402 | 
|                                        | Junior preferred stock            |   |              | 1,048 |              |  |        | 914   | 
|                                        |                                   |   |              |       |              |  |        |      
|Net income attributable to common stock |                                   | $ | 2,182        |       |              |  | 220    |      
|                                        |                                   |   |              |       |              |  |        |      

See accompanying notes to the unaudited consolidated condensed financial
statements.

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##### Table of Contents



COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries




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

|                                                 |                                                |   |              |        |              |  |        |        |  
|------------------------------------------------ | ---------------------------------------------- | - | ------------ | ------ | ------------ |  | ------ | ------ | -
|                                                 |                                                |   | 13-Week      |        | 14-Week     
|                                                 |                                                |   | period ended |        | period ended
|                                                 |                                                |   | January 2,   |        | January 3,  
|                                                 |                                                |   | 2004         |        | 2003        
|                                                 |                                                |   |              |        |             
|OPERATING ACTIVITIES                             |                                                |   |              |        |              |  |        |       
|                                                 | Net cash provided by operating activities      |   | $            | 6,194  |              |  |        | 13,328 |  
|                                                 |                                                |   |              |        |              |  |        |        |  
|INVESTING ACTIVITIES                             |                                                |   |              |        |              |  |        |       
|                                                 | Purchase of property, plant and equipment, net |   |              | (239   | )            |  |        | (263   | )
|                                                 |                                                |   |              |        |              |  |        |        |  
|FINANCING ACTIVITIES                             |                                                |   |              |        |              |  |        |       
|                                                 | Repayments on capital leases                   |   |              |       |              |  |        | (27    | )
|                                                 | Payment of debt issue costs                    |   |              |       |              |  |        | (254   | )
|                                                 | Net repayment from bank overdraft              |   |              | (1,639 | )            |  |        | (2,333 | )
|                                                 | Repayment of mortgage financing                |   |              |       |              |  |        | (250   | )
|                                                 |                                                |   |              |        |              |  |        |        |  
|                                                 | Net cash used in financing activities          |   |              | (1,639 | )            |  |        | (2,864 | )
|                                                 |                                                |   |              |        |              |  |        |        |  
|NET INCREASE IN CASH AND CASH EQUIVALENTS        |                                                |   | 4,316        |        |              |  | 10,201 |       
|Cash and cash equivalents at beginning of period |                                                |   | 33,751       |        |              |  | 2,724  |       
|                                                 |                                                |   |              |        |              |  |        |        |  
|Cash and cash equivalents at end of period       |                                                | $ | 38,067       |        |              |  | 12,925 |       
|                                                 |                                                |   |              |        |              |  |        |        |  

See accompanying notes to the unaudited consolidated condensed financial
statements.

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##### Table of Contents






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




CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands-unaudited)

|                                                                               |                                 |   |            |         |            |  |         |         |  
|------------------------------------------------------------------------------ | ------------------------------- | - | ---------- | ------- | ---------- |  | ------- | ------- | -
|                                                                               |                                 |   | January 2, |         | October 3,
|                                                                               |                                 |   | 2004       |         | 2003      
|                                                                               |                                 |   |            |         |           
|ASSETS                                                                        
|Current Assets                                                                 |                                 |   |            |         |            |  |         |        
|                                                                               | Cash and cash equivalents       |   | $          | 38,067  |            |  |         | 33,751  |  
|                                                                               | Accounts receivable, net        |   |            | 35,255  |            |  |         | 33,128  |  
|                                                                               | Inventories                     |   |            | 36,380  |            |  |         | 37,358  |  
|                                                                               | Other current assets            |   |            | 2,191   |            |  |         | 2,210   |  
|                                                                               |                                 |   |            |         |            |  |         |         |  
|Total current assets                                                           |                                 |   | 111,893    |         |            |  | 106,447 |        
|Property, plant, and equipment, net                                            |                                 |   | 39,144     |         |            |  | 40,132  |        
|Goodwill                                                                       |                                 |   | 19,149     |         |            |  | 19,149  |        
|Intangibles, net                                                               |                                 |   | 1,045      |         |            |  | 1,140   |        
|Debt issue costs, net                                                          |                                 |   | 1,935      |         |            |  | 2,263   |        
|Note receivable from parent                                                    |                                 |   | 5,750      |         |            |  | 5,750   |        
|                                                                               |                                 |   |            |         |            |  |         |         |  
|Total assets                                                                   |                                 | $ | 178,916    |         |            |  | 174,881 |        
|                                                                               |                                 |   |            |         |            |  |         |         |  
|LIABILITIES, PREFERRED STOCK ANDSTOCKHOLDERS DEFICIT                         
|Current Liabilities                                                            |                                 |   |            |         |            |  |         |        
|                                                                               | Senior subordinated notes       |   | $          | 26,000  |            |  |         |        |  
|                                                                               | Accounts payable                |   |            | 12,876  |            |  |         | 15,624  |  
|                                                                               | Accrued expenses                |   |            | 22,612  |            |  |         | 22,783  |  
|                                                                               | Product warranty                |   |            | 6,130   |            |  |         | 5,401   |  
|                                                                               | Income taxes payable            |   |            | 6,429   |            |  |         | 3,838   |  
|                                                                               | Accrued dividends payable       |   |            | 17,058  |            |  |         | 15,449  |  
|                                                                               | Advance payments from customers |   |            | 8,961   |            |  |         | 10,203  |  
|                                                                               |                                 |   |            |         |            |  |         |         |  
|Total current liabilities                                                      |                                 |   | 100,066    |         |            |  | 73,298  |        
|Senior subordinated notes                                                      |                                 |   | 74,000     |         |            |  | 100,000 |        
|Deferred income on sale-leaseback                                              |                                 |   | 6,781      |         |            |  | 6,887   |        
|                                                                               |                                 |   |            |         |            |  |         |         |  
|Total liabilities                                                              |                                 |   | 180,847    |         |            |  | 180,185 |        
|                                                                               |                                 |   |            |         |            |  |         |         |  
|Senior Redeemable Preferred Stock                                              |                                 |   | 28,960     |         |            |  | 28,907  |        
|                                                                               |                                 |   |            |         |            |  |         |         |  
|Commitments and contingencies                                                  |                                 |   |            |         |            |  |         |        
|Stockholders Deficit:                                                         |                                 |   |            |         |            |  |         |        
|                                                                               | Junior preferred stock          |   |            | 2       |            |  |         | 2       |  
|                                                                               | Common stock                    |   |            |        |            |  |         |        |  
|                                                                               | Additional paid-in capital      |   |            | 51,807  |            |  |         | 50,758  |  
|                                                                               | Deferred compensation           |   |            | (1,195  | )          |  |         | (1,289  | )
|                                                                               | Accumulated deficit             |   |            | (80,241 | )          |  |         | (82,426 | )
|                                                                               | Stockholder loans               |   |            | (1,264  | )          |  |         | (1,256  | )
|                                                                               |                                 |   |            |         |            |  |         |         |  
|Net stockholders deficit                                                      |                                 |   | (30,891    | )       |            |  | (34,211 | )      
|                                                                               |                                 |   |            |         |            |  |         |         |  
|Total liabilities, senior redeemable
preferred stock and stockholders deficit |                                 | $ | 178,916    |         |            |  | 174,881 |        
|                                                                               |                                 |   |            |         |            |  |         |         |  

See accompanying notes to the unaudited consolidated condensed financial
statements.

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##### Table of Contents



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




CONSOLIDATED CONDENSED
STATEMENTS OF OPERATIONS
(in thousands - unaudited)

|                                        |                                   |   |              |       |              |  |        |       | 
|--------------------------------------- | --------------------------------- | - | ------------ | ----- | ------------ |  | ------ | ----- | 
|                                        |                                   |   | 13-Week      |       | 14-Week     
|                                        |                                   |   | period ended |       | period ended
|                                        |                                   |   | January 2,   |       | January 3,  
|                                        |                                   |   | 2004         |       | 2003        
|                                        |                                   |   |              |       |             
|Sales                                   |                                   | $ | 68,313       |       |              |  | 61,626 |      
|Cost of sales                           |                                   |   | 47,141       |       |              |  | 44,936 |      
|                                        |                                   |   |              |       |              |  |        |      
|Gross profit                            |                                   |   | 21,172       |       |              |  | 16,690 |      
|                                        |                                   |   |              |       |              |  |        |      
|Operating costs and expenses:           |                                   |   |              |       |              |  |        |      
|                                        | Research and development          |   |              | 1,733 |              |  |        | 1,445 | 
|                                        | Selling and marketing             |   |              | 3,624 |              |  |        | 3,924 | 
|                                        | General and administrative        |   |              | 4,511 |              |  |        | 4,222 | 
|                                        |                                   |   |              |       |              |  |        |      
|Total operating costs and expenses      |                                   |   | 9,868        |       |              |  | 9,591  |      
|                                        |                                   |   |              |       |              |  |        |      
|Operating income                        |                                   |   | 11,304       |       |              |  | 7,099  |      
|Other income                            |                                   |   |             |       |              |  | 267    |      
|Interest expense                        |                                   |   | (3,078       | )     |              |  | (3,124 | )    
|                                        |                                   |   |              |       |              |  |        |      
|Income before taxes                     |                                   |   | 8,226        |       |              |  | 4,242  |      
|Income tax expense                      |                                   |   | 3,330        |       |              |  | 1,581  |      
|                                        |                                   |   |              |       |              |  |        |      
|Net income                              |                                   |   | 4,896        |       |              |  | 2,661  |      
|Preferred dividends:                    |                                   |   |              |       |              |  |        |      
|                                        | Senior redeemable preferred stock |   |              | 1,609 |              |  |        | 1,402 | 
|                                        | Junior preferred stock            |   |              | 1,048 |              |  |        | 914   | 
|                                        |                                   |   |              |       |              |  |        |      
|Net income attributable to common stock |                                   | $ | 2,239        |       |              |  | 345    |      
|                                        |                                   |   |              |       |              |  |        |      

See accompanying notes to the unaudited consolidated condensed financial
statements.

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##### Table of Contents



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




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

|                                                 |                                                |   |              |        |              |  |        |        |  
|------------------------------------------------ | ---------------------------------------------- | - | ------------ | ------ | ------------ |  | ------ | ------ | -
|                                                 |                                                |   | 13-Week      |        | 14-Week     
|                                                 |                                                |   | period ended |        | period ended
|                                                 |                                                |   | January 2,   |        | January 3,  
|                                                 |                                                |   | 2004         |        | 2003        
|                                                 |                                                |   |              |        |             
|OPERATING ACTIVITIES                             |                                                |   |              |        |              |  |        |       
|                                                 | Net cash provided by operating activities      |   | $            | 6,194  |              |  |        | 13,078 |  
|                                                 |                                                |   |              |        |              |  |        |        |  
|INVESTING ACTIVITIES                             |                                                |   |              |        |              |  |        |       
|                                                 | Purchase of property, plant and equipment, net |   |              | (239   | )            |  |        | (263   | )
|                                                 |                                                |   |              |        |              |  |        |        |  
|FINANCING ACTIVITIES                             |                                                |   |              |        |              |  |        |       
|                                                 | Repayments on capital leases                   |   |              |       |              |  |        | (27    | )
|                                                 | Payment of debt issue costs                    |   |              |       |              |  |        | (254   | )
|                                                 | Net repayment of bank overdraft                |   |              | (1,639 | )            |  |        | (2,333 | )
|                                                 |                                                |   |              |        |              |  |        |        |  
|                                                 | Net cash used in financing activities          |   |              | (1,639 | )            |  |        | (2,614 | )
|                                                 |                                                |   |              |        |              |  |        |        |  
|NET INCREASE IN CASH AND CASH EQUIVALENTS        |                                                |   | 4,316        |        |              |  | 10,201 |       
|Cash and cash equivalents at beginning of period |                                                |   | 33,751       |        |              |  | 2,724  |       
|                                                 |                                                |   |              |        |              |  |        |        |  
|Cash and cash equivalents at end of period       |                                                | $ | 38,067       |        |              |  | 12,925 |       
|                                                 |                                                |   |              |        |              |  |        |        |  

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 Annual Report on Form 10-K for the year ended
October 3, 2003. 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 2004.

As allowed by Statement of Financial Accounting Standards (SFAS) No. 123,
Accounting for Stock-Based Compensation, as amended by SFAS No. 148,
Accounting for Stock-Based Compensation  Transition and Disclosure, the
Company applies the intrinsic value-based method of accounting prescribed by
Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees, and related interpretations. Under this method, compensation
expense is recorded only if the current market price of the underlying stock
exceeded the exercise price at the measurement date. During fiscal year 2003,
the Company issued stock options to employees which were subsequently
determined to have been issued below the fair value of the stock on the date of
grant. The compensation cost associated with the 2003 stock options is
amortized as a charge against income under the caption General and
administrative in the Consolidated Statement of Operations on a straight-line
basis over the four year vesting period of the options. If compensation cost
for the Companys stock-based compensation plan had been determined consistent
with SFAS No. 123, the Companys net income would have changed to the pro forma
amounts indicated below:

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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)

|                       |                                                                                                     |      |              |      |              |      |              |      |              |   |       |      |   |   |       |    | 
|---------------------- | --------------------------------------------------------------------------------------------------- | ---- | ------------ | ---- | ------------ | ---- | ------------ | ---- | ------------ | - | ----- | ---- | - | - | ----- | -- | 
|                       |                                                                                                     |      | Holding      |      | CPI         
|                       |                                                                                                     |      |              |      |             
|                       |                                                                                                     |      | 13-Week      |      | 14-Week      |      | 13-Week      |      | 14-Week     
|                       |                                                                                                     |      | Period Ended |      | Period Ended |      | Period Ended |      | Period Ended
|                       |                                                                                                     |      | January 2,   |      | January 3,   |      | January 2,   |      | January 3,  
|(In thousands)         |                                                                                                     | 2004 |              | 2003 |              | 2004 |              | 2003
|                       |                                                                                                     |      |              |      |              |      |              |     
|Net income as reported |                                                                                                     | $    | 4,839        |      |              |      | 2,536        |      |              | $ | 4,896 |      |   |   | 2,661 |   
|Add:                   |                                                                                                     |      |              |      |              |      |              |      |              |   |       |      |   |   |       |   
|                       | Stock-based compensation included in net
income determined under intrinsic value
method, net of tax |      |              | 94   |              |      |              | 0    |              |   |       | 94   |   |   |       | 0  | 
|Deduct:                |                                                                                                     |      |              |      |              |      |              |      |              |   |       |      |   |   |       |   
|                       | Stock-based compensation determined under
fair value based method, net of tax                       |      |              | (203 | )            |      |              | 32   |              |   |       | (203 | ) |   |       | 32 | 
|                       |                                                                                                     |      |              |      |              |      |              |      |              |   |       |      |   |   |       |   
|Pro forma net income   |                                                                                                     | $    | 4,730        |      |              | $    | 2,568        |      |              | $ | 4,787 |      |   | $ | 2,693 |   
|                       |                                                                                                     |      |              |      |              |      |              |      |              |   |       |      |   |   |       |   

2. Inventories

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

|                        |             |      |            |        |            |  |        |        | 
|----------------------- | ----------- | ---- | ---------- | ------ | ---------- |  | ------ | ------ | 
|                        |             |      | January 2, |        | October 3,
|(In thousands)          |             | 2004 |            | 2003  
|                        |             |      |            |       
|Raw materials and parts |             | $    | 25,186     |        |            |  | 26,330 |       
|Work in process         |             |      | 8,894      |        |            |  | 8,786  |       
|Finished goods          |             |      | 2,300      |        |            |  | 2,242  |       
|                        |             |      |            |        |            |  |        |       
|                        | Inventories |      | $          | 36,380 |            |  |        | 37,358 | 
|                        |             |      |            |        |            |  |        |       

3. Accrued Warranty

The Companys products are generally warranted for a variety of periods,
typically one to three years or a predetermined product usage life. The
Company assesses the adequacy of its preexisting warranty liabilities and
adjusts the balance based on actual experience and changes in future
expectations. The following table reconciles the changes in the Companys
accrued warranty:

|                           |                               |      |              |       |              |  |       |        |  
|-------------------------- | ----------------------------- | ---- | ------------ | ----- | ------------ |  | ----- | ------ | -
|                           |                               |      | 13-Week      |       | 14-Week     
|                           |                               |      | Period Ended |       | Period Ended
|                           |                               |      | January 2,   |       | January 3,  
|(In thousands)             |                               | 2004 |              | 2003 
|                           |                               |      |              |      
|Beginning accrued warranty |                               | $    | 5,401        |       |              |  | 4,823 |       
|                           | Cost of warranty claims       |      |              | (972  | )            |  |       | (1,300 | )
|                           | Accruals for product warranty |      |              | 1,701 |              |  |       | 1,558  |  
|                           |                               |      |              |       |              |  |       |       
|Ending accrued warranty    |                               | $    | 6,130        |       |              |  | 5,081 |       
|                           |                               |      |              |       |              |  |       |       

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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)

4. Supplemental Cash Flow Information

|                                                |  |            |       |            |  |            |       |            |  |   |       |  |  |   |       | 
|----------------------------------------------- |  | ---------- | ----- | ---------- |  | ---------- | ----- | ---------- |  | - | ----- |  |  | - | ----- | 
|                                                |  | Holding    |       | CPI       
|                                                |  |            |       |           
|                                                |  | 13-week    |       | 14-Week    |  | 13-week    |       | 14-Week   
|                                                |  | Period     |       | Period     |  | Period     |       | Period    
|                                                |  | Ended      |       | Ended      |  | Ended      |       | Ended     
|                                                |  | January 2, |       | January 3, |  | January 2, |       | January 3,
|(In thousands)                                  |  | 2004       |       | 2003       |  | 2004       |       | 2003      
|                                                |  |            |       |            |  |            |       |           
|Cash Payments                                   |  |            |       |            |  |            |       |            |  |   |       |  |  |   |       | 
|Interest payments                               |  | $          | 302   |            |  | $          | 546   |            |  | $ | 58    |  |  | $ | 86    | 
|Tax payments                                    |  | $          | 739   |            |  | $          | 64    |            |  | $ | 739   |  |  | $ | 64    | 
|Non-cash Financing                              |  |            |       |            |  |            |       |            |  |   |       |  |  |   |       | 
|Unpaid cash
dividends on senior
preferred stock |  | $          | 1,609 |            |  | $          | 1,402 |            |  | $ | 1,609 |  |  | $ | 1,409 | 

5. Segments and Related Information

The Company has two reportable segments: vacuum electronic devices (VEDs) and
satcom equipment. Management evaluates performance and allocates resources
based on earnings before provision for income taxes, interest expense,
depreciation and amortization (EBITDA).

Summarized financial information concerning the Companys reportable segments
is shown in the following table. Intersegment product transfers are recorded
at cost.

|                                 |  |      |        |           |  |        |        |       |  |  |        |   |  |  |        | 
|-------------------------------- |  | ---- | ------ | --------- |  | ------ | ------ | ----- |  |  | ------ | - |  |  | ------ | 
|                                 |  |      |        |           |  | Satcom |        |       |  |  |        |   |  | 
|(In thousands)                   |  | VEDs |        | Equipment |  | Other  |        | Total
|                                 |  |      |        |           |  |        |        |      
|For the 13-week Period Ended     |  |      |        |           |  |        |        |       |  |  |        |   |  |  |        | 
|January 2, 2004:                 |  |      |        |           |  |        |        |       |  |  |        |   |  |  |        | 
|Revenues from external
customers |  | $    | 58,147 |           |  |        | 9,719  |       |  |  | 447    |   |  |  | 68,313 | 
|Intersegment product transfers   |  |      | 3,293  |           |  |        |       |       |  |  |       |   |  |  | 3,293  | 
|EBITDA  Holding                 |  |      | 14,393 |           |  |        | 228    |       |  |  | (1,512 | ) |  |  | 13,109 | 
|EBITDA  CPI                     |  |      | 14,393 |           |  |        | 228    |       |  |  | (2,018 | ) |  |  | 12,603 | 
|For the 14-Week Period Ended     |  |      |        |           |  |        |        |       |  |  |        |   |  |  |        | 
|January 3, 2003:                 |  |      |        |           |  |        |        |       |  |  |        |   |  |  |        | 
|Revenues from external
customers |  | $    | 50,956 |           |  |        | 10,586 |       |  |  | 84     |   |  |  | 61,626 | 
|Intersegment product transfers   |  |      | 2,207  |           |  |        |       |       |  |  |       |   |  |  | 2,207  | 
|EBITDA  Holding                 |  |      | 9,608  |           |  |        | 1,298  |       |  |  | (1,479 | ) |  |  | 9,427  | 
|EBITDA  CPI                     |  |      | 9,608  |           |  |        | 1,298  |       |  |  | (1,983 | ) |  |  | 8,923  | 

EBITDA represents earnings before provision for income taxes, interest expense,
depreciation and amortization. Other companies may define EBITDA differently
and, as a result, our measure of EBITDA may not be directly comparable to
EBITDA of other companies. A reconciliation of EBITDA from

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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)

reportable segments
to Income before taxes is as follows:

|                              |  |              |        |              |  |              |       |              |  |   |        |  |  |   |       | 
|----------------------------- |  | ------------ | ------ | ------------ |  | ------------ | ----- | ------------ |  | - | ------ |  |  | - | ----- | 
|                              |  | Holding      |        | CPI         
|                              |  |              |        |             
|                              |  | 13-week      |        | 14-Week      |  | 13-week      |       | 14-Week     
|                              |  | Period Ended |        | Period Ended |  | Period Ended |       | Period Ended
|                              |  | January 2,   |        | January 3,   |  | January 2,   |       | January 3,  
|(In thousands)                |  | 2004         |        | 2003         |  | 2004         |       | 2003        
|                              |  |              |        |              |  |              |       |             
|Segment EBITDA                |  | $            | 13,109 |              |  | $            | 9,427 |              |  | $ | 12,603 |  |  | $ | 8,923 | 
|Less:                         |  |              |        |              |  |              |       |              |  |   |        |  |  |   |       | 
|Depreciation and
amortization |  |              | 1,424  |              |  |              | 1,717 |              |  |   | 1,299  |  |  |   | 1,557 | 
|Interest expense              |  |              | 3,559  |              |  |              | 3,670 |              |  |   | 3,078  |  |  |   | 3,124 | 
|                              |  |              |        |              |  |              |       |              |  |   |        |  |  |   |       | 
|Income before taxes           |  | $            | 8,126  |              |  | $            | 4,040 |              |  | $ | 8,226  |  |  | $ | 4,242 | 
|                              |  |              |        |              |  |              |       |              |  |   |        |  |  |   |       | 

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

|                      |  |              |        |              |  |  |        | 
|--------------------- |  | ------------ | ------ | ------------ |  |  | ------ | 
|                      |  | 13-Week      |        | 14-Week     
|                      |  | Period Ended |        | Period Ended
|                      |  | January 2,   |        | January 3,  
|(In thousands)        |  | 2004         |        | 2003        
|                      |  |              |        |             
|United States         |  | $            | 44,760 |              |  |  | 38,036 | 
|All foreign countries |  |              | 23,553 |              |  |  | 23,590 | 
|                      |  |              |        |              |  |  |        | 
|Total sales           |  | $            | 68,313 |              |  |  | 61,626 | 
|                      |  |              |        |              |  |  |        | 

CPI had one customer, the US Government, that accounted for 10% or more of
consolidated sales. Sales to this customer were $15.0 million, or 22.0%, and
$11.5 million, or 18.7%, of the Companys consolidated sales for the 13-week
period ended January 2, 2004 and the 14-week period ended January 3, 2003,
respectively. A substantial majority of these sales were VED segment products,
but this customer also purchased satcom equipment products.

6. Recent Accounting Pronouncements

In January 2003, the Financial Accounting Standards Board (the FASB) issued
Interpretation No. 46, Consolidation of Variable Interest Entities, which
addresses consolidation by business enterprises of variable interest entities
which have one or both of the following characteristics: (1) The equity
investment at risk is not sufficient to permit the entity to finance its
activities without support from other parties and (2) the equity investors lack
one or more of the defined essential characteristics of a controlling financial
interest. This Interpretation requires existing unconsolidated variable
interest entities to be consolidated by their primary beneficiaries if the
entities do not effectively disperse risks among the participating parties.
This Interpretation applies immediately to variable interest entities created
after January 31, 2003 and to variable interest entities in which an enterprise
obtains an interest after that date. On October 9, 2003, FASB Staff Position
FIN 46-6, Effective Date of FASB Interpretation No. 46, Consolidation of
Variable Interest Entities was issued. This delayed the effective date of
this Interpretation for variable interest entities created before February 1,
2003 until January 3,

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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)

2004.     The Company has evaluated the impact of the provisions of Interpretation
46 and it believes it will not have a material impact on the Companys
consolidated financial statements.

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity. SFAS No. 150
requires that certain financial instruments with characteristics of both
liabilities and equity be classified as liabilities in statements of financial
position. The financial instruments affected include mandatorily redeemable
stock, certain financial instruments that require or may require the issuer to
buy back some of its shares in exchange for cash or other assets and certain
obligations that can be settled with shares of stock. SFAS No. 150 is
effective for all financial instruments entered into or modified after May 31,
2003 and must be applied to existing financial instruments at the beginning of
the first fiscal period beginning after December 15, 2003 for non-public
entities. The Company is currently analyzing this Statement and has not yet
determined its impact on the Companys consolidated financial position or
results of operations.

7.Goodwill and Other Intangible Assets

Goodwill

As of January 2, 2004 and October 3, 2003, the Company had $19.1 million of
goodwill, $13.4 million of which has been allocated to the VED segment and $5.7
million of which has been allocated to the satcom equipment segment. There were
no changes in the carrying amount of goodwill for the quarter ended January 2,
2004.

Intangible Assets

As of January 2, 2004 and October 3, 2003, the Company had $1.9 million of
intangible assets at cost, with accumulated amortization of $0.9 million and
$0.8 million, respectively. Amortization of intangible assets for the fiscal
quarters ended January 2, 2004 and January 3, 2003 was approximately $0.1
million each quarter. Amortization expense for these intangible assets is
projected to be approximately $0.4 million per year through fiscal year 2006.

8.Redemption of 12% Senior Subordinated Notes of CPI

On December 4, 2003, CPI instructed the trustee under the indenture (12%
Indenture) governing the 12% Senior Subordinated Notes due 2005 (12% Notes)
to send a notice to all of the registered holders of the 12% Notes, notifying
them that CPI had elected to redeem $26.0 million in principal amount of the
12% Notes on January 5, 2004, pursuant to and in accordance with the terms of
the 12% Indenture.

On January 5, 2004, CPI redeemed $26.0 million in principal amount of the 12%
Notes, pursuant to and in accordance with the terms of the 12% Indenture. The
redemption occurred at a price equal to 101.5% of the principal amount of such
notes plus accrued and unpaid interest to January 5, 2004. In connection with
the redemption, CPI and Holding entered into an amendment to CPIs secured
credit facility (Credit Facility) that, among other things, permitted CPI to
redeem up to an aggregate maximum amount of $30.0 million of the 12% Notes in
any fiscal year. At the closing of the merger described in Note 9 below, CPI
issued a notice of redemption for the remaining outstanding 12% Notes. The

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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)

Company has classified the $26.0 million of 12% Notes redeemed on January 5,
2004 as a current liability in the accompanying consolidated condensed balance
sheets as of January 2, 2004.

9.Merger

On January 23, 2004, Holding completed the merger (Merger) of CPI Merger Sub
Corp. (Merger Sub) with and into Holding pursuant to the terms of the
Agreement and Plan of Merger (the Merger
Agreement), dated as of November 17, 2003, by and among Holding, CPI
Acquisition Corp. (Acquiror), Merger Sub and Green Equity Investors II, L.P.,
as the representative of the securityholders of Holding, under which Acquiror,
Merger Subs parent corporation and a corporation controlled by affiliates of
The Cypress Group L.L.C. (collectively, Cypress), a New York-based private
equity firm, agreed to acquire Holding. In connection with the Merger, Holding
and CPI refinanced all of their outstanding indebtedness. As part of the
refinancing, CPI effected a covenant defeasance under the 12% Indenture and
elected to redeem in full the remaining $74.0 million outstanding aggregate
principal amount of the 12% Notes pursuant to the terms of the 12% Indenture.
In addition, CPI terminated the Credit Facility and Holding paid off all
amounts owing under, and terminated, the loan agreement related to the San
Carlos Property. CPI also redeemed all of the outstanding shares of its 14%
Junior Cumulative Preferred Stock and elected to redeem all of the outstanding
shares of its Series B 14% Senior Redeemable Exchangeable Cumulative Preferred
Stock.

In connection with the Merger, CPI entered into a $130.0 million credit
agreement (Credit Agreement). This Credit Agreement consists of a $40.0
million revolving commitment, with a sub-facility of $15.0 million for letters
of credit and $5.0 million for swingline loans (Revolver), which expires on
January 23, 2010, and a $90.0 million term loan (Term Loan), which expires on
July 23, 2010. The Term Loan requires 1.0% of the loan amount to be repaid
annually in quarterly installments of 0.25% beginning June 30, 2004 and
continuing for five years with the remainder due in equal quarterly
installments thereafter. The Credit Agreement is guaranteed by Acquiror,
Holding and all of CPIs domestic subsidiaries and collateralized with a
security agreement, which includes a security interest in certain property and
fixtures.

The Credit Agreement provides for Revolver and Term Loan borrowings that will
initially bear interest at a rate equal to LIBOR plus 3.00% per annum (the
3.00% being referred to as the Applicable LIBOR Margin), or the Alternate
Base Rate (ABR) plus 2.0% per annum; the ABR is the greater of (a) the Prime
Rate and (b) the Federal Funds Rate plus 0.50%. In addition to customary
fronting and administrative fees under the Credit Agreement, CPI will pay
Letter of Credit Participation fees equal to the Applicable LIBOR Margin per
annum on the average daily amount of letter of credit exposure, and a
commitment fee of 0.50% per annum on the average daily unused amount of
revolving commitment.

The Credit Agreement contains a number of covenants that, among other things,
restrict the ability of Acquiror, Holding, CPI and certain of its subsidiaries to sell
assets; engage in mergers and acquisitions; pay dividends and distributions or
repurchase their capital stock; incur additional indebtedness or issue equity
interests; make investments and loans; create liens or further negative pledges
on assets; engage in certain transactions with affiliates; enter into sale and
leaseback transactions; change their business or ownership; amend agreements or
make prepayments relating to subordinated indebtedness; amend or waive
provisions of charter documents, agreements with respect to capital stock or
any other document related to the Merger Agreement or related transaction
documents in a

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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)

manner that is materially adverse to the lenders; and change
their fiscal year. These covenants are subject to certain exceptions.

In addition, the Credit Agreement requires CPI and its subsidiaries to maintain
the following financial covenants: a minimum interest coverage ratio; a maximum
total leverage ratio; a minimum fixed charge coverage ratio; and a maximum
capital expenditures limitation.

In connection with the Merger, CPI issued an aggregate principal amount of
$125.0 million of 8% Senior Subordinated Notes due 2012 (8% Notes). CPI is
required to pay interest on the 8% Notes semiannually, beginning on August 1,
2004. The indenture governing the terms of the 8% Notes (the 8% Indenture),
contains restrictive provisions which, among other things, limit CPI and
certain of its subsidiaries from incurring certain indebtedness, selling assets
or consolidating or merging with or into other companies, paying dividends or
repurchasing or redeeming capital stock, making certain investments and
entering into certain types of transactions with their affiliates. The payment
of principal, premium and interest on, and other obligations evidenced by the 8% Notes is
subordinated in right of payment, as set forth in the 8% Indenture, to the
prior payment in full of all senior debt (as defined in the 8% Indenture),
including indebtedness under the Credit Agreement, whether outstanding on the
date of the 8% Indenture or thereafter incurred. CPIs payment obligations
under the 8% Notes are jointly and severally guaranteed by Acquiror, Holding
and all of CPIs domestic subsidiaries. The 8% Notes may be redeemed as
described in, and subject to the terms and conditions set forth in, the 8%
Indenture. In addition, the 8% Indenture requires the Company to make an offer
to purchase the 8% Notes in certain circumstances.

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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)




ITEM 2: MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

The following discussion reflects the condensed consolidated results of
Communications & Power Industries Holding Corporation (Holding), which are
materially consistent with those of Communications & Power Industries, Inc.
(CPI, both companies together referred to as the Company), except as
identified below and should be read in conjunction with the condensed
consolidated financial statements and notes thereto:

The Company is a leading designer, manufacturer and global marketer of vacuum
electron devices (VEDs), satellite communications amplifiers, medical x-ray
generators and other related products for critical defense and commercial
applications. The Companys defense applications include radar, electronic
warfare and communications end markets and our commercial applications include
communications, medical, industrial and scientific end markets. Communications
applications consist of applications for military and commercial satellite
communications uses and broadcast uses. The Company defines and discusses its
recorded orders and sales trends by these end markets in order to more clearly
relate its business to outside investors. Internally, however, the Company is
organized into five operating divisions that are differentiated based on
products operating in two segments. Four of these operating divisions comprise
the Companys vacuum electronic device (VED) segment. The Company also has a
satellite communications equipment segment. Segment data is included in Note 5
of the Notes to Consolidated Condensed Financial Statements.

The Companys fiscal years are the 52- or 53-week periods which end on the
Friday nearest September 30. Fiscal year 2004 will be comprised of the 52-week
period ending October 1, 2004, and fiscal year 2003 was comprised of the
53-week period ended October 3, 2003. The first quarter of fiscal year 2004 was
comprised of 13 weeks, whereas the first quarter of fiscal year 2003 was
comprised of 14 weeks.

On December 4, 2003, CPI elected to redeem $26.0 million in aggregate principal
amount of its 12% Senior Subordinated Notes due 2005 (12% Notes) and on
January 5, 2004, CPI redeemed such 12% Notes.

On January 23, 2004, Holding completed the merger (Merger) of CPI Merger Sub
Corp. (Merger Sub) with and into Holding pursuant to the terms of the
Agreement and Plan of Merger (theMerger Agreement), dated as of November 17,
2003, by and among Holding, CPI Acquisition Corp. (Acquiror), Merger Sub and
Green Equity Investors II, L.P., as the representative of the securityholders
of Holding, under which Acquiror, Merger Subs parent corporation and a
corporation controlled by affiliates of The Cypress Group L.L.C. (collectively,
Cypress), a New York-based private equity firm, agreed to acquire Holding. In
connection with the Merger, Holding and CPI refinanced all of their outstanding
indebtedness. As part of the refinancing, CPI effected a covenant defeasance
under the indenture (12% Indenture) governing the 12% Notes and elected to
redeem in full the remaining $74.0 million outstanding aggregate principal
amount of the 12% Notes pursuant to the terms of the 12% Indenture. In
addition, CPI terminated its existing secured credit facility and Holding paid
off all amounts owing under, and terminated, the loan agreement related to the
San Carlos Property. CPI also redeemed all of the outstanding shares of its 14%
Junior Cumulative Preferred Stock

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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)

and elected to redeem all of the outstanding
shares of its Series B 14% Senior Redeemable Exchangeable Cumulative Preferred
Stock. See Note 9 of the Notes to Consolidated Condensed Financial Statements.

Orders recorded during the first quarter of fiscal year 2004 were $73.4
million, as compared to $75.3 million for the first quarter of fiscal year
2003. The $1.9 million or 2.5% decrease is not considered significant as order
levels fluctuate from quarter to quarter based on the timing of when actual
order receipts are received. The various increases and decreases within the
markets discussed below are
primarily related to timing rather than to any material changes in the
Companys markets. Electronic warfare orders for the first quarter of fiscal
year 2004 were $7.9 million, a decrease of $3.6 million from the first quarter
of fiscal year 2003. The decrease is due primarily to timing of order releases
from quarter to quarter by original equipment manufacturers and government
logistics agencies, and annual orders in this market are expected to be
consistent with fiscal year 2003 levels. Medical orders decreased by $1.0
million to $6.2 million in the first quarter of fiscal year 2004, as compared
to the first quarter of fiscal year 2003, due principally to the timing of
orders from established customers. Communications orders decreased $3.6 million
to $19.4 million, as compared to the first quarter of fiscal year 2003, due
primarily to a large order from a direct-to-home service supplier that did not
reoccur in the first quarter of fiscal year 2004. However, the Company received
another large order from a direct-to-home service supplier in January 2004.
Industrial orders increased $3.4 million to $5.2 million in the first quarter
of fiscal year 2004 from $1.8 million in the comparable period of fiscal year
2003, due primarily to increased orders from the Companys stocking
distributor. Orders from this distributor were weak throughout fiscal year 2003
but are expected to return to normal levels in fiscal year 2004. Radar and
scientific orders for the first quarter of fiscal year 2004 increased by $1.4
million and $1.6 million, respectively, as compared to the first quarter of
2003, due principally to fluctuations in the timing of order receipts. 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.

Order backlog consists of firm orders for which goods and services are yet to
be provided. As of January 2, 2004, the Company had an order backlog of $178.1
million, representing approximately eight months of sales, compared to an order
backlog of $159.0 million, representing approximately seven months of sales, as
of January 3, 2003. Order backlog increased during the first quarter of fiscal
year 2004 by $6.0 million from $172.1 million at the end of fiscal year 2003.
Although orders can be and sometimes are modified or terminated, the amount of
modifications and terminations has historically not been material compared to
total contract volume.

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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)

Critical Accounting Policies

Management is required to make judgments, 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 October 3, 2003. The following critical accounting policies are those
policies that management believes affect its more significant estimates and
assumptions used in preparation of its consolidated financial statements.

Revenue Recognition

The estimated sales values of performance under certain contracts to commercial
customers and U.S. Government fixed-price and fixed-price incentive contracts
are recognized under the percentage of completion method of accounting. When
applying the percentage of completion method, the Company relies on estimates
of total expected contract revenue and costs. Recognized revenues and profit
are subject to revisions as the contract progresses towards completion.

Allowance for Doubtful Accounts

The Company monitors the creditworthiness of its customers based on a variety
of factors, including the length of time the receivables are past due, the
financial health of the customer, economic conditions and historical
experience. If collectibility is considered uncertain, then the Company will
record a reserve to reduce the receivable to the amount considered collectable.
If circumstances change, then further adjustments could be required.

Warranty Reserves

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 sales. Managements
estimates are based on historical costs for warranty, and are adjusted when
circumstances indicate that future costs are expected to vary from historical
levels. If actual product failure rates or material usage incurred differs from
the Companys estimates, then revisions to the estimated warranty liability
would be required.

Inventory Valuation

Inventories are stated at the lower of average cost or market (net realizable
value). The carrying value of inventory is reduced for estimated obsolescence
or unmarketability based upon assumptions about future demand, market
conditions, product lifecycles and product pricing. If the Companys
assumptions were to be substantially different than estimated, further
adjustments could be required. While these estimates require management to make
assumptions and judgments, 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 inventory value of
the products or contracts at the lower of cost or net realizable value (selling
price less estimated cost of disposal). If estimated costs, based on these
analyses, for fixed-price contracts, which represent virtually all of the
Companys contracts, are 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)

higher than originally estimated,
provisions are also required, and in such a case, the Company records a reserve
that is charged to costs of goods sold.

Impairment of Long-Lived Assets

The Company reviews long-lived assets, excluding intangible assets that are
covered by Statement of Financial Accounting Standards (SFAS) No. 142,
Goodwill and Other Intangible 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 with a charge to general and administrative at the time of the reduction.
Adverse changes in the customers and markets served by the Company could result
in future impairments of long-lived assets.

Goodwill Impairment

Goodwill represents the excess of the purchase price over the fair value of the
net assets acquired. The Company performs an annual goodwill impairment test
during the fourth quarter of each fiscal year, or earlier if an event or
circumstance indicates that an impairment loss has occurred. Goodwill and
certain other corporate assets and liabilities are assigned to the reporting
units which are consistent with the Companys operating divisions. The fair
value of the reporting units are then compared to the carrying value to
determine if there is any potential impairment. The process of evaluating
potential impairment is subjective and requires judgments regarding revenue
forecasts, discount rates, and weighted average cost of capital among other
things. 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 following table sets forth Holdings historical results of operations as a
percentage of sales for each of the periods indicated (both periods unaudited).

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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)

|                               |                     |  |              |      |              |  |       |      |  
|------------------------------ | ------------------- |  | ------------ | ---- | ------------ |  | ----- | ---- | -
|                               |                     |  | 13-Week      |      | 14-Week     
|                               |                     |  | period ended |      | period ended
|                               |                     |  | January 2,   |      | January 3,  
|                               |                     |  | 2004         |      | 2003        
|                               |                     |  |              |      |             
|Sales                          |                     |  | 100.0        | %    |              |  | 100.0 | %   
|Cost of sales                  |                     |  | 69.0         |      |              |  | 72.9  |     
|                               |                     |  |              |      |              |  |       |     
|                               | Gross profit        |  |              | 31.0 |              |  |       | 27.1 |  
|Research and development       |                     |  | 2.5          |      |              |  | 2.3   |     
|Selling and marketing          |                     |  | 5.3          |      |              |  | 6.4   |     
|General and administrative (a) |                     |  | 6.0          |      |              |  | 6.3   |     
|                               |                     |  |              |      |              |  |       |     
|Operating income               |                     |  | 17.1         |      |              |  | 12.1  |     
|Other income                   |                     |  | 0.0          |      |              |  | 0.4   |     
|Interest expense               |                     |  | (5.2         | )    |              |  | (6.0  | )   
|                               |                     |  |              |      |              |  |       |     
|                               | Income before taxes |  |              | 11.9 |              |  |       | 6.5  |  
|Income tax expense             |                     |  | 4.8          |      |              |  | 2.4   |     
|                               |                     |  |              |      |              |  |       |     
|                               | Net income          |  |              | 7.1  | %            |  |       | 4.1  | %
|                               |                     |  |              |      |              |  |       |     
|Other Data:                    |                     |  |              |      |              |  |       |     
|                               | EBITDA (b)          |  |              | 19.2 | %            |  |       | 15.3 | %



|(a) |  | General and administrative expense includes foreign currency gain (loss).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | EBITDA represents earnings before provision for income taxes, interest
expense, depreciation and amortization. Other companies may define EBITDA
differently and, as a result, our measure of EBITDA may not be directly
comparable to EBITDA of other companies. Management believes that the
presentation of EBITDA provides useful information to investors regarding
our results of operations because they assist in analyzing and
benchmarking the performance and value of our business. Although we use
EBITDA as a financial measure to assess the performance of our business,
the use of EBITDA is limited because it does not include certain material
costs, such as interest and taxes, necessary to operate our business.
EBITDA should be considered in addition to, and not as a substitute for,
net income in accordance with GAAP as a measure of performance or net cash
provided by operating activities in accordance with GAAP as a measure of
liquidity. For reconciliation of EBITDA to Income before taxes, see Note
5 of the Notes to Consolidated Condensed Financial Statements.

Sales. Sales for the first quarter of fiscal year 2004 were $68.3 million, an
increase of $6.7 million or 10.9%, from the same period in fiscal year 2003.
Radar and electronic warfare sales were $25.7 million and $6.3 million for the
first quarter of fiscal year 2004, respectively, which represents increases of
$2.3 million and $1.8 million, respectively, from the first quarter of fiscal
year 2003. These increases were due to increased spending by the Department of
Defense for VEDs that are sold in these markets. Communications sales in the
first quarter of fiscal year 2004 were $2.9 million lower than the prior year
level due primarily to the timing of shipments from quarter to quarter and
somewhat lower demand for communications products. The increased sales of
products in the medical market of $1.7 million were due to increased demand for
x-ray generators and VED products for the medical market. Increased sales in
the industrial market of $2.2 million were due to higher demand for
semiconductor products. Scientific sales were $3.0 million, an increase of
$1.6 million from the first quarter of fiscal year 2003, due primarily to
higher VED shipments to the Department of Energy.

Gross Margin. Gross profit was $21.2 million in the first quarter of fiscal
year 2004, compared to $16.7 million for the same period in fiscal year 2003,
an increase of $4.5 million or 26.9%. Higher shipment

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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)

volume improved gross
profit by approximately $2.9 million. As a percentage of sales, gross margin
was 31.0% in the first quarter of fiscal year 2004, compared to 27.1% for the
same period in fiscal year 2003. This increase in gross profit was offset
somewhat by unfavorable movements in foreign currency exchange rates, primarily
due to the weakness of the U.S. dollar relative to the Canadian dollar. The
first quarter of fiscal year 2004 gross margin is consistent with the average
for the prior three quarters
(31.8%), with improvement in margins beginning in the second quarter of fiscal
year 2003. The increase in gross profit as a percentage of sales since the
first quarter of fiscal year 2003 resulted primarily from gains in production
efficiencies, increase in sales volume, resolution of technical problems for
products and in manufacturing, favorable product mix, improved pricing for
certain products and completion of contracts with lower pricing in prior
periods.

Research and Development Expenses. Research and development expenses were $1.7
million, or 2.5% of sales, for the first quarter of fiscal year 2004, compared
to $1.4 million, or 2.3% of sales, for the first quarter of fiscal year 2003.
The increase is primarily attributable to additional development efforts on
products for the radar and medical markets.

Selling, Marketing, General and Administrative Expenses. Selling, marketing,
general and administrative expenses were $7.8 million, or 11.4% of sales, for
the first quarter of fiscal year 2004, compared to $7.8 million, or 12.7% of
sales, for the first quarter of fiscal year 2003. Selling and marketing
expenses decreased by $0.3 million to $3.6 million from the first quarter of
fiscal year 2003, due primarily to lower third party commission costs and the
timing of expenses for promotion and advertising. General and administrative
expenses increased by $0.3 million to $4.1 million from the first quarter of
fiscal year 2003, due primarily to expenses associated with the Merger.

Other Income. Other income of $0.3 million in the first quarter of fiscal year
2003 represents the Companys portion of the fair value of stock received from
its life and disability insurance provider resulting from the insurance
companys 2001 demutualization.

EBITDA. EBITDA for the first quarter of fiscal year 2004 was $13.1 million, or
19.2% of sales, compared to $9.4 million, or 15.3% of sales, for the first
quarter of fiscal year 2003. This increase in EBITDA is attributable primarily
to the improvement in gross margin as discussed above. For reconciliation of
EBITDA to Income before taxes, see Note 5 of the Notes to Consolidated
Condensed Financial Statements.

Interest Expense. Interest expense was $3.6 million, or 5.2% of sales, for the
first quarter of fiscal year 2004 as compared to $3.7 million, or 6.0% of
sales, for the first quarter of fiscal year 2003. Interest expense did not
change significantly from the first quarter of fiscal year 2003. However,
interest expense will increase in the future as a result of the consummation of
the Merger and the related transactions.

Income Tax Expense. Income tax expense for the first quarter of fiscal year
2004 was $3.3 million compared to $1.5 million for the first quarter of fiscal
year 2003. The tax expense for the first quarter of fiscal year 2004
represents an effective tax rate of approximately 40% compared to an effective
tax rate of approximately 37% for the first quarter of fiscal year 2003. The
lower effective tax rate in fiscal year 2003 was due to the expected
utilization of net operating loss carryforwards in fiscal year 2003.

Net Income. Income before taxes and preferred dividends was $8.1 million for
the first quarter of fiscal year 2004 compared to income before taxes and
preferred dividends of $4.0 million for the

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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)

corresponding period of fiscal year
2003, an increase of $4.1 million. Net income after taxes but before preferred
dividends was $4.8 million for the first quarter of fiscal year 2004, an
improvement of $2.3 million compared to net income after taxes but before
preferred dividends of $2.5 million for the first quarter of fiscal year 2003.

Differences between Holding and CPI. CPIs operating results differ slightly
from Holdings due to a sale-leaseback transaction between CPI and Holding
which took place in December 2000. In the first quarter of fiscal year 2004,
CPIs net income before taxes was $8.2 million compared to Holdings net income
before taxes of $8.1 million. As a result of this transaction, operating costs
for CPI were approximately $0.4 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 sale-leaseback and
additional depreciation by Holding on the San Carlos facility. Interest expense
for CPI was
approximately $0.5 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. In addition, interest
income from Holding of $0.2 million related to an intercompany receivable
included in CPIs results is eliminated upon consolidation for Holding. All
other operations data for CPI are consistent with Holdings operations data for
the first quarter of fiscal year 2004.

Financial Condition

Operating Activities. As of January 2, 2004, the Companys cash and cash
equivalents were $38.1 million, as compared to $33.8 million at October 3,
2003. In the first quarter of fiscal year 2004 and 2003, cash and cash
equivalents generated by Holding and CPI are the same. In the first quarter of
fiscal year 2003, the components of Holdings cash flow and that of CPIs
differ by Holdings $0.3 million repayment of mortgage refinancing that was
funded by an intercompany payment from CPI.

In the first quarter of fiscal year 2004, the Companys $4.3 million increase
in cash and cash equivalents relates to $6.2 million of cash generated from
operating activities, offset in part by $0.2 million net cash used in investing
activities and $1.6 million used in financing activities. Cash provided by
operating activities in the first quarter of fiscal year 2004 was generated
primarily from $4.8 million in net income.

In the first quarter of fiscal year 2003, the Companys $10.2 million increase
in cash and cash equivalents relates to $13.3 million of cash generated from
operating activities, offset in part by $0.3 million net cash used in investing
activities and $2.9 million used in financing activities. Cash provided by the
Companys operating activities in the first quarter of fiscal year 2003 was
generated primarily from $2.5 million in net income, $4.4 million in advance
payments from customers, and $4.1 million in inventory reduction.

Investing Activities.Net cash used in investing activities in the first
quarter of fiscal year 2004 and 2003 was for the purchase of property, plant
and equipment of $0.2 million and $0.3 million, respectively. The Company
expects the level of capital expenditures in fiscal year 2004 to be moderately
higher than fiscal year 2003 levels; however, the Company will continue to
manage capital expenditures consistent with business conditions. The Companys
continuing operations typically do not have large capital requirements. Capital
expenditures are generally made to replace existing assets, increase
productivity, facilitate cost reductions or meet regulatory requirements.

Financing Activities.For both Holding and CPI, net cash used in financing
activities in the first quarter

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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)

of fiscal year 2004 was primarily for the $1.6
million repayment of bank overdraft. For Holding, net cash used in financing
activities in the first quarter of fiscal year 2003 was primarily for the $2.3
million repayment of bank overdraft, $0.3 million payment of debt issue costs
and $0.3 million repayment on the mortgage. For CPI, net cash used in financing
activities in the first quarter of fiscal year 2003 was primarily for the $2.3
million repayment of bank overdraft and $0.3 million payment of debt issue
costs.

CPIs financial condition differs from that of Holding, as discussed above, in
that CPIs debt obligations and financing activities do not include $17.5
million of mortgage financing due in January 2004. This mortgage financing
resulted from Holdings purchase of the San Carlos facility from CPI in a
sale-leaseback transaction which took place in December 2000. In connection
with the sale-leaseback transaction, CPI entered into a non-cancelable lease
with Holding for the San Carlos real property for a term of twenty years with a
fixed annual rent of $2.45 million. The mortgage financing was repaid in full
in connection with the Merger in January 2004.

In connection with the Merger, CPI entered into a $130.0 million credit
agreement (Credit Agreement). This Credit Agreement consists of a $40.0
million revolving commitment, with a sub-facility of $15.0 million for letters
of credit and $5.0 million for swingline loans (Revolver), which expires on
January 23, 2010, and a $90.0 million term loan (Term Loan), which expires on
July 23, 2010. The Term Loan requires 1.0% of the loan amount to be repaid
annually in quarterly installments of 0.25% beginning June 30, 2004 and
continuing for five years with the remainder due in
equal quarterly installments thereafter. The Credit Agreement is guaranteed by
Acquiror, Holding and all of CPIs domestic subsidiaries and collateralized
with a security agreement, which includes a security interest in certain
property and fixtures. After giving effect to the Merger and related
transactions, the Company has $90.0 million outstanding under the Term Loan and
availability of $40.0 million under the Revolver.

The Credit Agreement provides for Revolver and Term Loan borrowings that will
initially bear interest at a rate equal to LIBOR plus 3.00% per annum (the
3.00% being referred to as the Applicable LIBOR Margin), or the Alternate
Base Rate (ABR) plus 2.0% per annum; the ABR is the greater of (a) the Prime
Rate and (b) the Federal Funds Rate plus 0.50%. In addition to customary
fronting and administrative fees under the Credit Agreement, CPI will pay
Letter of Credit Participation fees equal to the Applicable LIBOR Margin per
annum on the average daily amount of letter of credit exposure, and a
commitment fee of 0.50% per annum on the average daily unused amount of
revolving commitment.

The Credit Agreement contains a number of covenants that, among other things,
restrict the ability of Acquiror, Holding, CPI and certain of its subsidiaries to sell
assets; engage in mergers and acquisitions; pay dividends and distributions or
repurchase their capital stock; incur additional indebtedness or issue equity
interests; make investments and loans; create liens or further negative pledges
on assets; engage in certain transactions with affiliates; enter into sale and
leaseback transactions; change their business or ownership; amend agreements or
make prepayments relating to subordinated indebtedness; amend or waive
provisions of charter documents, agreements with respect to capital stock or
any other document relating to the Merger Agreement or related transaction
documents in a manner that is materially adverse to the lenders; and change
their fiscal year. These covenants are subject to certain exceptions.

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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)

In addition, the Credit Agreement requires CPI and its subsidiaries to maintain
the following financial covenants: a minimum interest coverage ratio; a maximum
total leverage ratio; a minimum fixed charge coverage ratio; and a maximum
capital expenditures limitation.

In addition to the Credit Agreement, and in connection with the Merger, CPI
issued an aggregate principal amount of $125.0 million of Notes due 2012 (8%
Notes). CPI is required to pay interest on the 8% Notes semiannually,
beginning on August 1, 2004. The indenture governing the terms of the 8% Notes
(8% Indenture) contains restrictive provisions which limit, among other
things, CPI and certain of its subsidiaries from incurring certain
indebtedness, selling assets or consolidating or merging with or into other
companies, paying dividends or repurchasing or redeeming capital stock, making
certain investments and entering into certain types of transactions with their
affiliates. The payment of principal, premium and interest on, and other
obligations evidenced by the 8% Notes is subordinated in right of payment, as
set forth in the 8% Indenture, to the prior payment in full of all senior debt
(as defined in the 8% Indenture), including indebtedness under the Credit
Agreement, whether outstanding on the date of the 8% Indenture or thereafter
incurred. CPIs payment obligations under the 8% Notes are jointly and
severally guaranteed by Acquiror., Holding and all of CPIs domestic
subsidiaries. The 8% Notes may be redeemed as described in, and subject to the
terms and conditions set forth in, the 8% Indenture. In addition, the 8%
Indenture requires the Company to make an offer to purchase the 8% Notes in
certain circumstances.

Generally, there can be no assurance that the combination of cash generated by
operations, borrowing availability from the Credit Agreement and additional
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 may adopt one or more alternatives, such as reducing or delaying
capital expenditures, reducing discretionary costs, and attempting to negotiate
an increase to the Companys borrowing capacity under its Credit Agreement,
although there can be no assurances that such alternatives will be available on
acceptable terms, if at all.

Recent Accounting Pronouncements

In January 2003, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 46, Consolidation of Variable Interest Entities, which
addresses consolidation by business enterprises of variable interest entities
which have one or both of the following characteristics: (1) The equity
investment at risk is not sufficient to permit the entity to finance its
activities without support from other parties and (2) the equity investors lack
one or more of the defined essential characteristics of a controlling financial
interest. This Interpretation requires existing unconsolidated variable
interest entities to be consolidated by their primary beneficiaries if the
entities do not effectively disperse risks among the participating parties.
This Interpretation applies immediately to variable interest entities created
after January 31, 2003 and to variable interest entities in which an enterprise
obtains an interest after that date. On October 9, 2003, FASB Staff Position
FIN 46-6, Effective Date of FASB Interpretation No. 46, Consolidation of
Variable Interest Entities was issued. This delayed the effective date of
this Interpretation for variable interest entities created before February 1,
2003 until January 3, 2004. The Company has evaluated the impact of the
provisions of Interpretation 46 and it believes it will not have a material
impact on the Companys consolidated 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)

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity. SFAS No. 150
requires that certain financial instruments with characteristics of both
liabilities and equity be classified as liabilities in statements of financial
position. The financial instruments affected include mandatorily redeemable
stock, certain financial instruments that require or may require the issuer to
buy back some of its shares in exchange for cash or other assets and certain
obligations that can be settled with shares of stock. SFAS No. 150 is
effective for all financial instruments entered into or modified after May 31,
2003 and must be applied to existing financial instruments at the beginning of
the first fiscal period beginning after December 15, 2003 for non-public
entities. The Company is currently analyzing this Statement and has not yet
determined its impact on the Companys consolidated financial position or
results of operations.

Cautionary Statements Regarding Forward-Looking Statements

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

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 that are
attributable to the Company or persons acting on the Companys behalf are
expressly qualified in their entirety by the risk factors, including those
contained in Exhibit 99 hereto, and other cautionary statements included herein
and in the Companys other filings with the Securities and Exchange Commission
(SEC). 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 and uncertainties associated with an investment in the
Companys securities. 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:



| |  | the Companys indebtedness is substantial;                                                                                                                                                       
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | the Companys debt agreements have restrictions that limit its flexibility in operating its business;                                                                                            
| 
| |  | the Companys ability to generate the significant amount of cash needed to service its debt and to fund capital
expenditures or other liquidity needs depends on many factors beyond its control;
| 
| |  | the Company has had historical losses;                                                                                                                                                           
| 
| |  | the Company may be unable to retain and/or recruit key management and other personnel;                                                                                                           
| 
| |  | the markets in which the Company sells its products are competitive;                                                                                                                             
| 
| |  | the end markets in which the Company operates are subject to technological change;                                                                                                               

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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 significant portion of the Companys sales is, and is expected to continue to be, from contracts with the U.S.
Government;                                                                                              
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | the Company generates sales from contracts with foreign governments;                                                                                                                                                      
| 
| |  | the Companys international operations subject it to social, political and economic risks of doing business in foreign
countries;                                                                                         
| 
| |  | the Company may not be successful in obtaining the necessary export licenses and technical assistance agreements to
conduct operations abroad and Congress may prevent proposed sales to foreign customers.               
| 
| |  | the Companys results of operations and financial condition may be adversely affected by increased or unexpected costs
incurred by it on its contracts and sales orders;                                                  
| 
| |  | the Companys business could be adversely affected by environmental regulation and legislation, liabilities relating to
contamination and changes in our ability to recover under Varian Medical Systems Inc.s indemnity;
| 
| |  | the Company has only a limited ability to protect its intellectual property rights;                                                                                                                                       
| 
| |  | the Companys inability to obtain certain necessary raw materials and key components could disrupt the manufacture of its
products and cause its financial condition and results of operations to suffer; and             
| 
| |  | the Company is controlled by affiliates of The Cypress Group L.L.C.                                                                                                                                                       

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.




ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Companys market risk disclosures set forth in its Annual Report on Form
10-K for the fiscal year ended October 3, 2003, have not changed materially.




ITEM 4: CONTROLS AND PROCEDURES

Management, including the Companys principal executive officer and principal
financial officer, has evaluated, as of the end of the period covered by this
report, the effectiveness of the design and operation of the Companys
disclosure controls and procedures with respect to the information generated
for use in this report. Based upon, and as of the date of that evaluation, the
principal executive officer and principal financial officer concluded that the
disclosure controls and procedures were effective to provide reasonable
assurances that information required to be disclosed in the reports filed or
submitted under the Securities Exchange Act of 1934, as amended, is recorded,
processed, summarized and reported within the time periods specified in the
SECs rules and forms.

There have been no changes in the Companys internal control over financial
reporting that occurred during the Companys most recent fiscal quarter that
have materially affected, or are reasonably likely to
materially affect, the Companys internal control over financial reporting.

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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.

Holding submitted the following items to its stockholders for approval by
written consent:

(i)  the Merger Agreement, the Merger and the related transactions, and the
amendment and restatement of the certificate of incorporation of Holding in
connection with the Merger. Holding received written consents approving these
matters from the holders of 4,720,672 shares of Common Stock, representing
approximately 94.26 % of the total outstanding shares of Common Stock.

(ii)  the payment by Holding and CPI of certain potential parachute payments to
certain executives in accordance with Section 280G(b)(5)(A)(ii) of the Internal
Revenue Code of 1986, as amended (the IRC). Holding received written
consents approving these matters from the holders of 4,474,250 shares of Common
Stock, representing approximately 92.78% of the total outstanding shares of
Common Stock entitled to vote on these matters under the IRC.

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                                                                                                                                                                                                                          
|        |  |                                                                                                                                                                                                                                      
|3.1     |  | Certificate of Incorporation of Communications & Power Industries Holding
Corporation (as amended and restated on January 23, 2004).                                                                                                 
|        |  |                                                                                                                                                                                                                                      
|3.2     |  | Bylaws of Communications & Power Industries Holding Corporation
(Incorporated by reference to Communications & Power Industries, Inc.s
Registration Statement on Form S-1 (Registration No. 33-96858), filed on
September 12, 1995).

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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)

|        |  |                                                                                                                                                                                                                                                                                                                                                                                                 
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                                                                 
|No.     |  | Description                                                                                                                                                                                                                                                                                                                                                                                     
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                 
|3.3     |  | Restated Certificate of Incorporation of Communications & Power
Industries, Inc., filed with the Delaware Secretary of State on August 11,
1995 (Incorporated by reference to Communications & Power Industries,
Inc.s Registration Statement on Form S-1 (Registration No. 33-96858),
filed on September 12, 1995).                                                                           
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                 
|3.4     |  | Amended and Restated Bylaws of Communications & Power Industries, Inc., dated March
19, 2002 (Incorporated by reference to Communications & Power Industries,
Inc.s Quarterly Report on Form 10-Q, for the quarter ended March 29,
2002).                                                                                                                                                      
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                 
|4.1     |  | Indenture relating to the 8% Senior Subordinated Notes due 2012, dated as
of January 23, 2004, among Communications & Power Industries, Inc., as
Issuer, the Guarantors named therein, as Guarantors, and BNY Western Trust
Company, as Trustee.                                                                                                                                                
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                 
|4.2     |  | Registration Rights Agreement, dated as of January 23, 2004, among
Communications & Power Industries, Inc., the Guarantors named therein, and
UBS Securities LLC, Bear, Stearns & Co. Inc., and Wachovia Capital
Markets, LLC, as the Initial Purchasers.                                                                                                                                       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                 
|10.1    |  | Credit Agreement, dated as of January 23, 2004, among Communications &
Power Industries, Inc., as Borrower, the Guarantors named therein, the
Lenders from time to time party thereto, UBS Securities LLC, Bear, Stearns
& Co. Inc., UBS Loan Finance LLC, UBS AG, Stamford Branch, Bear Stearns
Corporate Lending Inc., Wachovia Bank, National Association, and Wachovia
Capital Markets, LLC.
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                 
|10.2    |  | Security Agreement, dated as of January 23, 2004, among Communications &
Power Industries, Inc., the Guarantors party thereto, and UBS AG, Stamford
Branch.                                                                                                                                                                                                                                     
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                 
|10.3    |  | Form of Option Rollover Agreement (U.S. Employees).                                                                                                                                                                                                                                                                                                                                             
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                 
|10.4    |  | Form of Option Rollover Agreement (Canadian Employees).                                                                                                                                                                                                                                                                                                                                         
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                 
|10.5    |  | Form of Management Stockholders Agreement among CPI Acquisition Corp.,
Cypress Merchant Banking Partners II L.P., Cypress Merchant Banking II
C.V., 55th Street Partners II L.P., Cypress Side-by-Side LLC, and certain
management stockholders named therein.                                                                                                                                  
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                 
|31      |  | Rule 13a-14 (a) /15d-14 (a) Certifications.                                                                                                                                                                                                                                                                                                                                                     
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                 
|32      |  | Section 1350 Certifications.                                                                                                                                                                                                                                                                                                                                                                    
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                 
|99      |  | Risk factors related to the offering of 8% Senior Subordinated Notes due 2012.                                                                                                                                                                                                                                                                                                                  

(b)  Reports on Form 8-K:

| |                                                                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | A report on Form 8-K was filed on November 21, 2003 under Item 5 to announce
that Holding entered into the Agreement and Plan of Merger dated as of
November 17, 2003.

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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: February 11, 2004                         
| |  |  |  |                                                       |  |                                                 
| |  |  |  | By:                                                   |  | /s/ Joel Littman                                
| |  |  |  |                                                       |  |                                                 
| |  |  |  |                                                       |  | Joel Littman                                    
| |  |  |  |                                                       |  | Chief Financial Officer, Treasurer and Secretary
| |  |  |  |                                                       |  | (Principal Financial and Accounting Officer)    
| |  |  |  |                                                       |  | Date: February 11, 2004                         

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##### Table of Contents



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.

| |  |  |  |                                         |  |                                                 
| |  |  |  | --------------------------------------- |  | ------------------------------------------------
| |  |  |  | COMMUNICATIONS & POWER INDUSTRIES, INC.
| |  |  |  |                                         |  |                                                 
| |  |  |  | By:                                     |  | /s/ O. Joe Caldarelli                           
| |  |  |  |                                         |  |                                                 
| |  |  |  |                                         |  | O. Joe Caldarelli                               
| |  |  |  |                                         |  | Chief Executive Officer                         
| |  |  |  |                                         |  | Date: February 11, 2004                         
| | 
| |  |  |  | By:                                     |  | /s/ Joel Littman                                
| |  |  |  |                                         |  |                                                 
| |  |  |  |                                         |  | Joel Littman                                    
| |  |  |  |                                         |  | Chief Financial Officer, Treasurer and Secretary
| |  |  |  |                                         |  | (Principal Financial and Accounting Officer)    
| |  |  |  |                                         |  | Date: February 11, 2004                         

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Exhibit Index

|        |  |                                                                                                                                                                                                                                                                                                                                                                                                 
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                                                                 
|No.     |  | Description                                                                                                                                                                                                                                                                                                                                                                                     
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                 
|3.1     |  | Certificate of Incorporation of Communications & Power Industries Holding
Corporation (as amended and restated on January 23, 2004).                                                                                                                                                                                                                                                            
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                 
|3.2     |  | Bylaws of Communications & Power Industries Holding Corporation
(Incorporated by reference to Communications & Power Industries, Inc.s
Registration Statement on Form S-1 (Registration No. 33-96858), filed on
September 12, 1995).                                                                                                                                                           
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                 
|3.3     |  | Restated Certificate of Incorporation of Communications & Power
Industries, Inc., filed with the Delaware Secretary of State on August 11,
1995 (Incorporated by reference to Communications & Power Industries,
Inc.s Registration Statement on Form S-1 (Registration No. 33-96858),
filed on September 12, 1995).                                                                           
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                 
|3.4     |  | Amended and Restated Bylaws of Communications & Power Industries, Inc., dated March
19, 2002 (Incorporated by reference to Communications & Power Industries,
Inc.s Quarterly Report on Form 10-Q, for the quarter ended March 29,
2002).                                                                                                                                                      
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                 
|4.1     |  | Indenture relating to the 8% Senior Subordinated Notes due 2012, dated as
of January 23, 2004, among Communications & Power Industries, Inc., as
Issuer, the Guarantors named therein, as Guarantors, and BNY Western Trust
Company, as Trustee.                                                                                                                                                
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                 
|4.2     |  | Registration Rights Agreement, dated as of January 23, 2004, among
Communications & Power Industries, Inc., the Guarantors named therein, and
UBS Securities LLC, Bear, Stearns & Co. Inc., and Wachovia Capital
Markets, LLC, as the Initial Purchasers.                                                                                                                                       
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                 
|10.1    |  | Credit Agreement, dated as of January 23, 2004, among Communications &
Power Industries, Inc., as Borrower, the Guarantors named therein, the
Lenders from time to time party thereto, UBS Securities LLC, Bear, Stearns
& Co. Inc., UBS Loan Finance LLC, UBS AG, Stamford Branch, Bear Stearns
Corporate Lending Inc., Wachovia Bank, National Association, and Wachovia
Capital Markets, LLC.
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                 
|10.2    |  | Security Agreement, dated as of January 23, 2004, among Communications &
Power Industries, Inc., the Guarantors party thereto, and UBS AG, Stamford
Branch.                                                                                                                                                                                                                                     
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                 
|10.3    |  | Form of Option Rollover Agreement (U.S. Employees).                                                                                                                                                                                                                                                                                                                                             
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                 
|10.4    |  | Form of Option Rollover Agreement (Canadian Employees).                                                                                                                                                                                                                                                                                                                                         
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                 
|10.5    |  | Form of Management Stockholders Agreement among CPI Acquisition Corp.,
Cypress Merchant Banking Partners II L.P., Cypress Merchant Banking II
C.V., 55th Street Partners II L.P., Cypress Side-by-Side LLC, and certain
management stockholders named therein.                                                                                                                                  
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                 
|31      |  | Rule 13a-14 (a) /15d-14 (a) Certifications.                                                                                                                                                                                                                                                                                                                                                     
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                 
|32      |  | Section 1350 Certifications.                                                                                                                                                                                                                                                                                                                                                                    
|        |  |                                                                                                                                                                                                                                                                                                                                                                                                 
|99      |  | Risk factors related to the offering of 8% Senior Subordinated Notes due 2012.