##### Table of Contents



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 3, 2003                                           
|  |  |                                                                                          
|  |  | 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
(State or Other Jurisdiction of Incorporation or Organization)                                                                            |  | Delaware
(State or Other Jurisdiction of Incorporation or Organization)                                                                          
|77-0407395
(I.R.S. Employer Identification No.)                                                                                                    |  | 77-0405693
(I.R.S. Employer Identification No.)                                                                                                  
|811 Hansen Way 
Palo Alto, California 94303-1110
(650) 846-2900
(Address of Principal Executive Offices and Telephone Number,
Including Area Code) |  | 811 Hansen Way
Palo Alto, California 94303-1110
(650) 846-2900
(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 xNo o .

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding for each of the Registrants classes
of Common Stock, as of the latest practicable date: Communications & Power
Industries Holding Corporation: 4,908,172 shares of Common Stock, $.01 par
value, at February 3, 2003. Communications & Power Industries, Inc.: 1 share
of Common Stock, $.01 par value, at February 3, 2003.





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TABLE OF CONTENTS



|                              |                                                                                               |                                                                           |  |  |  |  |  | 
|----------------------------- | --------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------- |  |  |  |  |  | 
|PART I: FINANCIAL INFORMATION
|                              | ITEM 1: CONSOLIDATED CONDENSED FINANCIAL STATEMENTS                                          
|                              |                                                                                               | CONSOLIDATED CONDENSED BALANCE SHEETS                                    
|                              |                                                                                               | CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS                          
|                              |                                                                                               | CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS                          
|                              |                                                                                               | 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 AND CERTIFICATION 
|EXHIBIT INDEX                
|EXHIBIT 10.1                 
|EXHIBIT 99.1                 
|EXHIBIT 99.2                 
|EXHIBIT 99.3                 
|EXHIBIT 99.4                 



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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 3, 2003 and September 27, 2002                                                               |    |  | 2 | 
|                                                                                              |                                                       | Consolidated Condensed Statements of Operations for the 14-week period ended January 3, 2003
and the 13-week period ended December 28, 2001 |    |  | 3 | 
|                                                                                              |                                                       | Consolidated Condensed Statements of Cash Flows for the 14-week period ended January 3, 2003
and the 13-week period ended December 28, 2001 |    |  | 4 | 
|                                                                                              |                                                       | Notes to Consolidated Condensed Financial Statements                                                                                        |    |  | 8 | 
|                                                                                              | COMMUNICATIONS & POWER INDUSTRIES, INC.               |                                                                                                                                             |    |  |  
|                                                                                              |                                                       | Consolidated Condensed Balance Sheets, January 3, 2003 and September 27, 2002                                                               |    |  | 5 | 
|                                                                                              |                                                       | Consolidated Condensed Statements of Operations for the 14-week period ended January 3, 2003
and the 13-week period ended December 28, 2001 |    |  | 6 | 
|                                                                                              |                                                       | Consolidated Condensed Statements of Cash Flows for the 14-week period ended January 3, 2003
and the 13-week period ended December 28, 2001 |    |  | 7 | 
|                                                                                              |                                                       | Notes to Consolidated Condensed Financial Statements                                                                                        |    |  | 8 | 
|ITEM 2: MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS |                                                       |                                                                                                                                             | 13 | 
|ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                            |                                                       |                                                                                                                                             | 19 | 
|ITEM 4: CONTROLS AND PROCEDURES                                                               |                                                       |                                                                                                                                             | 20 | 
|PART II: OTHER INFORMATION                                                                    |                                                       |                                                                                                                                             | 21 | 
|SIGNATURES AND CERTIFICATIONS                                                                 |                                                       |                                                                                                                                             | 22 | 

-1-



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##### Table of Contents



COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries










CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands-unaudited)

|                                                             |                                   |   |            |         |               |  |         |         |  
|------------------------------------------------------------ | --------------------------------- | - | ---------- | ------- | ------------- |  | ------- | ------- | -
|                                                             |                                   |   | January 3, |         | September 27,
|                                                             |                                   |   | 2003       |         | 2002         
|                                                             |                                   |   |            |         |              
|ASSETS                                                      
|Current Assets                                               |                                   |   |            |         |               |  |         |        
|                                                             | Cash and cash equivalents         |   | $          | 12,925  |               |  |         | 2,724   |  
|                                                             | Accounts receivable, net          |   |            | 31,122  |               |  |         | 29,937  |  
|                                                             | Inventories                       |   |            | 35,818  |               |  |         | 39,927  |  
|                                                             | Other current assets              |   |            | 3,580   |               |  |         | 2,637   |  
|                                                             |                                   |   |            |         |               |  |         |        
|Total current assets                                         |                                   |   | 83,445     |         |               |  | 75,225  |        
|Property, plant, and equipment, net                          |                                   |   | 54,567     |         |               |  | 55,846  |        
|Goodwill                                                     |                                   |   | 19,149     |         |               |  | 19,149  |        
|Intangibles, net                                             |                                   |   | 1,425      |         |               |  | 1,613   |        
|Debt issue costs, net                                        |                                   |   | 3,246      |         |               |  | 3,329   |        
|                                                             |                                   |   |            |         |               |  |         |        
|Total assets                                                 |                                   | $ | 161,832    |         |               |  | 155,162 |        
|                                                             |                                   |   |            |         |               |  |         |        
|LIABILITIES, PREFERRED STOCK AND
STOCKHOLDERS DEFICIT      
|Current Liabilities                                          |                                   |   | 1          |         |               |  |         |        
|                                                             | Current portion of capital leases |   | $          | 18      |               |  |         | 45      |  
|                                                             | Mortgage financing                |   |            | 17,500  |               |  |         | 17,750  |  
|                                                             | Accounts payable                  |   |            | 10,665  |               |  |         | 14,111  |  
|                                                             | Accrued expenses                  |   |            | 19,147  |               |  |         | 17,304  |  
|                                                             | Product warranty                  |   |            | 5,081   |               |  |         | 4,823   |  
|                                                             | Income taxes payable              |   |            | 4,363   |               |  |         | 2,959   |  
|                                                             | Accrued dividends payable         |   |            | 10,940  |               |  |         | 9,538   |  
|                                                             | Advance payments from customers   |   |            | 11,955  |               |  |         | 7,594   |  
|                                                             |                                   |   |            |         |               |  |         |        
|Total current liabilities                                    |                                   |   | 79,669     |         |               |  | 74,124  |        
|Senior subordinated notes                                    |                                   |   | 100,000    |         |               |  | 100,000 |        
|                                                             |                                   |   |            |         |               |  |         |        
|Total liabilities                                            |                                   |   | 179,669    |         |               |  | 174,124 |        
|                                                             |                                   |   |            |         |               |  |         |        
|Senior Redeemable Preferred Stock of CPI                     |                                   |   | 28,747     |         |               |  | 28,693  |        
|                                                             |                                   |   |            |         |               |  |         |        
|Junior Preferred Stock of CPI                                |                                   |   | 26,363     |         |               |  | 25,449  |        
|                                                             |                                   |   |            |         |               |  |         |        
|Commitments and contingencies                                |                                   |   |            |         |               |  |         |        
|Stockholders Deficit                                        |                                   |   |            |         |               |  |         |        
|                                                             | Common stock                      |   |            | 49      |               |  |         | 49      |  
|                                                             | Additional paid-in capital        |   |            | 19,111  |               |  |         | 19,111  |  
|                                                             | Accumulated deficit               |   |            | (90,875 | )             |  |         | (91,041 | )
|                                                             | Stockholder loans                 |   |            | (1,232  | )             |  |         | (1,223  | )
|                                                             |                                   |   |            |         |               |  |         |        
|Net stockholders deficit                                    |                                   |   | (72,947    | )       |               |  | (73,104 | )      
|                                                             |                                   |   |            |         |               |  |         |        
|Total liabilities, preferred stock and
stockholders deficit |                                   | $ | 161,832    |         |               |  | 155,162 |        
|                                                             |                                   |   |            |         |               |  |         |        

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)

|                                               |                                   |   |              |       |              |  |        |       | 
|---------------------------------------------- | --------------------------------- | - | ------------ | ----- | ------------ |  | ------ | ----- | 
|                                               |                                   |   | 14-Week      |       | 13-Week     
|                                               |                                   |   | period ended |       | period ended
|                                               |                                   |   | January 3,   |       | December 28,
|                                               |                                   |   | 2003         |       | 2001        
|                                               |                                   |   |              |       |             
|Sales                                          |                                   | $ | 61,626       |       |              |  | 66,228 |      
|Cost of sales                                  |                                   |   | 44,936       |       |              |  | 52,069 |      
|                                               |                                   |   |              |       |              |  |        |      
|Gross profit                                   |                                   |   | 16,690       |       |              |  | 14,159 |      
|                                               |                                   |   |              |       |              |  |        |      
|Operating costs and expenses:                  |                                   |   |              |       |              |  |        |      
|                                               | Research and development          |   |              | 1,445 |              |  |        | 1,255 | 
|                                               | Selling and marketing             |   |              | 3,924 |              |  |        | 3,946 | 
|                                               | General and administrative        |   |              | 3,878 |              |  |        | 4,587 | 
|                                               |                                   |   |              |       |              |  |        |      
|Total operating costs and expenses             |                                   |   | 9,247        |       |              |  | 9,788  |      
|                                               |                                   |   |              |       |              |  |        |      
|Operating income                               |                                   |   | 7,443        |       |              |  | 4,371  |      
|Other income                                   |                                   |   | 267          |       |              |  |       |      
|Interest expense                               |                                   |   | (3,670       | )     |              |  | (4,725 | )    
|                                               |                                   |   |              |       |              |  |        |      
|Income (loss) before taxes                     |                                   |   | 4,040        |       |              |  | (354   | )    
|Income tax expense                             |                                   |   | 1,504        |       |              |  | 680    |      
|                                               |                                   |   |              |       |              |  |        |      
|Net income (loss)                              |                                   |   | 2,536        |       |              |  | (1,034 | )    
|Preferred dividends:                           |                                   |   |              |       |              |  |        |      
|                                               | Senior redeemable preferred stock |   |              | 1,402 |              |  |        | 1,194 | 
|                                               | Junior preferred stock            |   |              | 914   |              |  |        | 796   | 
|                                               |                                   |   |              |       |              |  |        |      
|Net income (loss) attributable to common stock |                                   | $ | 220          |       |              |  | (3,024 | )    
|                                               |                                   |   |              |       |              |  |        |      

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)

|                                                 |                                                |   |              |        |              |  |       |        |  
|------------------------------------------------ | ---------------------------------------------- | - | ------------ | ------ | ------------ |  | ----- | ------ | -
|                                                 |                                                |   | 14-Week      |        | 13-Week     
|                                                 |                                                |   | period ended |        | period ended
|                                                 |                                                |   | January 3,   |        | December 28,
|                                                 |                                                |   | 2003         |        | 2001        
|                                                 |                                                |   |              |        |             
|OPERATING ACTIVITIES                             |                                                |   |              |        |              |  |       |       
|                                                 | Net cash provided by operating activities      |   | $            | 10,995 |              |  |       | 9,815  |  
|                                                 |                                                |   |              |        |              |  |       |       
|INVESTING ACTIVITIES                             |                                                |   |              |        |              |  |       |       
|                                                 | Purchase of property, plant and equipment, net |   |              | (263   | )            |  |       | (664   | )
|                                                 |                                                |   |              |        |              |  |       |       
|                                                 | Net cash used in investing activities          |   |              | (263   | )            |  |       | (664   | )
|                                                 |                                                |   |              |        |              |  |       |       
|FINANCING ACTIVITIES                             |                                                |   |              |        |              |  |       |       
|                                                 | Repayments on capital leases                   |   |              | (27    | )            |  |       | (257   | )
|                                                 | Payment of debt issue costs                    |   |              | (254   | )            |  |       |       |  
|                                                 | Repayment of revolving credit facility         |   |              |       |              |  |       | (8,307 | )
|                                                 | Repayment of mortgage financing                |   |              | (250   | )            |  |       |       |  
|                                                 |                                                |   |              |        |              |  |       |       
|                                                 | Net cash used in financing activities          |   |              | (531   | )            |  |       | (8,564 | )
|                                                 |                                                |   |              |        |              |  |       |       
|NET INCREASE IN CASH AND CASH EQUIVLENTS         |                                                |   | 10,201       |        |              |  | 587   |       
|Cash and cash equivalents at beginning of period |                                                |   | 2,724        |        |              |  | 2,903 |       
|                                                 |                                                |   |              |        |              |  |       |       
|Cash and cash equivalents at end of period       |                                                | $ | 12,925       |        |              |  | 3,490 |       
|                                                 |                                                |   |              |        |              |  |       |       

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 3, |         | September 27,
|                                                                               |                                   |   | 2003       |         | 2002         
|                                                                               |                                   |   |            |         |              
|ASSETS                                                                        
|Current Assets                                                                 |                                   |   |            |         |               |  |         |        
|                                                                               | Cash and cash equivalents         |   | $          | 12,925  |               |  |         | 2,724   |  
|                                                                               | Accounts receivable, net          |   |            | 31,122  |               |  |         | 29,937  |  
|                                                                               | Inventories                       |   |            | 35,818  |               |  |         | 39,927  |  
|                                                                               | Other current assets              |   |            | 3,580   |               |  |         | 2,637   |  
|                                                                               |                                   |   |            |         |               |  |         |        
|Total current assets                                                           |                                   |   | 83,445     |         |               |  | 75,225  |        
|Property, plant, and equipment, net                                            |                                   |   | 41,359     |         |               |  | 42,478  |        
|Goodwill                                                                       |                                   |   | 19,149     |         |               |  | 19,149  |        
|Intangibles, net                                                               |                                   |   | 1,425      |         |               |  | 1,613   |        
|Debt issue costs, net                                                          |                                   |   | 3,203      |         |               |  | 3,259   |        
|Note receivable from parent                                                    |                                   |   | 5,750      |         |               |  | 5,750   |        
|                                                                               |                                   |   |            |         |               |  |         |        
|Total assets                                                                   |                                   | $ | 154,331    |         |               |  | 147,474 |        
|                                                                               |                                   |   |            |         |               |  |         |        
|LIABILITIES, PREFERRED STOCK AND
STOCKHOLDERS DEFICIT                        
|Current Liabilities                                                            |                                   |   |            |         |               |  |         |        
|                                                                               | Current portion of capital leases |   | $          | 18      |               |  |         | 45      |  
|                                                                               | Accounts payable                  |   |            | 10,665  |               |  |         | 14,111  |  
|                                                                               | Accrued expenses                  |   |            | 19,997  |               |  |         | 18,313  |  
|                                                                               | Product warranty                  |   |            | 5,081   |               |  |         | 4,823   |  
|                                                                               | Income taxes payable              |   |            | 4,445   |               |  |         | 2,964   |  
|                                                                               | Accrued dividends payable         |   |            | 10,940  |               |  |         | 9,538   |  
|                                                                               | Advance payments from customers   |   |            | 11,955  |               |  |         | 7,594   |  
|                                                                               |                                   |   |            |         |               |  |         |        
|Total current liabilities                                                      |                                   |   | 63,101     |         |               |  | 57,388  |        
|Senior subordinated notes                                                      |                                   |   | 100,000    |         |               |  | 100,000 |        
|Deferred income on sale-leaseback                                              |                                   |   | 7,205      |         |               |  | 7,311   |        
|                                                                               |                                   |   |            |         |               |  |         |        
|Total liabilities                                                              |                                   |   | 170,306    |         |               |  | 164,699 |        
|                                                                               |                                   |   |            |         |               |  |         |        
|Senior Redeemable Preferred Stock                                              |                                   |   | 28,747     |         |               |  | 28,693  |        
|                                                                               |                                   |   |            |         |               |  |         |        
|Commitments and contingencies                                                  |                                   |   |            |         |               |  |         |        
|Stockholders Deficit:                                                         |                                   |   |            |         |               |  |         |        
|                                                                               | Junior preferred stock            |   |            | 2       |               |  |         | 2       |  
|                                                                               | Common stock                      |   |            |        |               |  |         |        |  
|                                                                               | Additional paid-in capital        |   |            | 45,522  |               |  |         | 44,608  |  
|                                                                               | Accumulated deficit               |   |            | (89,014 | )             |  |         | (89,305 | )
|                                                                               | Stockholder loans                 |   |            | (1,232  | )             |  |         | (1,223  | )
|                                                                               |                                   |   |            |         |               |  |         |        
|Net stockholders deficit                                                      |                                   |   | (44,722    | )       |               |  | (45,918 | )      
|                                                                               |                                   |   |            |         |               |  |         |        
|Total liabilities, senior redeemable
preferred stock and stockholders deficit |                                   | $ | 154,331    |         |               |  | 147,474 |        
|                                                                               |                                   |   |            |         |               |  |         |        

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)

|                                               |                                   |   |              |       |              |  |        |       | 
|---------------------------------------------- | --------------------------------- | - | ------------ | ----- | ------------ |  | ------ | ----- | 
|                                               |                                   |   | 14-Week      |       | 13-Week     
|                                               |                                   |   | period ended |       | period ended
|                                               |                                   |   | January 3,   |       | December 28,
|                                               |                                   |   | 2003         |       | 2001        
|                                               |                                   |   |              |       |             
|Sales                                          |                                   | $ | 61,626       |       |              |  | 66,228 |      
|Cost of sales                                  |                                   |   | 44,936       |       |              |  | 52,069 |      
|                                               |                                   |   |              |       |              |  |        |      
|Gross profit                                   |                                   |   | 16,690       |       |              |  | 14,159 |      
|                                               |                                   |   |              |       |              |  |        |      
|Operating costs and expenses:                  |                                   |   |              |       |              |  |        |      
|                                               | Research and development          |   |              | 1,445 |              |  |        | 1,255 | 
|                                               | Selling and marketing             |   |              | 3,924 |              |  |        | 3,946 | 
|                                               | General and administrative        |   |              | 4,222 |              |  |        | 4,933 | 
|                                               |                                   |   |              |       |              |  |        |      
|Total operating costs and expenses             |                                   |   | 9,591        |       |              |  | 10,134 |      
|                                               |                                   |   |              |       |              |  |        |      
|Operating income                               |                                   |   | 7,099        |       |              |  | 4,025  |      
|Other income                                   |                                   |   | 267          |       |              |  |       |      
|Interest expense                               |                                   |   | (3,124       | )     |              |  | (4,197 | )    
|                                               |                                   |   |              |       |              |  |        |      
|Income (loss) before taxes                     |                                   |   | 4,242        |       |              |  | (172   | )    
|Income tax expense                             |                                   |   | 1,581        |       |              |  | 510    |      
|                                               |                                   |   |              |       |              |  |        |      
|Net income (loss)                              |                                   |   | 2,661        |       |              |  | (682   | )    
|Preferred dividends:                           |                                   |   |              |       |              |  |        |      
|                                               | Senior redeemable preferred stock |   |              | 1,402 |              |  |        | 1,194 | 
|                                               | Junior preferred stock            |   |              | 914   |              |  |        | 796   | 
|                                               |                                   |   |              |       |              |  |        |      
|Net income (loss) attributable to common stock |                                   | $ | 345          |       |              |  | (2,672 | )    
|                                               |                                   |   |              |       |              |  |        |      

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)

|                                                 |                                                |   |              |        |              |  |       |        |  
|------------------------------------------------ | ---------------------------------------------- | - | ------------ | ------ | ------------ |  | ----- | ------ | -
|                                                 |                                                |   | 14-Week      |        | 13-Week     
|                                                 |                                                |   | period ended |        | period ended
|                                                 |                                                |   | January 3,   |        | December 28,
|                                                 |                                                |   | 2003         |        | 2001        
|                                                 |                                                |   |              |        |             
|OPERATING ACTIVITIES                             |                                                |   |              |        |              |  |       |       
|                                                 | Net cash provided by operating activities      |   | $            | 10,745 |              |  |       | 9,815  |  
|                                                 |                                                |   |              |        |              |  |       |       
|INVESTING ACTIVITIES                             |                                                |   |              |        |              |  |       |       
|                                                 | Purchase of property, plant and equipment, net |   |              | (263   | )            |  |       | (664   | )
|                                                 |                                                |   |              |        |              |  |       |       
|                                                 | Net cash used in investing activities          |   |              | (263   | )            |  |       | (664   | )
|                                                 |                                                |   |              |        |              |  |       |       
|FINANCING ACTIVITIES                             |                                                |   |              |        |              |  |       |       
|                                                 | Repayments on capital leases                   |   |              | (27    | )            |  |       | (257   | )
|                                                 | Payment of debt issue costs                    |   |              | (254   | )            |  |       |       |  
|                                                 | Repayments on revolving credit facility        |   |              |       |              |  |       | (8,307 | )
|                                                 |                                                |   |              |        |              |  |       |       
|                                                 | Net cash used in financing activities          |   |              | (281   | )            |  |       | (8,564 | )
|                                                 |                                                |   |              |        |              |  |       |       
|NET INCREASE IN CASH AND CASH EQUIVALENTS        |                                                |   | 10,201       |        |              |  | 587   |       
|Cash and cash equivalents at beginning of period |                                                |   | 2,724        |        |              |  | 2,903 |       
|                                                 |                                                |   |              |        |              |  |       |       
|Cash and cash equivalents at end of period       |                                                | $ | 12,925       |        |              |  | 3,490 |       
|                                                 |                                                |   |              |        |              |  |       |       

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
September 27, 2002. 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 2003.

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 3, |        | September 27,
|(In thousands)          |                   | 2003       |        | 2002         
|                        |                   |            |        |              
|Raw materials and parts |                   | $          | 28,805 |               |  |  | 30,638 |       
|Work in process         |                   |            | 4,342  |               |  |  | 6,507  |       
|Finished goods          |                   |            | 2,671  |               |  |  | 2,782  |       
|                        |                   |            |        |               |  |  |        |       
|                        | Total inventories |            | $      | 35,818        |  |  |        | 39,927 | 
|                        |                   |            |        |               |  |  |        |       

3. Supplemental Cash Flow Information

|                                                |  |                  |     |                    |  |                  |     |                    |  |   |     |  |  |   |     | 
|----------------------------------------------- |  | ---------------- | --- | ------------------ |  | ---------------- | --- | ------------------ |  | - | --- |  |  | - | --- | 
|                                                |  | Holding          |     | CPI               
|                                                |  |                  |     |                   
|                                                |  | 14-Week Period   |     | 13-Week Period     |  | 14-Week Period   |     | 13-Week Period    
|                                                |  | Ended January 3, |     | Ended December 28, |  | Ended January 3, |     | Ended December 28,
|(In millions)                                   |  | 2003             |     | 2001               |  | 2003             |     | 2001              
|                                                |  |                  |     |                    |  |                  |     |                   
|Cash Payments                                   |  |                  |     |                    |  |                  |     |                    |  |   |     |  |  |   |     | 
|Interest payments                               |  | $                | 0.5 |                    |  | $                | 1.2 |                    |  | $ | 0.1 |  |  | $ | 0.9 | 
|Tax payments                                    |  | $                | 0.0 |                    |  | $                | 0.2 |                    |  | $ | 0.0 |  |  | $ | 0.2 | 
|Non-cash Financing                              |  |                  |     |                    |  |                  |     |                    |  |   |     |  |  |   |     | 
|Unpaid cash
dividends on senior
preferred stock |  | $                | 1.4 |                    |  | $                | 1.2 |                    |  | $ | 1.4 |  |  | $ | 1.2 | 

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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. 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 income taxes, interest, depreciation and amortization
(EBITDA).

Summarized financial information concerning the Companys reportable segments
is shown in the following table. Included in the Other column is financial
information for the Companys Solid State Products Division, which was sold in
September 2002, and did not meet the quantitative thresholds to be reported
separately, and certain unallocated corporate-level operating expenses.
Intersegment product transfers are recorded at cost.

|                                                |  |       |        |           |  |        |        |       |  |  |        |   |  |  |        | 
|----------------------------------------------- |  | ----- | ------ | --------- |  | ------ | ------ | ----- |  |  | ------ | - |  |  | ------ | 
|                                                |  |       |        |           |  | Satcom |        |       |  |  |        |   |  | 
|(In thousands)                                  |  | VED's |        | Equipment |  | Other  |        | Total
|                                                |  |       |        |           |  |        |        |      
|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  | 
|For the 13-Week Period Ended
December 28, 2001: |  |       |        |           |  |        |        |       |  |  |        |   |  |  |        | 
|Revenues from external
customers                |  | $     | 51,329 |           |  |        | 15,861 |       |  |  | (962   | ) |  |  | 66,228 | 
|Intersegment product transfers                  |  |       | 2,259  |           |  |        |       |       |  |  | 76     |   |  |  | 2,335  | 
|EBITDA  Holding                                |  |       | 8,073  |           |  |        | 281    |       |  |  | (889   | ) |  |  | 7,465  | 
|EBITDA  CPI                                    |  |       | 8,073  |           |  |        | 281    |       |  |  | (1,398 | ) |  |  | 6,956  | 

A reconciliation of EBITDA from reportable segments to Income (loss) before
taxes is as follows:

|                              |  |                  |       |                    |  |                  |       |                    |  |   |       |  |  |  |       |  
|----------------------------- |  | ---------------- | ----- | ------------------ |  | ---------------- | ----- | ------------------ |  | - | ----- |  |  |  | ----- | -
|                              |  | Holding          |       | CPI               
|                              |  |                  |       |                   
|                              |  | 14-Week Period   |       | 13-Week Period     |  | 14-Week Period   |       | 13-Week Period    
|                              |  | Ended January 3, |       | Ended December 28, |  | Ended January 3, |       | Ended December 28,
|(In thousands)                |  | 2003             |       | 2001               |  | 2003             |       | 2001              
|                              |  |                  |       |                    |  |                  |       |                   
|Segment EBITDA                |  | $                | 9,427 |                    |  |                  | 7,465 |                    |  | $ | 8,923 |  |  |  | 6,956 |  
|Less:                         |  |                  |       |                    |  |                  |       |                    |  |   |       |  |  |  |       |  
|Depreciation and
amortization |  |                  | 1,717 |                    |  |                  | 3,094 |                    |  |   | 1,557 |  |  |  | 2,931 |  
|Interest expense              |  |                  | 3,670 |                    |  |                  | 4,725 |                    |  |   | 3,124 |  |  |  | 4,197 |  
|                              |  |                  |       |                    |  |                  |       |                    |  |   |       |  |  |  |       |  
|Income (loss) before taxes    |  | $                | 4,040 |                    |  |                  | (354  | )                  |  | $ | 4,242 |  |  |  | (172  | )
|                              |  |                  |       |                    |  |                  |       |                    |  |   |       |  |  |  |       |  

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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)

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

|                      |  |              |        |              |  |  |        | 
|--------------------- |  | ------------ | ------ | ------------ |  |  | ------ | 
|                      |  | 14-Week      |        | 13-Week     
|                      |  | Period Ended |        | Period Ended
|(In thousands)        |  | January 3,   |        | December 28,
|                      |  | 2003         |        | 2001        
|                      |  |              |        |             
|United States         |  | $            | 38,036 |              |  |  | 49,817 | 
|All foreign countries |  |              | 23,590 |              |  |  | 16,411 | 
|                      |  |              |        |              |  |  |        | 
|Total Sales           |  | $            | 61,626 |              |  |  | 66,228 | 
|                      |  |              |        |              |  |  |        | 

CPI has a single customer that accounts for 10% or more of consolidated sales.
Sales to this customer were $11.5 million and $10.0 million of the Companys
consolidated sales for the 14-week period ended January 3, 2003 and the 13-week
period ended December 28, 2001, respectively. A substantial majority of these
sales were VED segment products, but this customer also purchased satcom
equipment products.

5. Recent Accounting Pronouncements

The Financial Accounting Standards Board (FASB) issued Statement of Financial
Accounting Standards (SFAS) No. 143, Accounting for Asset Retirement
Obligations, in August 2001, and SFAS No. 144, Accounting for the Impairment
or Disposal of Long-lived Assets, in October 2001. SFAS No. 143 is effective
for fiscal years beginning after June 15, 2002 and requires that the fair value
of an asset retirement obligation be recorded as a liability in the period in
which it incurs the obligation. SFAS No. 144 is effective for fiscal years
beginning after December 15, 2001. It provides a single accounting model for
long-lived assets to be disposed of and replaces SFAS No. 121 Accounting for
the Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of.
The Company adopted these Statements on September 28, 2002. The adoption did
not have a material impact on the Companys consolidated financial position or
results of operations.

In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements No.
4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections.
This Statement rescinds SFAS Statement No. 4, Reporting Gains and Losses from
Extinguishment of Debt, and an amendment of that Statement, SFAS Statement No.
64, Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements. This
Statement amends SFAS Statement No. 13, Accounting for Leases, to eliminate
an inconsistency between the required accounting for sale-leaseback
transactions and the required accounting for certain lease modifications that
have economic effects that are similar to sale-leaseback transactions. This
Statement also amends other existing authoritative pronouncements to make
various technical corrections, clarify meanings, or describe their
applicability under changed conditions. The provisions of SFAS No. 145 are
effective in fiscal years beginning after May 15, 2002, with early adoption
permitted and, in general, are to be applied prospectively. The Company adopted
this Statement on September 28, 2002. The adoption did not have a material
impact on the Companys consolidated financial position or results of
operations.

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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 June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated
with Exit and Disposal Activities. SFAS 146 requires that a liability for a
cost associated with an exit or disposal activity be recognized and measured
initially at fair value only when the liability is incurred. The provisions of
SFAS No. 146 are effective prospectively for exit or disposal activities
initiated after December 31, 2002. The Company does not expect the adoption of
this statement to have a material effect on the Companys consolidated
financial position or results of operations.

In December 2002, the FASB issued SFAS 148, Accounting for Stock-Based
Compensation  Transition and Disclosure  an Amendment of SFAS 123. SFAS 148
provides additional transition guidance for those entities that elect to
voluntarily adopt the accounting provisions of SFAS 123, Accounting for
Stock-Based Compensation. Since the Company intends to continue to apply the
intrinsic value method of accounting for stock-based compensation, the adoption
of SFAS 148 will not have an effect on its financial condition or results of
operations. However, the Company will provide the additional disclosures
required by SFAS 148 beginning in the second quarter of fiscal year 2003.

6. Goodwill and Other Intangible Assets

In June 2001, the FASB issued SFAS No. 141, Business Combinations, and SFAS
No. 142, Goodwill and Other Intangible Assets. SFAS No. 141 requires that the
purchase method of accounting be used for all business combinations initiated
after June 30, 2001. SFAS No. 141 also specifies the criteria intangible assets
acquired in a purchase method business combination must meet to be recognized
and reported apart from goodwill. SFAS No. 142 requires that goodwill and
intangible assets with indefinite useful lives no longer be amortized, but
instead be reviewed for impairment annually or more frequently if certain
indicators arise. SFAS No. 142 also requires that intangible assets with
definite useful lives be amortized over their respective estimated lives and be
reviewed for impairment. The Company adopted the provisions of SFAS No. 141
and SFAS No. 142 and ceased amortization of its goodwill, beginning in fiscal
year 2003.

Upon adoption of SFAS No. 142, the Company performed a transitional goodwill
impairment evaluation to assess whether goodwill was impaired as of the date of
adoption. Based on the results of the first step of the transitional goodwill
impairment test it was determined that no potential impairment exists. As a
result, the Company has recognized no transitional impairment loss in
connection with the adoption of SFAS No. 142. Also upon adoption of SFAS No.
142, as required by SFAS No. 141, the Company reassessed the useful lives and
residual values of all intangible assets acquired in purchase business
combinations, and no significant changes were deemed necessary.

Goodwill

As of January 3, 2003 and September 27, 2002, 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 3, 2003.

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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)

The following table presents the impact of adopting SFAS No. 142 on net income
(loss) had the standard been in effect for the comparable period of fiscal year
2002.

|                                  |  |                  |       |                    |  |                  |        |                    |  |   |       |  |  |  |      |  
|--------------------------------- |  | ---------------- | ----- | ------------------ |  | ---------------- | ------ | ------------------ |  | - | ----- |  |  |  | ---- | -
|                                  |  | Holding          |       | CPI               
|                                  |  |                  |       |                   
|                                  |  | 14-Week Period   |       | 13-Week Period     |  | 14-Week Period   |        | 13-Week Period    
|                                  |  | Ended January 3, |       | Ended December 28, |  | Ended January 3, |        | Ended December 28,
|(In thousands)                    |  | 2003             |       | 2001               |  | 2003             |        | 2001              
|                                  |  |                  |       |                    |  |                  |        |                   
|Net income (loss) as reported     |  | $                | 2,536 |                    |  |                  | (1,034 | )                  |  | $ | 2,661 |  |  |  | (682 | )
|Adjustments:                      |  |                  |       |                    |  |                  |        |                    |  |   |       |  |  |  |      |  
|Goodwill amortization, net
of tax |  |                  |      |                    |  |                  | 321    |                    |  |   |      |  |  |  | 321  |  
|                                  |  |                  |       |                    |  |                  |        |                    |  |   |       |  |  |  |      |  
|Adjusted net income (loss)        |  | $                | 2,536 |                    |  |                  | (713   | )                  |  | $ | 2,661 |  |  |  | (361 | )
|                                  |  |                  |       |                    |  |                  |        |                    |  |   |       |  |  |  |      |  

Intangible Assets

As of January 3, 2003 and September 27, 2002, the Company had $1.9 million of
intangible assets at cost, with accumulated amortization of $0.5 million and
$0.3 million, respectively.
Amortization of intangible assets for the fiscal quarters ended January 3, 2003
and December 28, 2001 was approximately $0.2 million and $0.1 million,
respectively. Amortization expense for these intangible assets is projected to
be approximately $0.4 million per year through fiscal year 2006.

7. Amendment to Credit Facility

In December 2002, the Company amended its credit facility to increase the
maximum amount of its revolving credit line by $20.0 million (the amount of a
prepaid term loan formerly outstanding under the same credit facility) from
$41.0 million to $61.0 million and to extend the expiration date from December
22, 2004 to May 31, 2005. The credit facility continues to be secured by
substantially all of the assets of CPI and guaranteed by Holding and all of
CPIs subsidiaries. Availability under the revolving credit facility continues
to be based upon eligible receivables, machinery and equipment and certain real
estate.

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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

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 which are
attributable to the Company or persons acting on the Companys behalf are
expressly qualified in their entirety by the risk factors and other
cautionary statements included herein. The Company is under no duty to update
any of the forward-looking statements after the date of this report to conform
such statements to actual results or to changes in the Companys expectations.

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

Overview

The following discussion reflects the condensed consolidated results of
Holding, which are materially consistent with those of CPI except as identified
below and should be read in conjunction with the condensed consolidated
financial statements and notes thereto:

The Company serves the communications, radar, electronic countermeasures,
industrial, medical and scientific markets. In addition, the Company divides
the communications market into applications for ground-based satellite uplinks
for military and commercial uses (satcom) and broadcast sectors. The Company
defines and discusses its orders and sales trends by the end markets to more
clearly relate its business to outside investors. Internally, however, the
Company is organized into five operating units that are differentiated based on
products. Four of these operating units comprise the Companys vacuum
electronic device (VED) segment. The Company also has a satellite
communications equipment segment. Segment data is included in Note 4 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 2003 will be comprised of the 53-week
period ended October 3, 2003, and fiscal year

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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)

2002 was comprised of the 52-week
period ended September 27, 2002. The first quarter of fiscal year2003 was comprised of 14 weeks, whereas the first quarter of fiscal year 2002
was comprised of 13 weeks.

Orders during the first quarter of fiscal year 2003 were $75.3 million, as
compared to $71.4 million for the first quarter of fiscal year 2002. This
increase of $3.9 million for the quarter reflects a higher demand for products
in the communications, electronic countermeasures and medical markets, offset
somewhat by decreases in orders for the Companys remaining three markets.
This quarters communication orders demonstrated the first quarter-on-quarter
increase in over a year. The increase of $3.1 million or 15.4% from the first
quarter of fiscal year 2002 is due primarily to the receipt of a large order
from a direct-to-home service supplier. The increase in communication orders is
not expected to be sustained in the upcoming quarters as the Company believes
that communication companies are continuing to maintain their capital spending
at the moderate rates we have seen in the last several quarters. Electronic
countermeasures orders for the first quarter of fiscal year 2003 were $11.5
million, an increase of $9.4 million from the first quarter of fiscal year
2002. The increase is due primarily to timing of order releases from quarter to
quarter by OEMs and government logistics agencies, and annual orders in this
market are expected to be consistent with fiscal year 2002 levels. Medical
orders increased by $1.6 million to $7.3 million in the first quarter of fiscal
year 2003 as compared to the first quarter of fiscal year 2002. Radar,
industrial and scientific orders decreased by $2.1 million, $2.8 million and
$5.3 million, respectively, from the first quarter of 2002 to the first quarter
of 2003 due principally to fluctuations in the timing of order receipts, with
several significant orders received in the first quarter of fiscal year 2002
which were not repeated in the first quarter of 2003. Overall, incoming order
levels fluctuate significantly on a quarterly basis and a particular quarters
order rate may not be indicative of future order levels. In addition, the
Companys sales are highly dependent upon manufacturing scheduling, performance
and shipments and, accordingly, it is not possible to accurately predict when
these orders will be recognized as sales.

As of January 3, 2003, the Company had an order backlog of $159.0 million,
representing approximately eight months of sales, compared to an order backlog
of $157.0 million, or approximately seven-and-a-half months of sales, as of
December 28, 2001. Order backlog increased during the first quarter of fiscal
year 2003 by $13.9 million from $145.1 million at the end of fiscal year 2002.

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 September 27, 2002. 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

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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)

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.
Revisions in profit estimates are charged to income in the period in which they
become determinable. Sales under cost-reimbursement contracts, primarily
research and development contracts, are recorded as costs are incurred and
include estimated earned fees in the proportion that costs incurred to date
bear to total estimated costs. The fees under certain U.S. Government
contracts may be increased or decreased in accordance with cost or performance
incentive provisions which measure actual performance against established
targets or other criteria. Such incentive fee awards or penalties are included
in revenue at the time the amounts can be reasonably determined.

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 product.
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 actual contract costs were to be
substantially higher than estimated, further provisions could be required.

Impairment of Long-Lived Assets

The Company reviews long-lived assets, excluding intangible assets which are
covered by SFAS 142, 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

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##### Table of Contents



COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

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

amount to future net cash flows expected to be generated from the operation and
sale of long-lived assets. If such assets are considered to be impaired, the
Companys carrying value is reduced to its
estimated fair value. Adverse changes in the customers and markets served by
the Company could result in future impairments of long-lived assets.

Goodwill Impairment

Goodwill represents the excess of the purchase price over the fair value of the
net assets acquired. The Company performed a goodwill impairment test in the
first quarter of fiscal year 2003, upon adoption of SFAS No. 142. The Company
plans to perform another goodwill impairment test during the fourth quarter of
the 2003 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 judgements 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

Sales. Sales for the first quarter of fiscal year 2003 were $61.6 million, a
decrease of $4.6 million, or 6.9%, from the same period in fiscal year 2002.
This decrease is attributable to the fact that sales in the communications
market for the first quarter of fiscal year 2002 included the final units of
the XM Radio project, which contributed sales of approximately $5.0 million.

Gross Margin. Gross margins for the first quarter of fiscal year 2003 were
27.1%, an increase of 5.7% from the first quarter of fiscal year 2002. The
increase is attributable to a more favorable product mix, negotiated reductions
in component costs and gains in production efficiencies.

Operating Costs and Expenses. Operating costs and expenses were $9.2 million,
or 15.0 % of sales, for the first quarter of fiscal year 2003 as compared to
$9.8 million, or 14.8 % of sales, for the first quarter of fiscal year 2002.
In absolute dollars, the decrease of $0.6 million can be attributed to
decreased general and administrative costs resulting from the absence of
goodwill amortization upon adoption of SFAS 142 and cost-cutting measures,
offset in part by increased research and development expenses.

EBITDA. Earnings before interest, income taxes, depreciation and amortization
(EBITDA)1 for the first quarter of fiscal year 2003 were $9.4 million, or
15.3% of sales, compared to $7.5 million, or 11.3% of sales, for the first
quarter of fiscal year 2002. This increase in EBITDA can be attributed
primarily to the improvement in gross margins as discussed above.



---

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

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##### Table of Contents



COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

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

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.

Net Income (Loss).Net income was $2.5 million for the first quarter of fiscal
year 2003 compared to a net loss of $1.0 million for the corresponding period
of fiscal year 2002. The increase in the Companys net income from the first
quarter of fiscal year 2002 can be attributed to improved operating income as
discussed above and reduced interest expense resulting from lower outstanding
debt, offset in part by an increase in tax expense resulting from the Companys
return to profitability in fiscal year 2003.

Differences between Holding and CPI. CPIs operating results differ from those
of Holding due to a sale-leaseback transaction between CPI and Holding which
took place in December 2000. In the first quarter of fiscal year 2003, CPIs
income before taxes was $4.2 million, which was approximately $0.2 million
higher than Holdings income before taxes of $4.0 million. As a result of the
sale-leaseback transaction, operating costs for CPI were approximately $0.3
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 on the San
Carlos facility. Interest expense, net, 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 combined with CPIs interest income on a note
receivable from Holding. All other operations data for CPI is consistent with
Holdings operations data for the first quarter of fiscal year 2003.

Financial Condition

The Company generated positive cash flows from operating activities during the
first quarter of fiscal year 2003 as well as each quarter of fiscal year 2002.
Cash flows provided by operating activities for the first quarter of fiscal
year 2003 were $11.0 million, an increase of $1.2 million from the $9.8 million
provided by operating activities during the first quarter of fiscal year 2002.
The incremental positive cash flow was generated primarily from cash generated
from operating earnings, further reductions in inventories and increased
advance payments from customers, offset by decreases in accounts payable.

Investing activities were comprised principally of purchases of property, plant
and equipment totaling $0.3 million for the first quarter of fiscal year 2003.
Purchases of property, plant and equipment were down $0.4 million from $0.7
million in the first quarter of fiscal year 2002. The Company currently
anticipates that capital expenditure requirements for fiscal year 2003 will be
approximately $3.5 million, similar to the amounts spent in fiscal years 2002
and 2001.

Financing activities during the first quarter of fiscal year 2003 were related
to a principal payment of $0.3 million made on the mortgage financing held by
Holding related to the San Carlos facility and debt issuance costs related to
an amendment of the Companys credit facility.

In December 2002, the Company amended its credit facility to increase the
maximum amount of its revolving credit line by $20.0 million (the amount of a
prepaid term loan formerly outstanding under the

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##### Table of Contents



COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

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

same credit facility) from
$41.0 million to $61.0 million and to extend the expiration date from December
22, 2004 to May 31, 2005. The credit facility continues to be secured by
substantially all of the assets of CPI and guaranteed by Holding and all of
CPIs subsidiaries. Availability under the
revolving credit facility continues to be based upon eligible receivables,
machinery and equipment and certain real estate

As of January 3, 2003, the Company had $27.7 million available under its
revolving line of credit.

The following is a summary of certain obligations and commitments of the
Company as of January 3, 2003:

|                                                      |                        |      |                     |        |  |      |       |      |  |            |         |         |  |  |    |    |  |  |          |        |  |  |         |         | 
|----------------------------------------------------- | ---------------------- | ---- | ------------------- | ------ |  | ---- | ----- | ---- |  | ---------- | ------- | ------- |  |  | -- | -- |  |  | -------- | ------ |  |  | ------- | ------- | 
|                                                      |                        |      | Due in Fiscal Years
|                                                      |                        |      |                    
|                                                      |                        |      |                     |        |  |      |       |      |  |            |         |         |  |  |    |    |  |  | 2007 and |        |  |  |        
|(In thousands)                                        |                        | 2003 |                     | 2004   |  | 2005 |       | 2006 |  | Thereafter |         | Total  
|                                                      |                        |      |                     |        |  |      |       |      |  |            |         |        
|Debt obligations,
including capital lease
obligations |                        | $    | 17,518              |        |  |      |      |      |  |            | 100,000 |         |  |  |   |    |  |  |         |        |  |  | 117,518 |        
|Noncancellable operating
leases                       |                        |      | 668                 |        |  |      | 617   |      |  |            | 458     |         |  |  | 89 |    |  |  | 41       |        |  |  | 1,873   |        
|Senior Redeemable
Preferred Stock                     |                        |      |                    |        |  |      |      |      |  |            |        |         |  |  |   |    |  |  | 28,747   |        |  |  | 28,747  |        
|                                                      |                        |      |                     |        |  |      |       |      |  |            |         |         |  |  |    |    |  |  |          |        |  |  |         |        
|                                                      | Total cash obligations |      | $                   | 18,186 |  |      |       | 617  |  |            |         | 100,458 |  |  |    | 89 |  |  |          | 28,788 |  |  |         | 148,138 | 
|                                                      |                        |      |                     |        |  |      |       |      |  |            |         |         |  |  |    |    |  |  |          |        |  |  |         |        
|Standby letters of credit                             |                        | $    | 2,075               |        |  |      | 2,211 |      |  |            | 11      |         |  |  |   |    |  |  |         |        |  |  | 4,297   |        

Holdings short-term debt includes mortgage financing of $17.5 million that
expires on June 1, 2003. Restrictions in the Senior Subordinated Notes
Indenture and in the Companys credit facility prohibit CPI from distributing
cash to Holding to satisfy this obligation. Management expects to either
refinance this obligation or to enter into a sale or other transaction with
respect to this property.

In connection with the sale of the Companys Solid State Products Division
(SSPD) in September 2002 to KMIC Technology, Inc., a company owned by the
former management of SSPD, the Company was required to provide a $100,000
letter of credit as a partial guarantee for the new companys leased
facilities. The guarantee expires in November 2003.

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 2003. 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.

Generally, there can be no assurance that the combination of cash generated by
operations, borrowing availability from the Companys credit facility and
additional collateral-based financing will be sufficient to meet the Companys
cash requirements. If the Company is unable to satisfy such cash requirements
from these sources, the Company will adopt one or more alternatives, such as
reducing or delaying

-18-



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##### Table of Contents



COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

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

capital expenditures, reducing discretionary costs, and
attempting to negotiate an increase to the Companys borrowing capacity under
its line of credit.

Recent Accounting Pronouncements

In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated
with Exit and Disposal Activities. SFAS 146 requires that a liability for a
cost associated with an exit or disposal activity be recognized and measured
initially at fair value only when the liability is incurred. The provisions of
SFAS No. 146 are effective prospectively for exit or disposal activities
initiated after December 31, 2002. The Company does not expect the adoption of
this statement to have a material effect on the Companys consolidated
financial position or results of operations.

In December 2002, the FASB issued SFAS 148, Accounting for Stock-Based
Compensation  Transition and Disclosure  an Amendment of SFAS 123. SFAS 148
provides additional transition guidance for those entities that elect to
voluntarily adopt the accounting provisions of SFAS 123, Accounting for
Stock-Based Compensation. Since the Company intends to continue to apply the
intrinsic value method of accounting for stock-based compensation, the adoption
of SFAS 148 will not have an effect on its financial condition or results of
operations. However, the Company will provide the additional disclosures
required by SFAS 148 beginning in the second quarter of fiscal year 2003.

Risk Factors

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




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 September 27, 2002, have not changed materially.

-19-



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##### Table of Contents



COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

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




ITEM 4: CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures. Based on their evaluation as
of a date within 90 days of the filing date of this Report, the Companys
principal executive officer and principal financial officer have concluded that
the Companys disclosure controls and procedures (as defined in Rules 13a-14
(c) and 15d-14 (c) under the Securities Exchange Act of 1934, as amended (the
Exchange Act)) are effective to ensure that information required to be
disclosed by the Company in reports that it files or submits under the Exchange
Act is recorded, processed, summarized and reported within the time periods
specified in Securities and Exchange Commission rules and forms.

Changes in internal controls. There were no significant changes in the
Companys internal controls or in other factors that could significantly affect
these controls subsequent to the date of their evaluation. There were no
significant deficiencies or material weaknesses, and therefore there were no
corrective actions taken.

-20-



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##### Table of Contents



COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

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




PART II: OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

None.

ITEM 2: CHANGES IN SECURITIES

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

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

None.

ITEM 5. OTHER INFORMATION.

None.

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

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

|            |  |                                                                                                                                                                                                                                                                                          
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                              
|            |  |                                                                                                                                                                                                                                                                                          
|10.1        |  | Amendment Number One to Loan and Security Agreement by and among CPI as
borrower, the other obligors named as signatories therein, the lenders
that are signatories as lenders, and Foothill Capital Corporation as the
arranger and administrative agent, dated as of December 16, 2002.
|99.1        |  | Certification of the Chief Executive Officer of Holding pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.                                                                                                                        
|99.2        |  | Certification of the Chief Financial Officer of Holding Pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.                                                                                                                        
|99.3        |  | Certification of the Chief Executive Officer of CPI pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.                                                                                                                            
|99.4        |  | Certification of the Chief Financial Officer of CPI pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.                                                                                                                            

(b)  Reports on Form 8-K:

No reports were filed on Form 8-K during the quarter ended January 3, 2003.

-21-



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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 HOLDING
CORPORATION
| |  |                                                       |  |                                                                                                                                   
| |  | By:                                                   |  | /s/ O. Joe Caldarelli                                                                                                             
| |  |                                                       |  |                                                                                                                                   
| |  |                                                       |  | O. Joe Caldarelli
Chief Executive Officer
Date: February 12, 2003                                                                 
| |  |                                                       |  |                                                                                                                                   
| |  | By:                                                   |  | /s/ Joel Littman                                                                                                                  
| |  |                                                       |  |                                                                                                                                   
| |  |                                                       |  | Joel Littman
Chief Financial Officer, Treasurer and Secretary
(Principal Financial and Accounting Officer)
Date: February 12, 2003

-22-



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##### Table of Contents



CERTIFICATION

I, O. Joe Caldarelli, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Communications &
Power Industries Holding Corporation;                                                                                                                                                                                                                  
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                   
|  
|4. |  | The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                      



| | a) |  | designed such disclosure controls and procedures
to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly
during the period in which this quarterly report is being
prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants
disclosure controls and procedures as of a date within 90 days
prior to the filing date of this quarterly report (the
Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this quarterly report our
conclusions about the effectiveness of the disclosure controls
and procedures based on our evaluation as of the Evaluation
Date;                                                                                                                        



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



| | a) |  | all significant deficiencies in the design or
operation of internal controls which could adversely affect
the registrants ability to record, process, summarize and
report financial data and have identified for the registrants
auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves
management or other employees who have a significant role in
the registrants internal controls; and                                                                                                                                        



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

| |  |       |  |                   |  |            |  |                                           
| |  | ----- |  | ----------------- |  | ---------- |  | ------------------------------------------
| |  | Date: |  | February 12, 2003 |  | Signature: |  | /s/ O. Joe Caldarelli                     
| |  |       |  |                   |  |            |  |                                           
| |  |       |  |                   |  |            |  | O. Joe Caldarelli, Chief Executive Officer

-23-



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##### Table of Contents



CERTIFICATION

I, Joel A. Littman, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Communications &
Power Industries Holding Corporation;                                                                                                                                                                                                                  
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                   
|  
|4. |  | The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                      



| | a) |  | designed such disclosure controls and procedures
to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly
during the period in which this quarterly report is being
prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants
disclosure controls and procedures as of a date within 90 days
prior to the filing date of this quarterly report (the
Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this quarterly report our
conclusions about the effectiveness of the disclosure controls
and procedures based on our evaluation as of the Evaluation
Date;                                                                                                                        



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



| | a) |  | all significant deficiencies in the design or
operation of internal controls which could adversely affect
the registrants ability to record, process, summarize and
report financial data and have identified for the registrants
auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves
management or other employees who have a significant role in
the registrants internal controls; and                                                                                                                                        



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

| |  |       |  |                   |  |            |  |                                         
| |  | ----- |  | ----------------- |  | ---------- |  | ----------------------------------------
| |  | Date: |  | February 12, 2003 |  | Signature: |  | /s/ Joel A. Littman                     
| |  |       |  |                   |  |            |  |                                         
| |  |       |  |                   |  |            |  | Joel A. Littman, Chief Financial Officer

-24-



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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 12, 2003                                                                 
| |  |                                         |  |                                                                                                                                   
| |  | By:                                     |  | /s/ Joel Littman                                                                                                                  
| |  |                                         |  |                                                                                                                                   
| |  |                                         |  | Joel Littman
Chief Financial Officer, Treasurer and Secretary
(Principal Financial and Accounting Officer)
Date: February 12, 2003

-25-



---



##### Table of Contents



CERTIFICATION

I, O. Joe Caldarelli, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Communications &
Power Industries, Inc.;                                                                                                                                                                                                                                
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                   
|  
|4. |  | The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                      



|
|
|
|
|
|
|



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



| | a) |  | all significant deficiencies in the design or
operation of internal controls which could adversely affect
the registrants ability to record, process, summarize and
report financial data and have identified for the registrants
auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves
management or other employees who have a significant role in
the registrants internal controls; and                                                                                                                                        



|7. |  | The registrants other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |       |  |                   |  |            |  |                                           
| |  | ----- |  | ----------------- |  | ---------- |  | ------------------------------------------
| |  | Date: |  | February 12, 2003 |  | Signature: |  | /s/ O. Joe Caldarelli                     
| |  |       |  |                   |  |            |  |                                           
| |  |       |  |                   |  |            |  | O. Joe Caldarelli, Chief Executive Officer

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##### Table of Contents



CERTIFICATION

I, Joel A. Littman, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Communications &
Power Industries, Inc.;                                                                                                                                                                                                                                
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;                   
|  
|4. |  | The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                      



| | a) |  | designed such disclosure controls and procedures
to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly
during the period in which this quarterly report is being
prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | evaluated the effectiveness of the registrants
disclosure controls and procedures as of a date within 90 days
prior to the filing date of this quarterly report (the
Evaluation Date); and                                                                                                  
|
| | c) |  | presented in this quarterly report our
conclusions about the effectiveness of the disclosure controls
and procedures based on our evaluation as of the Evaluation
Date;                                                                                                                        



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



| | a) |  | all significant deficiencies in the design or
operation of internal controls which could adversely affect
the registrants ability to record, process, summarize and
report financial data and have identified for the registrants
auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | b) |  | any fraud, whether or not material, that involves
management or other employees who have a significant role in
the registrants internal controls; and                                                                                                                                        



|7. |  | The registrants other certifying officer and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |       |  |                   |  |            |  |                                         
| |  | ----- |  | ----------------- |  | ---------- |  | ----------------------------------------
| |  | Date: |  | February 12, 2003 |  | Signature: |  | /s/ Joel A. Littman                     
| |  |       |  |                   |  |            |  |                                         
| |  |       |  |                   |  |            |  | Joel A. Littman, Chief Financial Officer

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##### Table of Contents






EXHIBIT INDEX

|            |  |                                                                                                                                                                                                                                                                                          
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                              
|            |  |                                                                                                                                                                                                                                                                                          
|10.1        |  | Amendment Number One to Loan and Security Agreement by and among CPI as
borrower, the other obligors named as signatories therein, the lenders
that are signatories as lenders, and Foothill Capital Corporation as the
arranger and administrative agent, dated as of December 16, 2002.
|99.1        |  | Certification of the Chief Executive Officer of Holding pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.                                                                                                                        
|99.2        |  | Certification of the Chief Financial Officer of Holding Pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.                                                                                                                        
|99.3        |  | Certification of the Chief Executive Officer of CPI pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.                                                                                                                            
|99.4        |  | Certification of the Chief Financial Officer of CPI pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.