##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM 10-K
 þ
    
    Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the fiscal year ended December 31, 2005
 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 0-11685
 
 Radyne Corporation
 
 
 Delaware
    
    11-2569467(State or other jurisdiction of incorporation or organization)
    
    (I.R.S. Employer Identification No.)3138 East Elwood Street, Phoenix, Arizona
    
    85034(Address of Principal Executive Offices)
    
    (Zip Code)
 Registrants telephone number including area code: (602) 437-9620
Securities Registered Under Section 12(b) of the Exchange Act: None
Securities Registered Under Section 12(g) of the Exchange Act:
Common Stock, $.001 Par Value
 o þ
 o þ
 þ o
 o
  o þ o
 o þ
   DOCUMENTS INCORPORATED BY REFERENCE
 Portions of the Registrants Proxy Statement relating to its 2006 Annual Meeting of
Stockholders are incorporated by reference into Part III of this Form 10-K . Annual Meeting of
Stockholders to be held on June 7, 2006 at 2 p.m. in the Phoenix office.




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##### 



Table of Contents
 PART IItem 1.
    
    Business
    
    
    3Item 1A.
    
    Risk Factors
    
    
    11Item 1B.
    
    Unresolved Staff Comments
    
    
    14Item 2.
    
    Properties
    
    
    14Item 3.
    
    Legal Proceedings
    
    
    15Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    15PART IIItem 5.
    
    Market for Companys Common Equity and Related Shareholder Matters
    
    
    16Item 6.
    
    Selected Financial Data
    
    
    18Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operation
    
    
    19Item 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    29Item 8.
    
    Financial Statements and Supplementary Data
    
    
    29Item 9.
    
    Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
    
    
    51Item 9A.
    
    Controls and Procedures
    
    
    51Item 9B.
    
    Other Information
    
    
    53PART IIIItem 10.
    
    Directors and Executive Officers of the Registrant
    
    
    54Item 11.
    
    Director and Executive Compensation
    
    
    54Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    54Item 13.
    
    Certain Relationships and Related Transactions
    
    
    55Item 14.
    
    Principal Accounting Fees and Services
    
    
    55PART IVItem 15.
    
    Exhibits and Financial Statement Schedules
    
    
    56EX-3.2EX-21.1EX-23.1EX-31.1EX-31.2EX-32.1
  2




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Part I
 
 Item 1. Business
 Development of Business
 History of Business
  Recent Acquisition
  Current Business
   Ø
    
    Satellite modems used as the backbone for major U.S. Department of Defense and Homeland
Security communications systemsØ
    
    HDTV encoders and decoders for a major American television network for use during their
coverage of the 2008 Olympics in Beijing and the National Basketball AssociationØ
    
    Satellite backhaul systems for GSM mobile phone providers in India and ChinaØ
    
    Tri-band satellite amplifiers for a major U.S. satellite communications integrator that
is used in a mobile satellite program for the U.S. militaryØ
    
    DMD20 satellite modem, frequency converters, and redundancy switches for a large
expansion project by a leading telecom providers in the Asia Pacific regionØ
    
    Major expansion of U.S. government satellite monitoring network.Ø
    
    DataPath, a premier U.S. government supplier, with DMD20s to use in its DKET and TRACKX productsØ
    
    Solid-State-Block-Upconverters for major U.S. satellite communications integrator
 3




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Ø
    
    Satellite products for disaster recovery projects including the Hurricane Katrina recovery effort
 Financial Information about Segments
 , note 12  Segment Reporting
 Description of Business
 Industry Overview
    Ø
    
    Fixed Satellite.Fixed satellite services provides point-to-point and
point-to-multipoint satellite communication of voice, data, and video between fixed
ground-based earth stations. The introduction of high-power satellites has created new
opportunities within the fixed satellite services segment by enabling the use of smaller,
less costly earth stations for applications such as corporate data networks, Intranet
access, and rural telephony.Ø
    
    Mobile Satellite.Mobile satellite services operate between fixed earth stations and
mobile earth stations, or terminals. These services provide mobile voice and data
transmission capability on land, sea, and air. New mobile satellite services are being
developed to bring more extensive coverage and circuit reliability for mobile telephone and
data services to underserved populations throughout the world. Further, there is increased
demand for live origination of broadcast television programming, such as live coverage of
news, sports or cultural events that employ mobile satellite services for transmission from
the venue to television studios.Ø
    
    Direct Broadcast.Direct broadcast services provide a direct transmission link from
high-power satellites to customers over a wide geographic area. This includes
direct-to-home television and radio services, distribution of television and radio
programming to local affiliates direct broadcast data services, and Internet access.
 Industry Growth and Market Opportunity
  Worldwide Demand for Communications Services.
 4




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Deregulation and Privatization.
 Cost-Effectiveness of Satellite Communications.
 Technological Advances.
 Government and Military.
 Television Video Distribution
 Radio Broadcasts.
 Private Networks.
 Internet Communications.
 5




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##### Table of Contents



Products
   Ø
    
    Satellite Electronics
 Ø
    
    Modems  Satellite modems transform user information, such as data, video or audio,
into a signal that can be further processed for transmission via satellite. We produce
several varieties of satellite modems, which operate at different speeds using a variety
of modulation techniques. Featured products include: the DMD20  Universal Satellite
Modem, the DMD2050  MIL-STD Compliant Universal Satellite Modem, and the DMD15 
Universal IBS/IDR Satellite Modem.Ø
    
    Frequency Converters/Transceivers  Each satellite is configured to receive or transmit
a particular radio wave pattern, otherwise called a frequency band, which is typically
different from the frequency of the satellite modem. Frequency converters are used to
alter the input/output of a satellite modem into a wave pattern that can be interpreted by
the particular satellite being used in the satellite system to relay communication
signals. The Company currently markets a variety of converters used to transmit and
receive signals over satellites in the commercial satellite frequency ranges of C-Band,
Ka-Band, and Ku-Band. We also produce a redundancy control unit, which will switch a
satellite system to stand-by equipment in the event of a malfunction in a satellite modem
or converter. Such redundancy is a critical element for many of our customers, such as
rural or international telephony networks, that strive to provide uninterrupted satellite
communications services to their customers. Featured products include: SFC-1450 Ku-Band
up-converter and SFC-1275 KuBand down-converter.Ø
    
    Earth Stations  Our earth stations typically consist of several components, including
a satellite modem, a frequency converter, a transceiver, a transmitter, redundancy
switches and an antenna. Earth stations serve as an essential link in transmitting signals
to and receiving signals from satellites. Our earth stations enable users to program power
levels and operating parameters in order to compensate for low signal levels, extreme
weather conditions, and other variables. We design and manufacture our earth stations
using components that we manufacture as well as components that we obtain from other
manufacturers. Featured products include: the DMD20LB/ST  Satellite Earth Station.
 Ø
    
    Broadcast Equipment
 Ø
    
    Standard and High Definition TV Encoders/Decoders  TV encoders convert analog signals
to digital format and compress the signal to fit over available bandwidth. Decoders are
used to convert the compressed signal back into a form that can be viewed and edited.
Encoders are used in satellite, cable and terrestrial applications. Many U.S. broadcasters
rely on encoders to provide news/live event gathering and direct to home service. The
Company offers a complete product line of SDTV and HDTV encoders for professional
applications. Both models feature MPEG-2 video encoding capability and audio compression.
The HDTV encoder features a monitor screen on its faceplate which enables the technician
to monitor actual unit performance in real time. Featured products include: the HE4000 
High and Standard Definition Encoder, the SE4000  DVB MPEG-2 Contribution Encoder, the
HD4000  High Definition Contribution Decoder, and the TDR4022
 DVB Professional
Integrated Receiver/Decoder.Ø
    
    High-Speed and DVB Modems  Modulators and demodulators are similar to modems as they
transform a signal for transmission to a satellite and then, at the receiving station,
convert the signal back into a form usable as part of the broadcast data stream. Featured
products include: the DM240  Digital Video Broadcast Modulator and the DD240   Digital
Video Broadcast Demodulator.Ø
    
    Cable and Microwave  Our cable modulators are used primarily in the distribution of
digital video for use by cable television distributors and in HDTV. The design of our
cable modulators allows for the transmission of digital video on
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terrestrial, broadband cable and enables system operators to manage and control available
bandwidth. Our microwave modems are used with point-to-point microwave radios and usually
feature high-speed and multidata-rate capabilities that provide a complete
point-to-multipoint communication link that facilitates microwave link upgrades. For
example, television stations use our microwave modems to transmit audio and video over a
microwave link to and from digital newsgathering trucks. Featured products include: the
MM200  Terrestrial Microwave Modem and the QAM256  Digital Video Modulator.
        Competition
    Ø
    
    An experienced management group, which has extensive technological and
engineering expertise and excellent customer relationships. The members of our management
team average over 20 years experience in the satellite communications industry.Ø
    
    A broad line of well-known, well-respected, off-the-shelf, state-of-the-art
equipment that enables us to meet our
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customers requirementsØ
    
    Our ability to custom design products for our customers special applications
and to provide a one-stop shopping option to our customers.Ø
    
    Equipment that meets or exceeds all applicable military and government
standards including the first satellite modem to obtain DISA certification, the DMD-20.Ø
    
    The ability to meet the complex satellite ground communications systems
requirements of our customers in diverse political, economic, and regulatory environments
in various locations around the world.Ø
    
    Our worldwide sales and service organization with the expertise to successfully
conduct business internationally through sales and service offices staffed by our employees
in most of our major markets throughout the world, including Beijing, Singapore, London,
Jakarta, and Amsterdam.Ø
    
    The ability to offer a full line of satellite ground equipment with the
inclusion of Xicom.
 Strategy
  Target Providers of Fixed, Mobile, and Direct Broadcast Communications Services in Developing
Markets.
 Pursue Military, Homeland Defense and Other US Government Markets.
 Capitalize On Our Existing Technology Leadership.
 Develop New Products to Exploit New Market Opportunities.
 Provide High-Margin Customized Products to Niche Markets.
 Continued Emphasis on Operational Efficiency and Financial Performance.
 Pursue Strategic Acquisitions.
 Research and Development
 8




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Item 7.  Managements Discussion and Analysis of Financial Condition and Results of
Operations
 Sales and Marketing
   www.radn.com www.xicomtech.com
  Customers
   9




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Years ended December 31,Region
    
    2005
    
    2004
    
    2003Asia
    
    
    16
    %
    
    
    21
    %
    
    
    21
    %Africa/Middle East
    
    
    7
    %
    
    
    10
    %
    
    
    8
    %Latin America
    
    
    2
    %
    
    
    2
    %
    
    
    2
    %Europe
    
    
    15
    %
    
    
    13
    %
    
    
    16
    %Canada
    
    
    1
    %
    
    
    1
    %
    
    
    1
    %Total Foreign Sales
    
    
    41
    %
    
    
    47
    %
    
    
    48
    %Domestic
    
    
    59
    %
    
    
    53
    %
    
    
    52
    %100
    %
    
    
    100
    %
    
    
    100
    %
  note 10  Significant Customers and Foreign and Domestic Sales
 Manufacturing
     Intellectual Property
   10




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Employees
  Available Information
 www.radn.com www.xicomtech.com www.sec.gov
 
 Item 1A. Risk Factors
  We Have A History Of Inconsistent Operating Results, And Could Suffer A Reduction In Profitability
and Even Losses In The Future.
  Our Quarterly Operating Results Have Fluctuated Significantly In The Past, And We Anticipate That
They Could Do So In The Future, Which Could Adversely Affect Our Stock Price.
  Ø
    
    demand for our products;Ø
    
    introduction of new or enhanced products by us or our competitors;Ø
    
    growth of demand for Internet-based products and services in developing countries;Ø
    
    timing of significant marketing programs we may implement;Ø
    
    extent and timing of hiring additional personnel;Ø
    
    competitive conditions in our industry; andØ
    
    general economic conditions in the United States and abroad.
  We Depend On International Sales, Which Could Cause Our Sales Levels To Be Volatile.
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Ø
    
    changing regulatory requirements;Ø
    
    fluctuations in the exchange rate for the United States dollar;Ø
    
    the availability of export licenses;Ø
    
    political and economic instability;Ø
    
    difficulties in staffing and managing foreign operations, tariffs and other trade barriers;Ø
    
    changes in diplomatic and trade relationships;Ø
    
    complex foreign laws and treaties;Ø
    
    acts of terrorism; andØ
    
    difficulty of collecting foreign accounts receivable.
  We Depend On Developing Markets And Their Uncertain Growth Potential Could Result In A Reduction In
Revenues And Even Losses.
  The Sales And Implementation Cycles for our Products are Long and Continue to Increase, and We May
Incur Substantial, Non-Recoverable Expenses or Devote Significant Resources To Sales That May Not
Occur When Anticipated, If At All
  Competition In Our Industry Is Intense And Can Lead To Reduced Sales And Market Share.
   Our Products May Become Obsolete Due To Rapid Technological Change.
 12




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Our Research And Development Efforts Are Costly And The Results Are Uncertain, Which May Reduce Our
Profitability And Could Result In Losses.
  Continued Growth Through Acquisition Could Prove Unsuccessful And Strain Our Personnel And Systems
And Divert Our Resources.
  Ø
    
    difficulty of assimilating the operations and personnel of acquired businesses or
products due to unforeseen circumstances;Ø
    
    the necessity to attract, train, motivate, and manage a significantly larger number of employees;Ø
    
    the use of a disproportionate amount of our managements attention or our resources;Ø
    
    substantial cash expenditures, potentially dilutive issuances of equity securities, the
incurrence of additional debt and contingent liabilities, and amortization expenses related
to intangible assets;Ø
    
    potential disruption of our ongoing business;Ø
    
    our inability, once integrated, to achieve comparable levels of revenues, profitability
or productivity as our existing business or otherwise perform as expected; andØ
    
    our potential inability to obtain the desired financial and strategic benefits from the
acquisition or investment.
  Our Ability To Use Our Net Operating Loss Carryforwards May Be Limited By The Ownership Change
Caused By The Sale Of All Of The Shares Of Our Common Stock Held By Our Majority Stockholders.
  Our Competitive Position Relies Heavily On Our Proprietary Technology And Intellectual Property.
 13




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We Depend Upon Certain Suppliers And Subcontractors, The Loss Of Which Could Cause An Interruption
In The Production Of Our Products.
  The Transition and Loss Of The Services Of Certain Members Of Our Senior Management Or The
Inability To Attract Or Retain Additional Technical Personnel Could Impair Our Ability To Conduct
And Expand Our Business.
  
 Item 1B. Unresolved Staff Comments
  
 Item 2. Properties
  14




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Item 3. Legal Proceedings
  
 Item 4. Submission of Matters to a Vote of Security Holders
  15




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PART II
 
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
 Market for Common Stock
  High
    
    Low2005First quarter
    
    $
    9.36
    
    
    $
    7.38Second quarter
    
    $
    9.20
    
    
    $
    7.24Third quarter
    
    $
    11.43
    
    
    $
    8.91Fourth quarter
    
    $
    15.17
    
    
    $
    10.272004First quarter
    
    $
    12.90
    
    
    $
    7.18Second quarter
    
    $
    10.34
    
    
    $
    7.77Third quarter
    
    $
    7.95
    
    
    $
    6.53Fourth quarter
    
    $
    7.90
    
    
    $
    7.03
 Holders of Record
  Dividends
  Unregistered Sales of Equity Securities and Use of Proceeds
  Warrants
  Issuer Purchases of Equity Securities
  16




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Maximum numberTotal number of
    
    
    (or approximateshares
    
    
    dollar value) ofTotal
    
    
    
    
    
    
    purchased as
    
    
    shares that maynumber of
    
    
    Average
    
    
    part of a publicly
    
    
    yet be purchasedshares
    
    
    price paid
    
    
    announced plan
    
    
    under the plan orPeriod
    
    purchased
    
    
    per share
    
    
    or program
    
    
    programBeginning dollar value
available to repurchase
shares as of June 4, 2004
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    10,000,000Total 2004 Purchases
    
    
    402,600
    
    
    $
    6.93
    
    
    
    402,600
    
    
    $
    7,210,000January 1-31, 2005
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    7,210,000February 1-28, 2005
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    7,210,000March 1-31, 2005
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    7,210,000April 1-31, 2005
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    7,210,000May 1-31, 2005
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    7,210,000June 1-30, 2005
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    7,210,000402,600
    
    
    $
    6.93
    
    
    
    402,600
 Equity Compensation Plans
  17




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Item 6. Selected Financial Data
 Item 7.  Managements Discussion and Analysis of Financial Condition and Results
of Operation
 Years Ended December 31,(in thousands, except per share data)2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001CONSOLIDATED STATEMENT OF OPERATIONS DATA:Net sales
    
    $
    103,263
    
    
    $
    56,578
    
    
    $
    57,991
    
    
    $
    57,662
    
    
    $
    68,471Cost of sales
    
    
    57,251
    
    
    
    26,435
    
    
    
    31,640
    
    
    
    38,041
    
    
    
    39,559Inventory write-down
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    431
    
    
    
    Gross profit
    
    
    46,012
    
    
    
    30,143
    
    
    
    26,351
    
    
    
    19,190
    
    
    
    28,912Selling, general and administrative
    
    
    21,777
    
    
    
    15,420
    
    
    
    13,559
    
    
    
    13,471
    
    
    
    15,307Research and development
    
    
    8,824
    
    
    
    5,330
    
    
    
    6,294
    
    
    
    8,665
    
    
    
    10,812Asset impairment charge
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    995
    
    
    
    Restructuring charge
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,102
    
    
    
    Total operating expenses
    
    
    30,601
    
    
    
    20,750
    
    
    
    19,853
    
    
    
    24,233
    
    
    
    26,119Earnings (loss) from operations
    
    
    15,411
    
    
    
    9,393
    
    
    
    6,498
    
    
    
    (5,043
    )
    
    
    2,793Interest expense
    
    
    252
    
    
    
    29
    
    
    
    28
    
    
    
    62
    
    
    
    54Interest and other income
    
    
    (665
    )
    
    
    (492
    )
    
    
    (254
    )
    
    
    (236
    )
    
    
    (523
    )Earnings (loss) before income taxes
and cumulative effect of change in accounting principle
    
    
    15,824
    
    
    
    9,856
    
    
    
    6,724
    
    
    
    (4,869
    )
    
    
    3,262Income taxes (benefit)
    
    
    5,138
    
    
    
    (3,644
    )
    
    
    2,599
    
    
    
    (196
    )
    
    
    1,326Earnings (loss) before cumulative
effect of change in accounting principle
    
    
    10,686
    
    
    
    13,500
    
    
    
    4,125
    
    
    
    (4,673
    )
    
    
    1,936Cumulative effect of change in accounting principle
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,281
    
    
    
    Net earnings (loss)
    
    $
    10,686
    
    
    $
    13,500
    
    
    $
    4,125
    
    
    $
    (8,954
    )
    
    $
    1,936Earnings (loss) per share:Basic
    
    $
    0.63
    
    
    $
    0.83
    
    
    $
    0.27
    
    
    $
    (0.59
    )
    
    $
    0.13Diluted
    
    $
    0.60
    
    
    $
    0.79
    
    
    $
    0.26
    
    
    $
    (0.59
    )
    
    $
    0.13Weighted average number of common shares outstandingBasic
    
    
    16,838
    
    
    
    16,357
    
    
    
    15,488
    
    
    
    15,180
    
    
    
    14,944Diluted
    
    
    17,700
    
    
    
    17,136
    
    
    
    15,718
    
    
    
    15,180
    
    
    
    15,412
 December 31,(in thousands)2005
    
    2004
    
    2003
    
    2002
    
    2001CONSOLIDATED BALANCE SHEET DATA:Cash and cash equivalents
    
    $
    16,928
    
    
    $
    39,300
    
    
    $
    30,130
    
    
    $
    16,230
    
    
    $
    7,211Working capital
    
    
    41,169
    
    
    
    53,432
    
    
    
    41,642
    
    
    
    34,252
    
    
    
    36,187Total assets
    
    
    100,628
    
    
    
    65,416
    
    
    
    50,609
    
    
    
    44,407
    
    
    
    53,241Long-term obligations
    
    
    4,961
    
    
    
    430
    
    
    
    475
    
    
    
    849
    
    
    
    912Total liabilities
    
    
    22,988
    
    
    
    7,222
    
    
    
    6,991
    
    
    
    7,118
    
    
    
    7,893Stockholders equity
    
    
    77,640
    
    
    
    58,194
    
    
    
    43,618
    
    
    
    37,288
    
    
    
    45,347
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Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Overview
        Critical Accounting Policies and Estimates
  Management believes the Companys most critical accounting policies and estimates used in the
preparation of its consolidated financial statements relate to:
 
    
    Revenue Recognition.Revenues from product sales are recognized upon the actual shipment of
product and transfer of the risk of ownership from us, or our contract manufacturers, to our
customers in accordance with SEC Staff Bulletins No. 104
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##### Table of Contents



Revenue Recognitionand No. 101, Revenue Recognition in Financial Statements,as amended. We do
not sell through distributors and we do not use consignment resellers as a method of selling our
products. Revenue from services principally consists of sales related to services for
installation and integration of satellite earth stations and video and microwave hub stations and
are recognized at the time the services are performed. We consider products and services as
separate units of accounting under EITF 00-21, Revenue Arrangements with Multiple Deliverables.
Revenue is allocated to the separate units of accounting based on their relative fair values.
 
    
    Stock Compensation.For 2005, the Company elected to follow
Accounting Principles Board Opinion No. 25, Accounting for Stock
Issued to Employees(APB 25) and related interpretations in
accounting for its employee stock options and to adopt the
disclosure only alternative treatment under Statement of
Financial Accounting Standards No. 123, Accounting for Stock-Based
Compensation(SFAS 123). Under SFAS 123, deferred compensation
is recorded at the fair value of the stock on the date of the
option grant. The deferred compensation is amortized over the
vesting period of the option.In December 2004, the Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting Standards No.
123 (revised 2004), Share-Based Payment(SFAS 123(R)). SFAS
123(R) is a revision of SFAS 123 and supersedes APB 25. Among
other items, SFAS 123(R) eliminates the use of APB 25 and the
intrinsic value method of accounting, and requires companies to
recognize the cost of employee services received in exchange for
awards of equity instruments, based on the grant date fair value
of those awards. The Company has adopted SFAS 123(R) effective
January 1, 2006.
 
    
    Valuation of Receivables. We maintain an allowance for doubtful
accounts for estimated losses resulting from the inability of our
customers to make required payments. Bad debt reserves are
recorded based upon historic default averages as well as through
the creation of reserves established for specific customers deemed
marginal in their ability to pay based upon factors known at that
time. In general, if the financial condition of a customer
deteriorates, resulting in an impairment of that customers
ability to make payments, additional allowances may be required.
 
    
    Valuation and Impairment of Intangible Assets.In assessing our
goodwill and other intangible assets for impairment in accordance
with Statement of Financial Accounting Standards No. 142,
Goodwill and Other Intangible Assets, (SFAS 142) we are required
to make significant assumptions about the future cash flows,
overall performance, identity and allocation and valuation of the
assets, including goodwill and other intangibles of our reporting
units. Market prices are not readily available for certain
businesses, unique physical assets, and most intangible assets to
be evaluated in goodwill impairment tests. Therefore, we estimate
fair values using estimating techniques and assumptions that are
matters of judgment. During 2005, as a result of the Xicom
acquisition, we recorded goodwill of approximately $30.3 million
on our balance sheet. We applied the provisions of SFAS 142 and
determined that there was no impairment.
 
    
    Warranty Liability.We provide limited warranties on certain of
our products and systems for periods generally not exceeding two
years. Estimated warranty costs for potential product liability
and warranty claims based on our claim experience are accrued as
cost of sales at the time revenue is recognized. While we engage
in extensive product quality programs and processes, including
actively monitoring and evaluating the quality of our vendors, our
warranty liability is affected by product failure rates and
material usage and service delivery costs incurred in correcting
product failures. Should actual product failure rates, material
usage or service delivery costs differ from the Companys present
estimates, additional warranty liabilities may be required.
 
    
    Valuation of Inventories.Inventories, consisting of satellite
modems and related products, are valued at the lower of cost
(first-in, first-out) or market. Our inventories include
high-technology components and systems sold into rapidly changing
and competitive markets, accordingly, our inventories are subject
to technological obsolescence. We evaluate inventories for excess,
obsolescence or other factors that may render inventories
unmarketable at normal margins. Write-downs are recorded so that
inventories reflect the approximate net realizable value.
Assumptions about future demand, market conditions and decisions
to discontinue certain product lines can impact the decision to
write down inventories. If assumptions about future demand change
or actual market conditions are less favorable than those
projected by management, additional inventory write-downs may be
required. If market conditions were to improve, we do not reverse
previously recorded downward adjustments. We monitor the
subsequent sale of impaired inventory and the amounts subsequently
sold are immaterial to our gross margin. In any case, actual
amounts could be different from those estimated.
 
    
    Accounting for Income Taxes. Managements judgment is required in
determining the provision for income taxes, deferred tax assets
and liabilities and the valuation allowance recorded against net
deferred tax assets. We consider historic levels of income,
expectations and risk associated with estimates of future taxable
income and ongoing prudent and feasible tax planning strategies in
assessing these tax-related balances.
 20




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##### Table of Contents



Results of Operations
 Sales:
   Years ended December 31,(in thousands)2005
    
    2004
    
    Change
    
    %Sales
    
    $
    103,263
    
    
    $
    56,578
    
    
    $
    46,685
    
    
    
    83
    %
 Bookings and Backlog
  Years ended December 31,(in thousands)2004
    
    2003
    
    Change
    
    %Sales
    
    $
    56,578
    
    
    $
    57,991
    
    
    
    ($1,413
    )
    
    
    -2
    %
  Cost of sales:
   Years ended December 31,(in thousands)2005
    
    2004
    
    Change
    
    %Cost of Sales
    
    $
    57,251
    
    
    $
    26,435
    
    
    $
    30,816
    
    
    
    117
    %Gross Profit
    
    $
    46,012
    
    
    $
    30,143
    
    
    $
    15,869
    
    
    
    53
    %Gross Margin %
    
    
    45
    %
    
    
    53
    %
    
    
    -8
    %
    
    
    -15
    %
  21




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##### Table of Contents



Recent Accounting Pronouncements
  Years ended December 31,(in thousands)2004
    
    2003
    
    Change
    
    %Cost of Sales
    
    $
    26,435
    
    
    $
    31,640
    
    
    
    ($5,205
    )
    
    
    -16
    %Gross Profit
    
    $
    30,143
    
    
    $
    26,351
    
    
    
    $3,792
    
    
    
    14
    %Gross Margin %
    
    
    53
    %
    
    
    45
    %
    
    
    8
    %
    
    
    17
    %
  Selling, General, and Administrative Costs:
   Years ended December 31,(in thousands)2005
    
    2004
    
    Change
    
    %Selling, general &
administrative
    
    $
    21,777
    
    
    $
    15,420
    
    
    $
    6,357
    
    
    
    41
    %
 Recent Accounting Pronouncements
  22




---



##### Table of Contents



Years ended December 31,(in thousands)2004
    
    2003
    
    Change
    
    %Selling, general & administrative
    
    $
    15,420
    
    
    $
    13,559
    
    
    $
    1,861
    
    
    
    14
    %
  Research and Development:
   Years ended December 31,(in thousands)2005
    
    2004
    
    Change
    
    %Research & development
    
    $
    8,824
    
    
    $
    5,330
    
    
    $
    3,494
    
    
    
    66
    %
 Recent Accounting Pronouncements
  Years ended December 31,(in thousands)2004
    
    2003
    
    Change
    
    %Research & development
    
    $
    5,330
    
    
    $
    6,294
    
    
    
    ($964
    )
    
    
    -15
    %
  Interest Expense:
 note 7  Financial
Instruments
 Interest and Other Income:
  23




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##### Table of Contents



Liquidity and Capital Resources
 Income Taxes (Benefit):
     Net Earnings:
   Years ended December 31,(in thousands)2005
    
    2004
    
    Change
    
    %Net earnings
    
    $
    10,686
    
    
    $
    13,500
    
    
    ($
    2,814
    )
    
    
    -21
    %Earnings per diluted share
    
    $
    0.60
    
    
    $
    0.79
    
    
    ($
    0.19
    )
    
    
    -24
    %
 Income Taxes Item 1A.  Risk Factors
 24




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##### Table of Contents



Years ended December 31,(in thousands)2004
    
    2003
    
    Change
    
    %Net earnings
    
    $
    13,500
    
    
    $
    4,125
    
    
    $
    9,375
    
    
    
    227
    %Earnings per diluted share
    
    $
    0.79
    
    
    $
    0.26
    
    
    $
    0.53
    
    
    
    204
    %
  Bookings and Backlog:
   Years ended December 31,(in thousands)2005
    
    2004
    
    Change
    
    %Bookings
    
    $
    107,180
    
    
    $
    57,871
    
    
    $
    49,309
    
    
    
    85
    %Ending Backlog
    
    $
    32,246
    
    
    $
    9,585
    
    
    $
    22,661
    
    
    
    236
    %
   Years ended December 31,(in thousands)2004
    
    2003
    
    Change
    
    %Bookings
    
    $
    57,871
    
    
    $
    51,900
    
    
    $
    5,971
    
    
    
    12
    %Ending Backlog
    
    $
    9,585
    
    
    $
    8,000
    
    
    $
    1,585
    
    
    
    20
    %
  Liquidity and Capital Resources
  25




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##### Table of Contents



Operating Activities:
     Investing Activities:
  Financing Activities:
  Issuer Purchases of Equity Securities
 note 7  Financial Instruments
 26




---



##### Table of Contents



Contractual Obligations and Commitments
  Payments due by periodContractual Obligations and Commitments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    More than 5(in thousands)
    
    Total
    
    Less than 1 year
    
    1-3 years
    
    3-5 years
    
    yearsOperating leases
    
    $
    6,381
    
    
    $
    2,692
    
    
    $
    3,112
    
    
    $
    577
    
    
    $
    Purchase obligations
    
    
    25,292
    
    
    
    23,408
    
    
    
    729
    
    
    
    1,155
    
    
    
    Other long-term liabilities
    
    
    4,796
    
    
    
    1,046
    
    
    
    3,750
    
    
    
    
    
    
    
    Total
    
    $
    36,469
    
    
    $
    27,146
    
    
    $
    7,591
    
    
    $
    1,732
    
    
    $
    
 Impact of Inflation
  Recent Accounting Pronouncements
 Statement of
Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment
     27




---



##### Table of Contents



Accounting for Conditional Asset
Retirement Obligationsan interpretation of FASB Statement No. 143 conditional asset retirement obligation Accounting for Asset
Retirement Obligations
    Disclosure Concerning Forward-Looking Statements
   28




---



##### Table of Contents



Item 7A. Quantitative and Qualitative Disclosures About Market Risk
 Liquidity and Capital
Resources note 7  Financial
Instruments
 
 Item 8. Financial Statements and Supplementary Data
 
 29




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
    Internal ControlIntegrated Framework
 
 30




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##### Table of Contents



Radyne Corporation
Consolidated Balance Sheets
December 31, 2005 and 2004
(in thousands, except share data)
 December 31,2005
    
    
    2004AssetsCurrent assets:Cash and cash equivalents
    
    $
    16,928
    
    
    $
    39,300Accounts receivable  trade, net of allowance for
doubtful accounts of $804 and $350, respectively
    
    
    20,337
    
    
    
    9,728Inventories
    
    
    18,057
    
    
    
    8,132Deferred tax assets
    
    
    3,010
    
    
    
    2,218Prepaid expenses and other assets
    
    
    864
    
    
    
    846Total current assets
    
    
    59,196
    
    
    
    60,224Goodwill
    
    
    30,333
    
    
    
    Intangibles
    
    
    6,706
    
    
    
    Deferred tax assets, net
    
    
    
    
    
    
    3,445Property and equipment, net
    
    
    4,098
    
    
    
    1,593Other assets
    
    
    295
    
    
    
    154Total Assets
    
    $
    100,628
    
    
    $
    65,416Liabilities and Stockholders EquityCurrent liabilities:Accounts payable
    
    $
    5,054
    
    
    $
    1,566Accrued expenses
    
    
    9,045
    
    
    
    4,835Customer advance payments
    
    
    2,319
    
    
    
    149Current portion of long-term debt
    
    
    1,000
    
    
    
    Income taxes payable
    
    
    609
    
    
    
    242Total current liabilities
    
    
    18,027
    
    
    
    6,792Long-term debt, less current portion
    
    
    3,750
    
    
    
    Deferred tax liability
    
    
    752
    
    
    
    Deferred rent
    
    
    413
    
    
    
    284Accrued stock option compensation
    
    
    46
    
    
    
    146Total liabilities
    
    
    22,988
    
    
    
    7,222Commitments and contignencies (notes 8 and 16)Stockholders equity:Common stock; $.001 par value  authorized,
50,000,000 shares; issued and outstanding,
17,334,467 shares and 16,232,999 shares,
respectively
    
    
    17
    
    
    
    16Additional paid-in capital
    
    
    63,171
    
    
    
    54,414Retained earnings
    
    
    14,450
    
    
    
    3,764Other comprehensive income
    
    
    2
    
    
    
    Total stockholders equity
    
    
    77,640
    
    
    
    58,194Total Liabilities and Stockholders Equity
    
    $
    100,628
    
    
    $
    65,416
  31




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##### Table of Contents



Radyne Corporation
Consolidated Statements of Operations
For the Years Ended December 31, 2005, 2004 and 2003
(in thousands, except per share data)
 Year ended December 31,2005
    
    
    2004
    
    
    2003Net sales
    
    $
    103,263
    
    
    $
    56,578
    
    
    $
    57,991Cost of sales
    
    
    57,251
    
    
    
    26,435
    
    
    
    31,640Gross profit
    
    
    46,012
    
    
    
    30,143
    
    
    
    26,351Operating expenses:Selling, general and administrative
    
    
    21,777
    
    
    
    15,420
    
    
    
    13,559Research and development
    
    
    8,824
    
    
    
    5,330
    
    
    
    6,294Total operating expenses
    
    
    30,601
    
    
    
    20,750
    
    
    
    19,853Earnings from operations
    
    
    15,411
    
    
    
    9,393
    
    
    
    6,498Other (income) expense:Interest expense
    
    
    252
    
    
    
    29
    
    
    
    28Interest and other income
    
    
    (665
    )
    
    
    (492
    )
    
    
    (254
    )Earnings before income taxes
    
    
    15,824
    
    
    
    9,856
    
    
    
    6,724Income tax expense (benefit)
    
    
    5,138
    
    
    
    (3,644
    )
    
    
    2,599Net earnings
    
    $
    10,686
    
    
    $
    13,500
    
    
    $
    4,125Earnings per share:Basic
    
    $
    0.63
    
    
    $
    0.83
    
    
    $
    0.27Diluted
    
    $
    0.60
    
    
    $
    0.79
    
    
    $
    0.26Weighted average number of common shares outstanding:Basic
    
    
    16,838
    
    
    
    16,357
    
    
    
    15,488Diluted
    
    
    17,700
    
    
    
    17,136
    
    
    
    15,718
  32




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##### Table of Contents



Radyne Corporation
Consolidated Statements of Stockholders Equity and Comprehensive Income
Years ended December 31, 2005, 2004 and 2003
(in thousands)
 Additional
    
    
    Retained earnings
    
    
    Accumulated otherCommon Stock
    
    
    Paid-in
    
    
    (accumulated
    
    
    comprehensiveShares
    
    
    Amount
    
    
    capital
    
    
    deficit)
    
    
    income
    
    
    TotalBalances, December 31, 2002
    
    
    15,309
    
    
    $
    15
    
    
    $
    50,921
    
    
    $
    (13,625
    )
    
    $
    (23
    )
    
    $
    37,288Exercise of stock options
    
    
    642
    
    
    
    1
    
    
    
    1,865
    
    
    
    
    
    
    
    
    
    
    
    1,866Issuance of common stock through
employee stock purchase plan
    
    
    180
    
    
    
    
    
    
    
    316
    
    
    
    
    
    
    
    
    
    
    
    316Comprehensive income:Foreign translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23
    
    
    
    23Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,125
    
    
    
    
    
    
    
    4,125Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,148Balance, December 31, 2003
    
    
    16,131
    
    
    
    16
    
    
    
    53,102
    
    
    
    (9,500
    )
    
    
    
    
    
    
    43,618Exercise of stock options
    
    
    435
    
    
    
    
    
    
    
    1,572
    
    
    
    
    
    
    
    
    
    
    
    1,572Issuance of common stock through
employee stock purchase plan
    
    
    70
    
    
    
    
    
    
    
    460
    
    
    
    
    
    
    
    
    
    
    
    460Common stock repurchased and retired
    
    
    (403
    )
    
    
    
    
    
    
    (2,555
    )
    
    
    (236
    )
    
    
    
    
    
    
    (2,791
    )Tax benefit from stock option exercises
    
    
    
    
    
    
    
    
    
    
    1,835
    
    
    
    
    
    
    
    
    
    
    
    1,835Comprehensive income:Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,500
    
    
    
    
    
    
    
    13,500Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,500Balance, December 31, 2004
    
    
    16,233
    
    
    
    16
    
    
    
    54,414
    
    
    
    3,764
    
    
    
    
    
    
    
    58,194Exercise of stock options
    
    
    462
    
    
    
    1
    
    
    
    2,053
    
    
    
    
    
    
    
    
    
    
    
    2,054Exercise of stock warrants
    
    
    311
    
    
    
    
    
    
    
    2,717
    
    
    
    
    
    
    
    
    
    
    
    2,717Issuance of common stock through
employee stock purchase plan
    
    
    109
    
    
    
    
    
    
    
    768
    
    
    
    
    
    
    
    
    
    
    
    768Shares issued  acquisition
    
    
    220
    
    
    
    
    
    
    
    2,018
    
    
    
    
    
    
    
    
    
    
    
    2,018Acceleration of stock options
    
    
    
    
    
    
    
    
    
    
    365
    
    
    
    
    
    
    
    
    
    
    
    365Tax benefit from stock option exercises
    
    
    
    
    
    
    
    
    
    
    836
    
    
    
    
    
    
    
    
    
    
    
    836Comprehensive income:Foreign translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    2Net earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,686
    
    
    
    
    
    
    
    10,686Comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,688Balance, December 31, 2005
    
    
    17,335
    
    
    $
    17
    
    
    $
    63,171
    
    
    $
    14,450
    
    
    $
    2
    
    
    $
    77,640
  33




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##### Table of Contents



Radyne Corporation
Consolidated Statements of Cash Flows
For the Years Ended December 31, 2005, 2004 and 2003
(in thousands)
 Years ended December 31,2005
    
    
    2004
    
    
    2003Cash flows from operating activities:Net earnings
    
    $
    10,686
    
    
    $
    13,500
    
    
    $
    4,125Adjustments to reconcile net earnings to
net cash provided by operating activities:Asset impairment charge
    
    
    
    
    
    
    135
    
    
    
    Provision for bad debt
    
    
    (331
    )
    
    
    318
    
    
    
    398Deferred income taxes
    
    
    3,070
    
    
    
    (5,663
    )
    
    
    2,553Gain on disposal of assets
    
    
    (53
    )
    
    
    (23
    )
    
    
    (21
    )Depreciation and amortization
    
    
    2,378
    
    
    
    1,246
    
    
    
    1,853Tax benefit from disqualifying dispositions
    
    
    836
    
    
    
    1,835
    
    
    
    Stock compensation expense
    
    
    365
    
    
    
    
    
    
    
    Increase (decrease) in cash resulting from changes in:Accounts receivable
    
    
    (4,787
    )
    
    
    (266
    )
    
    
    339Inventories
    
    
    542
    
    
    
    (366
    )
    
    
    2,889Prepaid expenses and other current assets
    
    
    324
    
    
    
    (364
    )
    
    
    85Other assets
    
    
    (44
    )
    
    
    20
    
    
    
    2Accounts payable
    
    
    (2,262
    )
    
    
    (615
    )
    
    
    300Accrued expenses
    
    
    1,971
    
    
    
    1,571
    
    
    
    (387
    )Income taxes payable
    
    
    286
    
    
    
    57
    
    
    
    185Customer advance payments
    
    
    347
    
    
    
    (728
    )
    
    
    170Long-term obligations
    
    
    (399
    )
    
    
    19
    
    
    
    (61
    )Accrued stock option compensation
    
    
    (101
    )
    
    
    (59
    )
    
    
    (296
    )Net cash provided by operating activities
    
    
    12,829
    
    
    
    10,617
    
    
    
    12,134Cash flows from investing activities:Acquisition, net of cash
    
    
    (43,538
    )
    
    
    
    
    
    
    Capital expenditures
    
    
    (2,053
    )
    
    
    (822
    )
    
    
    (521
    )Proceeds from sales of property and equipment
    
    
    104
    
    
    
    148
    
    
    
    121Net cash used in investing activities
    
    
    (45,487
    )
    
    
    (674
    )
    
    
    (400
    )Cash flows from financing activities:Borrowing from notes payable
    
    
    5,000
    
    
    
    
    
    
    
    Payments under notes payable
    
    
    (250
    )Repurchase of common stock
    
    
    
    
    
    
    (2,791
    )
    
    
    Net proceeds from sale of common stock to employees
    
    
    768
    
    
    
    460
    
    
    
    316Exercise of stock options
    
    
    2,054
    
    
    
    1,572
    
    
    
    1,866Exercise of redeemable warrants
    
    
    2,717
    
    
    
    
    
    
    
    Principal payments on capital lease obligations
    
    
    (5
    )
    
    
    (14
    )
    
    
    (38
    )Net cash (used in) provided by financing activities
    
    
    10,284
    
    
    
    (773
    )
    
    
    2,144Net (decrease) increase in cash and cash equivalents
    
    
    (22,374
    )
    
    
    9,170
    
    
    
    13,878Effects of exchange rate changes on cash and cash equivalents
    
    
    2
    
    
    
    
    
    
    
    23Cash and cash equivalents, beginning of year
    
    
    39,300
    
    
    
    30,130
    
    
    
    16,229Cash and cash equivalents, end of year
    
    $
    16,928
    
    
    $
    39,300
    
    
    $
    30,130Supplemental disclosures of cash flow information:Cash paid for interest
    
    $
    176
    
    
    $
    29
    
    
    $
    28Cash paid for taxes
    
    $
    623
    
    
    $
    125
    
    
    $
    Non-cash investing activities:Issuance of 219,709 shares of common stock in acquisition
    
    $
    2,018
    
    
    $
    
    
    
    $
    
  34




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##### Table of Contents



Radyne Corporation
Notes to the Consolidated Financial Statements
For the year ended December 31, 2005, 2004 and 2003
 1) Organization and Nature of Business
   2) Summary of Significant Accounting Policies
 a)
    
    Use of Estimates
  b)
    
    Principles of Consolidation
  c)
    
    Cash Equivalents
  d)
    
    Accounts Receivable
  e)
    
    Revenue Recognition
  35




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##### Table of Contents



Revenue Arrangements with Multiple Deliverables
 f)
    
    Inventories
  g)
    
    Property and Equipment
  h)
    
    Intangible Assets and Impairment of Long-Lived Assets
 Goodwill and Other
Intangible Assets Accounting for Impairment or Disposal of Long-Lived Assets .
   i)
    
    Warranty Costs
  j)
    
    Research and Development
  36




---



##### Table of Contents



k)
    
    Income Taxes
   l)
    
    Concentration of Credit Risk
    m)
    
    Net Earnings Per Share
  n)
    
    Fair Value of Financial Instruments
    o)
    
    Employee Stock Options
 Accounting for
Stock Issued to Employees Accounting for Stock-Based Compensation
 37




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##### Table of Contents



Year Ended December 31,2005
    
    
    2004
    
    
    2003(in thousands)Net earnings:As reported
    
    $
    10,686
    
    
    $
    13,500
    
    
    $
    4,125Fair value of stock options
    
    
    3,248
    
    
    
    1,508
    
    
    
    726Pro forma
    
    $
    7,438
    
    
    $
    11,992
    
    
    $
    3,399Earnings per share:Basic  as reported
    
    $
    0.63
    
    
    $
    0.83
    
    
    $
    0.27Basic  pro forma
    
    $
    0.44
    
    
    $
    0.73
    
    
    $
    0.22Diluted  as reported
    
    $
    0.60
    
    
    $
    0.79
    
    
    $
    0.26Diluted  pro forma
    
    $
    0.42
    
    
    $
    0.70
    
    
    $
    0.22
  Year Ended December 31,2005
    
    2004
    
    2003(in thousands)Expected life (years)
    
    
    4
    
    
    
    5
    
    
    
    5Risk-free interest rate
    
    
    4.50
    %
    
    
    3.50
    %
    
    
    3.02
    %Dividend yield
    
    
    
    
    
    
    
    
    
    
    Volatility
    
    
    45
    %
    
    
    80
    %
    
    
    49
    %
    p)
    
    Segment Reporting
 Disclosures about Segments of an Enterprise and Related Information
 38




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##### Table of Contents



q)
    
    Foreign Currency Translation
 Condensed Consolidated Balance Sheet Condensed
Consolidated Statements of Operations
 r)
    
    Reclassifications
  3)
    
    InventoriesInventories consist of the following:
 December 31,2005
    
    
    2004(in thousands)Raw materials and components
    
    $
    12,694
    
    
    $
    5,659Work-in-process
    
    
    3,874
    
    
    
    1,501Finished goods
    
    
    1,489
    
    
    
    972$
    18,057
    
    
    $
    8,132
 4)
    
    Property and EquipmentProperty and equipment consist of the following:
 December 31,2005
    
    
    2004(in thousands)Machinery and equipment
    
    $
    6,135
    
    
    $
    4,498Furniture and fixtures
    
    
    1,452
    
    
    
    1,463Leasehold improvements
    
    
    625
    
    
    
    491Demonstration units
    
    
    2,154
    
    
    
    1,113Computers and software
    
    
    1,690
    
    
    
    79512,056
    
    
    
    8,360Less accumulated
depreciation and
amortization
    
    
    (7,958
    )
    
    
    (6,767
    )$
    4,098
    
    
    $
    1,593
  5)
    
    Intangible Assets
  39




---



##### Table of Contents



Amortization
    
    
    
    
    
    Accumulated(in thousands)
    
    period - years
    
    Cost
    
    amortization
    
    NetIntangible assets subject to
amortization:Core technologies
    
    
    10
    
    
    $
    4,920
    
    
    $
    287
    
    
    $
    4,633Customer relationship
    
    
    4
    
    
    
    2,040
    
    
    
    297
    
    
    
    1,743Covenant-not-to compete
    
    
    3
    
    
    
    410
    
    
    
    80
    
    
    
    330Total
    
    
    
    
    
    $
    7,370
    
    
    $
    664
    
    
    $
    6,706
  (in thousands)GoodwillBalance as of May 27, 2005
    
    $
    28,879Additions
    
    
    1,454Balance as of December 31, 2005
    
    $
    30,333
  6)
    
    Accrued Expenses
  December 31,2005
    
    
    2004(in thousands)Wages, vacation and related
payroll taxes
    
    $
    4,136
    
    
    $
    2,351Professional fees
    
    
    569
    
    
    
    354Warranty reserve
    
    
    2,101
    
    
    
    955Restructuring costs
    
    
    
    
    
    
    67Commissions
    
    
    738
    
    
    
    489Deferred rent
    
    
    495
    
    
    
    265Other
    
    
    1,006
    
    
    
    354$
    9,045
    
    
    $
    4,835
  Accrued Lease(in thousands)
    
    Exit CostsBalance, December 31, 2003
    
    $
    407Cash payments
    
    
    (340
    )Balance, December 31, 2004
    
    
    67Cash payments
    
    
    (67
    )Balance, December 31, 2005
    
    $
    
 40




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##### Table of Contents



7)
    
    Financial Instruments
     2006
    
    $
    1,0002007
    
    
    1,0002008
    
    
    2,7502009
    
    
    2010
    
    
    Total
    
    $
    4,750
 8)
    
    Commitments
  Commitments2006
    
    $
    2,6922007
    
    
    1,9072008
    
    
    1,2052009
    
    
    3632010
    
    
    214Thereafter
    
    
    Total commitments
    
    $
    6,381
 41




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##### Table of Contents



9)
    
    Income Taxes
  Year ended December 31,2005
    
    
    2004
    
    
    2003(in thousands)Computed Federal statutory tax
expense
    
    $
    5,538
    
    
    $
    3,351
    
    
    $
    2,286State tax expense (benefit)
    
    
    530
    
    
    
    (335
    )
    
    
    207Change in federal valuation
allowance
    
    
    
    
    
    
    (6,396
    )
    
    
    1,282Extra territorial income
exclusion
    
    
    (407
    )
    
    
    (456
    )
    
    
    (1,128
    )Research and development
credit
    
    
    (400
    )
    
    
    
    
    
    
    Other adjustments
    
    
    (123
    )
    
    
    192
    
    
    
    (48
    )Total
    
    $
    5,138
    
    
    $
    (3,644
    )
    
    $
    2,599
  42




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##### Table of Contents



Year ended December 31,Current
    
    
    Deferred
    
    
    Total(in thousands)2005Federal
    
    $
    1,540
    
    
    $
    2,773
    
    
    $
    4,313State
    
    
    518
    
    
    
    297
    
    
    
    815Foreign
    
    
    10
    
    
    
    
    
    
    
    10Total
    
    $
    2,068
    
    
    $
    3,070
    
    
    $
    5,1382004Federal
    
    $
    1,942
    
    
    $
    (5,080
    )
    
    $
    (3,138
    )State
    
    
    77
    
    
    
    (583
    )
    
    
    (506
    )Total
    
    $
    2,019
    
    
    $
    (5,663
    )
    
    $
    (3,644
    )2003Federal
    
    $
    (10
    )
    
    $
    2,296
    
    
    $
    2,286State
    
    
    56
    
    
    
    257
    
    
    
    313Total
    
    $
    46
    
    
    $
    2,553
    
    
    $
    2,599
  December 31,2005
    
    
    2004(in thousands)Tax effect of net
operating loss carryforwards:Federal
    
    $
    3,346
    
    
    $
    5,714State
    
    
    253
    
    
    
    323Foreign
    
    
    
    
    
    
    Tax credits
    
    
    632
    
    
    
    502Reserves and accruals:Compensated absenses
    
    
    308
    
    
    
    80Inventory reserves
    
    
    484
    
    
    
    27Bad debt reserves
    
    
    254
    
    
    
    129263A Inventory
    
    
    298
    
    
    
    283Warranty reserves
    
    
    800
    
    
    
    352Deferred rent
    
    
    314
    
    
    
    110Other reserves
    
    
    662
    
    
    
    153Depreciation
    
    
    (464
    )
    
    
    (4
    )Amortization of goodwill and
intangibles
    
    
    (2,083
    )
    
    
    540Net deferred tax assets
    
    
    4,804
    
    
    
    8,209Valuation allowance
    
    
    (2,546
    )
    
    
    (2,546
    )$
    2,258
    
    
    $
    5,663
  43




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##### Table of Contents



10)
    
    Significant Customers and Foreign and Domestic Sales
 Amplifier
  Years ended December 31,Region
    
    2005
    
    2004
    
    2003Asia
    
    
    16
    %
    
    
    21
    %
    
    
    21
    %Africa/Middle East
    
    
    7
    %
    
    
    10
    %
    
    
    8
    %Latin America
    
    
    2
    %
    
    
    2
    %
    
    
    2
    %Europe
    
    
    15
    %
    
    
    13
    %
    
    
    16
    %Canada
    
    
    1
    %
    
    
    1
    %
    
    
    1
    %Total Foreign Sales
    
    
    41
    %
    
    
    47
    %
    
    
    48
    %Domestic
    
    
    59
    %
    
    
    53
    %
    
    
    52
    %100
    %
    
    
    100
    %
    
    
    100
    %
 11)
    
    Stockholders Equity
     44




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##### Table of Contents



12)
    
    Segment Reporting
  Year ended December 31, 2005(in thousands)Sattelite electronics andbroadcast equipment
    
    
    Amplifiers
    
    
    Unallocated
    
    
    TotalNet sales
    
    $
    70,848
    
    
    $
    32,415
    
    
    $
    
    
    
    $
    103,263Operating income (expense)
    
    
    27,423
    
    
    
    1,656
    
    
    
    (13,668
    )
    
    
    15,411Interest income, net
    
    
    
    
    
    
    
    
    
    
    398
    
    
    
    398Income before income tax
    
    $
    27,422
    
    
    $
    1,672
    
    
    $
    (13,270
    )
    
    $
    15,824Net income
    
    $
    22,579
    
    
    $
    1,377
    
    
    $
    (13,270
    )
    
    $
    10,686Depreciation and amortization
    
    $
    973
    
    
    $
    1,405
    
    
    $
    
    
    
    $
    2,378Total assets
    
    $
    57,722
    
    
    $
    42,906
    
    
    $
    
    
    
    $
    100,628
 13)
    
    Earning Per Share
  Years Ended December 31,2005
    
    
    2004
    
    
    2003(in thousands, except per share data)Numerator:Net earnings
    
    $
    10,686
    
    
    $
    13,500
    
    
    $
    4,125Denominator:Weighted average common
shares for basic earnings per
share
    
    
    16,838
    
    
    
    16,357
    
    
    
    15,488Net effect of dilutive stock options
and warrants
    
    
    862
    
    
    
    779
    
    
    
    230Weighted average common
shares for diluted earnings per
share
    
    
    17,700
    
    
    
    17,136
    
    
    
    15,718Basic earnings per share:Net earnings per basic share
    
    $
    0.63
    
    
    $
    0.83
    
    
    $
    0.27Diluted earnings per share:Net earnings per diluted share
    
    $
    0.60
    
    
    $
    0.79
    
    
    $
    0.26Options and warrants excluded
from earnings per share due to
anti-dilution:Stock options with exercise price
greater than the average market
price
    
    
    693
    
    
    
    485
    
    
    
    1,648Common stock warrants with
$8.75 exercise price
    
    
    
    
    
    
    2,144
    
    
    
    2,144
 14)
    
    Acquisition  Business Combination
  45




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##### Table of Contents



Xicom Purchase Price
 Issuance of stock
    
    $
    2,018Acquisition costs
    
    
    1,268Cash
    
    
    37,539Assume debt
    
    
    5,034Total Purchase Price
    
    $
    45,859
  Purchase Allocation
 Cash
    
    $
    242Receivables
    
    
    5,541Other assets
    
    
    108Inventory
    
    
    10,467Prepaid expenses
    
    
    341Deferred tax benefit  current
    
    
    1,453Property and equipment
    
    
    2,207Accounts payable
    
    
    (5,748
    )Accrued liabilities
    
    
    (2,338
    )Long term obligations, less current
    
    
    (436
    )Deferred tax liability  non-current
    
    
    (1,800
    )Income tax payable
    
    
    (58
    )Customer advances
    
    
    (1,823
    )Core technologies
    
    
    4,920Customer Relationships
    
    
    2,040Covenant-not-to-compete
    
    
    410Excess of purchase price  Goodwill
    
    $
    30,333
  Year ended December 31, 2005
 2005
    
    
    2004Net sales
    
    $
    113,048
    
    
    $
    100,985Net income
    
    $
    8,727
    
    
    $
    12,701Net income per
share, basic
    
    $
    0.52
    
    
    $
    0.77Net income per
share, diluted
    
    $
    0.49
    
    
    $
    0.73
 46




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##### Table of Contents



15)
    
    Employee Benefit Plans
 401(k) Plan
  Employee Stock Options
    47




---



##### Table of Contents



WeightedAverageNumber of
    
    
    Price Peroptions
    
    
    ShareBalance, December 31, 2002
    
    
    3,308,047
    
    
    $
    7.29Granted
    
    
    1,167,429
    
    
    
    3.61Cancelled
    
    
    (999,615
    )
    
    
    9.90Forfeited
    
    
    (230,304
    )
    
    
    4.21Exercised
    
    
    (642,101
    )
    
    
    2.92Balance, December 31, 2003
    
    
    2,603,456
    
    
    $
    5.99Granted
    
    
    495,450
    
    
    
    7.16Forfeited
    
    
    (40,788
    )
    
    
    5.19Exercised
    
    
    (434,556
    )
    
    
    3.64Balance, December 31, 2004
    
    
    2,623,562
    
    
    $
    6.62Granted
    
    
    671,650
    
    
    
    9.87Forfeited
    
    
    (37,660
    )
    
    
    6.98Exercised
    
    
    (462,671
    )
    
    
    4.46Balance, December 31, 2005
    
    
    2,794,881
    
    
    $
    7.75
  Options Outstanding and ExerciseableWeightedaverageremaining
    
    
    WeightedNumber
    
    contractual life
    
    
    averageRange of exercise prices
    
    outstanding
    
    in years
    
    
    exercise price$2.25 to $3.50
    
    
    285,748
    
    
    
    4.30
    
    
    $
    2.70$3.51 to $4.75
    
    
    215,856
    
    
    
    5.53
    
    
    
    4.12$4.76 to $6.25
    
    
    540,284
    
    
    
    7.45
    
    
    
    5.35$6.26 to $7.50
    
    
    636,184
    
    
    
    7.03
    
    
    
    6.78$7.51 to $8.75
    
    
    299,112
    
    
    
    9.33
    
    
    
    8.19$8.76 to $10.00
    
    
    124,327
    
    
    
    8.65
    
    
    
    9.05$10.01 to $14.63
    
    
    693,370
    
    
    
    6.74
    
    
    
    13.302,794,881
    
    
    
    6.96
    
    
    $
    7.75
 Non-Executive Employee Stock Option Exchange Offer
   48




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##### Table of Contents



Employee Stock Purchase Plan
  16) Contingencies
  17) Supplemental Financial Information
  Balance atYears ended December 31:
    
    beginning of
    
    Acquired Xicom
    
    
    
    
    
    
    
    
    
    Balance at(in thousands)
    
    year
    
    reserve
    
    Additions
    
    Deductions
    
    end of year2005
    
    $
    350
    
    
    
    473
    
    
    
    331
    
    
    
    350
    
    
    $
    8042004
    
    $
    489
    
    
    
    
    
    
    
    318
    
    
    
    457
    
    
    $
    3502003
    
    $
    339
    
    
    
    
    
    
    
    398
    
    
    
    248
    
    
    $
    489
 18) Quarterly Financial Data  Unaudited
  First
    
    Second
    
    Third
    
    FourthQuarter
    
    Quarter
    
    Quarter
    
    Quarter
    
    Total(in thousands, except per share data)2005:Total revenues
    
    $
    13,709
    
    
    $
    20,613
    
    
    $
    32,146
    
    
    $
    36,795
    
    
    $
    103,263Gross profit
    
    
    7,126
    
    
    
    9,640
    
    
    
    13,366
    
    
    
    15,880
    
    
    
    46,012Operating expenses
    
    
    5,175
    
    
    
    6,547
    
    
    
    8,992
    
    
    
    9,887
    
    
    
    30,601Earnings from operations
    
    
    1,951
    
    
    
    3,093
    
    
    
    4,374
    
    
    
    5,993
    
    
    
    15,411Net earnings
    
    
    1,444
    
    
    
    2,075
    
    
    
    2,880
    
    
    
    4,287
    
    
    
    10,686Basic earnings per share
    
    $
    0.09
    
    
    $
    0.12
    
    
    $
    0.17
    
    
    $
    0.25
    
    
    $
    0.63Diluted earnings per share
    
    $
    0.08
    
    
    $
    0.12
    
    
    $
    0.16
    
    
    $
    0.24
    
    
    $
    0.602004:Total revenues
    
    $
    15,073
    
    
    $
    12,020
    
    
    $
    12,707
    
    
    $
    16,778
    
    
    $
    56,578Gross profit
    
    
    7,980
    
    
    
    6,049
    
    
    
    6,574
    
    
    
    9,540
    
    
    
    30,143Operating expenses
    
    
    4,705
    
    
    
    4,720
    
    
    
    4,934
    
    
    
    6,391
    
    
    
    20,750Earnings from operations
    
    
    3,274
    
    
    
    1,329
    
    
    
    1,640
    
    
    
    3,150
    
    
    
    9,393Net earnings
    
    $
    3,135
    
    
    $
    1,323
    
    
    $
    6,065
    
    
    $
    2,977
    
    
    $
    13,500Basic earnings per share (1)
    
    $
    0.19
    
    
    $
    0.08
    
    
    $
    0.37
    
    
    $
    0.18
    
    
    $
    0.83Diluted earnings per share (1)
    
    $
    0.18
    
    
    $
    0.08
    
    
    $
    0.36
    
    
    $
    0.18
    
    
    $
    0.79
 
 (1)
    
    Earnings per share are computed independently for each of the quarters presented.
Therefore, the sum of the quarterly earnings per share does not equal the total computed
for the year due to stock transactions that occurred. 49




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Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
  
 Item 9A. Controls and Procedures
  Managements Annual Report on Internal Control over Financial Reporting
 Internal Control-Integrated Framework
   Changes
in Internal Control over Financial Reporting
   50




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
 Internal ControlIntegrated Framework
    Internal ControlIntegrated Framework
   
 51




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Item 9B. Other Information
  52




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PART III
 
 Item 10. Directors and Executive Officers of the Registrant
  www.radn.com
 
 Item 11. Director and Executive Compensation
  
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
  Disclosure with Respect to the Companys Equity Compensation Plans
as of December 31, 2005
   Number ofsecuritiesremaining availableNumber of
    
    
    
    
    
    
    for future issuancesecurities to be
    
    
    
    
    
    
    under equityissued upon
    
    
    Weighted-average
    
    
    compensation plansexercise of
    
    
    exercise price of
    
    
    (excludingoutstanding
    
    
    outstanding
    
    
    securitiesoptions, warrants
    
    
    options, warrants
    
    
    reflected in columnPlan category
    
    and rights
    
    
    and rights
    
    
    (a))(a)
    
    
    (b)
    
    
    (c)Equity compensation plans approved by
security holders [1]
    
    
    2,794,881
    
    
    $
    7.75
    
    
    
    1,198,854 [2]Equity compensation plans not approved
by security holders
    
    None
    
    
    
    N/A
    
    

NoneTotal
    
    
    2,794,881
    
    
    $
    7.75
    
    
    

1,198,854
 
 1
    
    Of the total options outstanding, 338,033 and 2,456,848 have been granted under the 1996 Plan
and the 2000 Plan, respectively.2
    
    Of these shares, 260,862 remain available for purchase under the ESPP. 53




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##### Table of Contents



Item 13. Certain Relationships and Related Transactions
  
 Item 14. Principal Accounting Fees and Services
  54




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PART IV
 
 Item 15. Exhibits and Financial Statement Schedules
 Financial Statements
        Financial Statement Schedules:
  Exhibits:
  55




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SIGNATURES
  RADYNE CORPORATIONBy:
    
    /s/ Robert C. FittingRobert C. Fitting, Chief Executive Officer(Principal Executive Officer)By:
    
    /s/ Malcolm C. PersenMalcolm C. Persen, Vice President, Secretary and Chief Financial Officer(Principal Financial Officer)By:
    
    /s/ Garry D. KlineGarry D. Kline, Vice President and Controller(Principal Accounting Officer)
    Name
    
    Title
    
    Date/s/ C.J. Waylan

C.J. Waylan
    
    Chairman of the Board of Directors
    
    March 14, 2006/s/ Lee Yip Loi

Lee Yip Loi
    
    Director
    
    March 14, 2006/s/ Dennis Elliott

Dennis Elliott
    
    Director
    
    March 14, 2006/s/ Michael A. Smith

Michael A. Smith
    
    Director
    
    March 14, 2006/s/ James J. Spilker

James J. Spilker
    
    Director
    
    March 14, 2006/s/ Robert C. Fitting

Robert C. Fitting
    
    Chief Executive Officer and Director
    
    March 14, 2006/s/ Malcolm C. Persen

Malcolm C. Persen
    
    Vice President, Secretary and Chief Financial Officer
(Principal Financial Officer)
    
    March 14, 2006/s/ Garry D. Kline

Garry D. Kline
    
    Vice President and Controller (Principal Accounting Officer)
    
    March 14, 2006
 56




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EXHIBIT INDEX
 Exhibit No.
    
    Exhibit3.1(1)
    
    Restated Certificate of Incorporation3.2(2)*
    
    Certificate of Ownership and Merger (amending the Restated Certificate of
Incorporation) certified June 1, 20053.3(3)
    
    By-Laws, as amended and restated10.1(a)(4)
    
    ***1996 Incentive Stock Option Plan10.1(b)(5)
    
    ***Amendment to 1996 Incentive Stock Option Plan10.2(6)
    
    ***1999 Employee Stock Purchase Plan10.3(a)(7)
    
    ***2000 Long-Term Incentive Plan10.3(b)(8)
    
    ***Amendment to 2000 Long-Term Incentive Plan10.4(a)(9)
    
    Lease by and between ADI Communication Partners, L.P. and ComStream dated April 23,
199710.4(b)(9)
    
    First Amendment to lease by and between ADI Communication Partners L.P. and
ComStream dated July 16, 199710.4(c)(9)
    
    Second Amendment to Lease by and between Kilroy Realty, L.P. and ComStream dated
November 18, 199810.5(10)
    
    Lease Agreement dated November 11,1997 by and between Registrant and OMB
Development I, L.L.C.10.6(11)
    
    Lease Agreement dated April 7th, 2000 by and between Xicom Technology, Inc. and
Mission West Properties L.P. III10.7(12)
    
    Lease Agreement dated November 8th, 2004 by and between Registrant and RREEF
AMERICA REIT II CORP., JJ10.8(13)
    
    Credit Agreement by and between the Registrant and Wells Fargo HSBC Trade Bank, N.A.10.9(14)
    
    ***Change of Control Agreement, dated as of March 20, 2002, by and between
Registrant and Robert C. Fitting10.10(15)
    
    ***Change of Control Agreement, dated as of March 20, 2002, by and between
Registrant and Steven Eymann10.11(16)
    
    ***Change of Control Agreement, dated as of March 20, 2002, by and between
Registrant and Brian Duggan10.12(17)
    
    ***Employment Agreement, dated as of November 1, 2003 by and between Registrant and
Robert C. Fitting10.13(18)
    
    ***Amendment No. 1 to the Employment Agreement by and between Registrant and
Robert C. Fitting effective December 31, 200510.14(19)
    
    ***Change of Control Agreement, dated May 13, 2004, by and between Registrant and
Malcolm C. Persen10.15(20)
    
    ***Employment Agreement by and between Registrant and Malcolm C. Persen dated as of
March 9, 200510.16(21)
    
    ***Employment Agreement by and between Registrant and Carl Myron Wagner effective
as of January 30, 200610.17(22)
    
    Agreement and Plan of Merger, dated March 2, 2005, by and among Registrant, Xicom
Acquisition Inc., Xicom Technology., the Xicom Shareholders (as defined therein)
and Walt Wood, solely in his capacity as the Shareholders Representative.10.18(23)
    
    Amendment No. 1 to Agreement and Plan of Merger by and among Registrant, Xicom
Acquisition Inc., Xicom Technology Inc., the Xicom Shareholders (as defined
therein) and Walt Wood, solely in his capacity as the Shareholders Representative21.1*
    
    Subsidiaries of the Registrant23.1*
    
    Consent of KPMG LLP24.1*
    
    Power of Attorney (see signature page)31.1*
    
    Certification of the Principal Executive Officer Pursuant to Rule 13-14(a) Under
the Securities Exchange Act of 193431.2**
    
    Certification of the Principal Financial Officer pursuant to Rule 13-14(a) Under
the Securities Exchange Act of 193432.1
    
    Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18
U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002




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*
    
    Filed herewith**
    
    Furnished herewith***
    
    Indicates management compensatory contract, plan or arrangement(1)
    
    Incorporated by reference from exhibit 3.1 to Registrants description of capital stock
on Form 8-A12G, filed on July 13, 2000.(2)
    
    Incorporated by reference to Exhibit 3.2 to Registrants Current Report on Form 8-K, as
filed with the SEC on June 3, 2005 (File No. 000-11685)(3)
    
    Incorporated by reference from exhibit 3.2 to Registrants description of capital stock
on Form 8-A12G, filed on July 13, 2000.(4)
    
    Incorporated by reference to Exhibit 4.1 to Registrants Registration Statement on Form
S-8, dated and declared effective on March 12, 1997 (File No. 333-23159).(5)
    
    Incorporated by reference to Exhibit 4.1 to Registrants Registration Statement on Form
S-8, dated and declared effective on November 18, 1998 (File No. 333-67469).(6)
    
    Incorporated by reference to Exhibit 4.1 to Registrants Registration Statement on Form
S-8, dated and declared effective on November 5, 1999 (File No. 333-90383).(7)
    
    Incorporated by reference to Exhibit 4.1 to Registrants Registration Statement on Form
S-8, dated and declared effective on July 19, 2000 (File No. 333-41704)(8)
    
    Incorporated by reference to Exhibit 4.1 to Registrants Registration Statement on Form
S-8, dated and declared effective on May 29, 2002 (File No. 333-89316).(9)
    
    Incorporated by reference from Registrants Registration Statement on Form S-2, filed
January 11, 1999 (File No. 333-70403).(10)
    
    Incorporated by reference to Exhibit 10.3 to Registrants Annual Report on Form 10-K for
the year ended December 31, 1997, as filed with the SEC on March 27, 1998 (File No.
000-11685).(11)
    
    Incorporated by reference to Exhibit 10.1 to Registrants Quarterly Report on Form 10-Q
for the quarter ended September 30, 2005, as filed with the SEC on November 9, 2005 (File
No. 000-11685)(12)
    
    Incorporated by reference to Exhibit 10.1 to Registrants Quarterly Report on Form 10-Q
for the quarter ended September 30, 2005, as filed with the SEC on November 9, 2005 (File
No. 000-11685)(13)
    
    Incorporated by reference to Exhibit 10.6 to Registrants Annual Report on Form 10-K for
the year ended December 31, 2001, as filed with the SEC on April 1, 2002 (File No.
000-11685).(14)
    
    Incorporated by reference to Exhibit 10.1 to Registrants Quarterly Report on Form 10-Q
for the quarter ended March 31, 2002, as filed with the SEC on May 15, 2002 (File No.
000-11685).(15)
    
    Incorporated by reference to Exhibit 10.2 to Registrants Quarterly Report on Form 10-Q
for the quarter ended March 31, 2002, as filed with the SEC on May 15, 2002 (File No.
000-11685).(16)
    
    Incorporated by reference to Exhibit 10.3 to Registrants Quarterly Report on Form 10-Q
for the quarter ended March 31, 2002, as filed with the SEC on May 15, 2002 (File No.
000-11685).(17)
    
    Incorporated by reference to Exhibit 10.1 to Registrants Quarterly Report on Form 10-Q
for the quarter ended September 30, 2003, as filed with the SEC on November 14, 2003 (File
No. 000-11685). 58




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(18)
    
    Incorporated by reference to Exhibit 10.2 to Registrants Current Report on Form 8-K, as
filed with the SEC on January 17, 2006 (File No. 000-11685)(19)
    
    Incorporated by reference to Exhibit 10.1 to Registrants Quarterly Report on Form 10-Q
for the quarter ended June 30, 2004 as filed with the SEC on August 11, 2004 (File No.
000-11685).(20)
    
    Incorporated by reference to Exhibit 10.11 to Registrants Annual Report on Form 10-K for
the year ended December 31, 2004, as filed with the SEC on March 16, 2005 (File No.
000-11685).(21)
    
    Incorporated by reference to Exhibit 10.1 to Registrants Current Report on Form 8-K, as
filed with the SEC on January 17, 2006 (File No. 000-11685)(22)
    
    Incorporated by reference to Exhibit 10.12 to Registrants Annual Report on Form 10-K for
the year ended December 31, 2004, as filed with the SEC on March 16, 2005 (File No.
000-11685).(23)
    
    Incorporated by reference to Exhibit 2.1 to Registrants Current Report on Form 8-K/A, as
filed with the SEC on May 31, 2005 (File No. 000-11685) 59