SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

[X]

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the quarter ended ~~June~~December 2928, 2001 OR

[ ]

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

For the transition period from _________ to _________

Commission File Number: 33-96858-01		Commission File Number: 33-96858
COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION		COMMUNICATIONS & POWER INDUSTRIES, INC.
(Exact name of registrant as specified in its charter) Delaware (State of Incorporation) 77-0407395 (I.R.S. employer identification number) 811 Hansen Way Palo Alto, California 94303-1110 (650) 846-2800 (Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices) Securities registered pursuant to Section 12(b) of the Act:		(Exact name of registrant as specified in its charter) Delaware (State of Incorporation) 77-0405693 (I.R.S. employer identification number) 811 Hansen Way Palo Alto, California 94303-1110 (650) 846-2800 (Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices) Securities registered pursuant to Section 12(b) of the Act:
(Exact name of registrant as specified in its charter)		(Exact name of registrant as specified in its charter)
None Securities registered pursuant to Section 12(g) of the Act:		None Securities registered pursuant to Section 12(g) of the Act:
Delaware (State of Incorporation)		Delaware (State of Incorporation)
77-0407395		77-0405693
(I.R.S. employer identification number) 811 Hansen Way		(I.R.S. employer identification number) 811 Hansen Way
Palo Alto, California 94303-1110 (650) 846-2900		Palo Alto, California 94303-1110 (650) 846-2900
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)		(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
Securities registered pursuant to Section 12(b) of the Act:		Securities registered pursuant to Section 12(b) of the Act:
None		None
Securities registered pursuant to Section 12(g) of the Act:		Securities registered pursuant to Section 12(g) of the Act:
None		None

Indicate by check mark whether each registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ].

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding for each of the Registrant’s classes of Common Stock, as of the latest practicable date: Communications & Power Industries Holding Corporation: 4,908,172 shares of Common Stock, $.01 par value, at ~~June~~February 295, ~~2001~~2002. Communications & Power Industries, Inc.: 1 share of of Common Stock, $.01 par value, at ~~June~~February 295, ~~2001~~2002.

TABLE OF CONTENTS

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

COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

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

PART I: FINANCIAL INFORMATION
ITEM 1: CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
	COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
		Consolidated Condensed Balance Sheets, June 29, 2001 and September 29, 2000	2
		Consolidated Condensed Balance Sheets, December 28, 2001 and September 28, 2001	2
		Consolidated Condensed Statements of Operations for the 13-week periods ended June 29, 2001 and June 30, 2000	3
		Consolidated Condensed Statements of Operations for the 13-week periods ended December 28, 2001 and December 29, 2000	3
		Consolidated Condensed Statements of Operations for the 39-week periods ended June 29, 2001 and June 30, 2000	4
		Consolidated Condensed Statements of Cash Flows for the 13-week periods ended December 28, 2001 and December 29, 2000	4
		Consolidated Condensed Statements of Cash Flows for the 39-week periods ended June 29, 2001 and June 30, 2000	5
		Notes to Consolidated Condensed Financial Statements	8
		Notes to Consolidated Condensed Financial Statements	10
		Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
	COMMUNICATIONS & POWER INDUSTRIES, INC.
		Consolidated Condensed Balance Sheets, June 29, 2001 and September 29, 2000	6
		Consolidated Condensed Balance Sheets, December 28, 2001 and September 28, 2001	5
		Consolidated Condensed Statements of Operations for the 13-week periods ended June 29, 2001 and June 30, 2000	7
		Consolidated Condensed Statements of Operations for the 13-week periods ended December 28, 2001 and December 29, 2000	6
		Consolidated Condensed Statements of Operations for the 39-week periods ended June 29, 2001 and June 30, 2000	8
		Consolidated Condensed Statements of Cash Flows for the 13-week periods ended December 28, 2001 and December 29, 2000	7
		Consolidated Condensed Statements of Cash Flows for the 39-week periods ended June 29, 2001 and June 30, 2000	9
		Notes to Consolidated Condensed Financial Statements	8
		Notes to Consolidated Condensed Financial Statements	10
ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			10
		Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
PART II: OTHER INFORMATION			15
PART II:OTHER INFORMATION
SIGNATURES			16
		Other Information	19
SIGNATURES			20

- 1 -

COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands-unaudited)

		June 29,			September 29,
		December 28,			September 28,
ASSETS		2001			2000
		2001			2001
ASSETS
Current Assets
	Cash and cash equivalents	$	3,~~488~~490		$	42,~~766~~903
	Accounts receivable, net		4842,~~078~~629			4246,~~434~~738
	Inventories		6850,~~820~~835			6357,~~949~~678
	Deferred taxes		62,~~972~~960			63,~~972~~500
	Other current assets		1,~~618~~965			12,~~603~~241
Total current assets			~~128~~101,~~976~~879			~~119~~113,~~724~~060
Property, plant, and equipment, net			6360,~~363~~685			6862,~~656~~698
Goodwill and other intangibles, net			2423,~~131~~038			2623,~~090~~452
Debt issue costs, net			54,~~314~~404			4,~~627~~857
Deferred taxes			7,889			7,888
Total assets		$	190,006		$	204,067
Total assets		$	229,673		$	226,985
LIABILITIES, PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT
Current Liabilities
	Revolving credit facility	$	2512,~~380~~986		$	3921,~~800~~293
	Current portion of term loans		—			6,012
	Current portion of capital leases		697			919
	Current portion of capital leases		1,056			960
	Mortgage financing		18,000			18,000
	Current portion of mortgage financing		18,000			—
	Senior term loans		20,000			20,000
	Accounts payable		1510,~~562~~380			1814,~~462~~729
	Accrued expenses		2119,~~403~~765			1617,~~903~~859
	Accrued dividends		3,232			—
	Product warranty		4,210			4,225
	Product warranty		3,740			2,978
	Income taxes payable		671			407
	Income taxes payable		9,644			9,518
	Accrued dividends payable		5,581			4,387
	Advance payments from customers		6,~~588~~934			59,~~210~~193
Total current liabilities			~~104~~99,~~605~~224			99111,~~843~~012
Senior term loans			20,000			10,000
Senior subordinated notes			100,000			100,000
Obligations under capital leases			~~204~~55			~~895~~90
Total liabilities			~~224~~199,~~809~~279			~~210~~211,~~738~~102
Senior Redeemable Preferred Stock of Subsidiary			28,~~425~~532			28,~~265~~479
Junior Preferred Stock of Subsidiary			2122,~~325~~891			1922,~~170~~094
Commitments and contingencies Stockholders’ Deficit
Commitments and contingencies
Stockholders’ Deficit
	Common stock		49			49
	Additional paid-in capital		19,111			19,111
	Accumulated deficit		(6278,~~877~~664	)		(4975,~~215~~587	)
	Stockholder loans		(1,~~169~~192	)		(1,~~133~~181	)
Net stockholders’ deficit			(4460,~~886~~696	)		(3157,~~188~~608	)
Total liabilities, preferred stock and stockholders’ deficit		$	~~229~~190,~~673~~006		$	~~226~~204,~~985~~067

See accompanying notes to the unaudited consolidated condensed financial statements.

- 2 -

COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (in thousands -— unaudited)

			13-Week			13-Week
			period ended			period ended
			June 29,			June 30,
			December 28,			December 29,
			2001			2000
~~Sales~~	Sales		$	7266,~~724~~228		$	6660,~~367~~376
~~Cost of sales~~	Cost of sales			5752,~~071~~069			4947,~~894~~578
~~Gross profit~~	Gross profit			1514,~~653~~159			1612,~~473~~798
~~Operating costs and expenses:~~	Operating costs and expenses:
	~~Research and development~~	Research and development		1,~~466~~255			21,~~476~~388
	~~Selling and marketing~~	Selling and marketing		43,~~648~~946			43,~~737~~912
	~~General and administrative~~	General and administrative		54,~~704~~662			4,~~876~~300
~~Total operating costs and expenses~~	Total operating costs and expenses			119,~~818~~863			129,~~089~~600
~~Operating income~~	Operating income			34,~~835~~296			43,~~384~~198
Foreign currency loss				(250	)		(119	)
	Foreign currency gain (loss)			75			(186	)
~~Interest expense~~	Interest expense			(54,~~208~~725	)		(45,~~681~~167	)
~~Loss before taxes~~	Loss before taxes			(~~1,623~~354	)		(~~416~~2,155	)
~~Income tax expense~~	Income tax expense			~~250~~680			~~170~~250
~~Net loss~~	Net loss			(1,~~873~~034	)		(~~586~~2,405	)
~~Preferred dividends:~~	Preferred dividends:
	~~Senior redeemable preferred stock~~	Senior redeemable preferred stock		1,~~115~~194			~~972~~1,041
	~~Junior preferred stock~~	Junior preferred stock		~~743~~796			~~648~~694
Net loss attributable to common stock			$	(3,~~731~~024	)	$	(24,~~206~~140	)

See accompanying notes to the unaudited consolidated condensed financial statements.

- 3 -

COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

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

				39-Week				39-Week
		13-Week				13-Week
		period ended		~~period ended~~		period ended		~~period ended~~
				June 29,				June 30,
		December 28,				December 29,
		2001		~~2001~~		2000		~~2000~~
Sales				$	199,670			$	181,697
OPERATING ACTIVITIES
Cost of sales					158,596				139,772
	Net cash provided by operating activities	$	9,815			$	1,203
Gross profit					41,074				41,925
INVESTING ACTIVITIES
Operating costs and expenses:
	Purchase of property, plant and equipment, net		(664	)			(896	)
	Research and development				4,395				6,585
	Net cash used in investing activities		(664	)			(896	)
	Selling and marketing				12,975				13,835
FINANCING ACTIVITIES
	General and administrative				16,061				13,599
	Repayments on capital leases		(257	)			(228	)
Total operating costs and expenses					33,431				34,019
	Payment of debt issue costs		—				(2,153	)
Operating income					7,643				7,906
	Repayment of terminated revolving credit facility		—				(40,000	)
Gain on the sale of property, plant and equipment					887				—
	(Repayment) proceeds from revolving credit facility		(8,307	)			20,942
Foreign currency loss					(155	)			(289	)
	Repayments on terminated senior term loans		—				(16,049	)
Interest expense					(15,739	)			(13,908	)
	Proceeds from senior term loan		—				20,000
Loss before taxes					(7,364	)			(6,291	)
	Proceeds from mortgage financing		—				18,000
Income tax expense					750				571
	Net cash (used in) provided by financing activities		(8,564	)			512
Net loss					(8,114	)			(6,862	)
NET INCREASE IN CASH AND CASH EQUIVALENTS			587				819
Preferred dividends:
Cash and cash equivalents at beginning of period			2,903				4,766
	Senior redeemable preferred stock				3,233				2,818
Cash and cash equivalents at end of period		$	3,490			$	5,585
	Junior preferred stock				2,155				1,879
Net loss attributable to common stock				$	(13,502	)		$	(11,559	)

See accompanying notes to the unaudited consolidated condensed financial statements.

- 4 -

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

CONSOLIDATED CONDENSED ~~STATEMENTS~~ OFBALANCE ~~CASH FLOWS~~SHEETS (in thousands -— unaudited)

		39-Week			39-Week
		December 28,			September 28,
		period ended			period ended
ASSETS		2001			2001
		June 29,			June 30,
Current Assets
		2001			2000
	Cash and cash equivalents	$	3,490		$	2,903
OPERATING ACTIVITIES
	Accounts receivable, net		42,629			46,738
	Net cash (used in) provided by operating activities	$	(3,984	)	$	8,958
	Inventories		50,835			57,678
INVESTING ACTIVITIES
	Deferred taxes		3,100			3,500
	Proceeds from sale of property, plant and equipment		1,922			—
	Other current assets		1,965			2,241
	Purchase of property, plant and equipment, net		(3,784	)		(4,604	)
Total current assets			102,019			113,060
	Net cash used in investing activities		(1,862	)		(4,604	)
Property, plant, and equipment, net			46,818			48,672
FINANCING ACTIVITIES
Goodwill and other intangibles, net			23,038			23,452
	Repayments on capital leases		(595	)		(632	)
Debt issue costs, net			4,331			4,715
	Payment of debt issue costs		(2,368	)		—
Note receivable from parent			5,750			5,750
	Repayment of terminated revolving credit facility		(40,000	)		—
Total assets		$	181,956		$	195,649
	Proceeds from revolving credit facility		25,580			—
LIABILITIES, REDEEMABLE PREFERRED STOCK AND DEFICIT
	Repayments on terminated senior term loans		(16,049	)		(4,944	)
Current Liabilities
	Proceeds from senior term loan		20,000			—
	Revolving credit facility	$	12,986		$	21,293
	Proceeds from mortgage financing		18,000			—
	Current portion of capital leases		697			919
	Net proceeds from stockholder loans		—			20
	Senior term loans		20,000			20,000
	Purchase of treasury stock		—			(23	)
	Accounts payable		10,380			15,175
	Net cash provided by (used in) financing activities		4,568			(5,579	)
	Accrued expenses		20,700			18,196
NET DECREASE IN CASH AND CASH EQUIVALENTS			(1,278	)		(1,225	)
	Product warranty		4,210			4,225
Cash and cash equivalents at beginning of period			4,766			4,247
	Income taxes payable		641			407
Cash and cash equivalents at end of period		$	3,488		$	3,022
	Accrued dividends		5,581			4,387
	Advance payments from customers		6,934			9,193
Total current liabilities			82,129			93,795
Senior subordinated notes			100,000			100,000
Deferred income on sale-leaseback			7,630			7,735
Obligations under capital leases			55			90
Total liabilities			189,814			201,620
Senior Redeemable Preferred Stock			28,532			28,479
Commitments and contingencies
Stockholders’ Deficit:
	Junior preferred stock		2			2
	Common stock		—			—
	Additional paid-in capital		42,048			41,252
	Accumulated deficit		(77,248	)		(74,523	)
	Stockholder loans		(1,192	)		(1,181	)
Net stockholders’ deficit			(36,390	)		(34,450	)
Total liabilities, senior redeemable preferred stock and stockholders’ deficit		$	181,956		$	195,649

See accompanying notes to the unaudited consolidated condensed financial statements.

- 5 -

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

CONSOLIDATED CONDENSED STATEMENTS ~~BALANCE~~OF ~~SHEETS~~OPERATIONS (in thousands- — unaudited)

				June 29,				September 29,
					13-Week				13-Week
ASSETS				2001				2000
					period ended				period ended
Current Assets
					December 28,				December 29,
	Cash and cash equivalents			$	3,488			$	4,766
					2001				2000
	Accounts receivable, net				48,793				42,434
	Sales				$	66,228			$	60,376
	Inventories				68,820				63,949
	Cost of sales					52,069				47,578
	Deferred taxes				6,972				6,972
	Gross profit					14,159				12,798
	Other current assets				1,618				1,603
	Operating costs and expenses:
Total current assets					129,691				119,724
			Research and development			1,255				1,388
Property, plant, and equipment, net					49,175				68,656
			Selling and marketing			3,946				3,912
Goodwill and other intangibles, net					24,131				26,090
			General and administrative			5,008				4,289
Debt issue costs, net					5,092				4,627
	Total operating costs and expenses					10,209				9,589
Note receivable from parent					5,750				—
	Operating income					3,950				3,209
Deferred taxes					7,889				7,888
	Foreign currency gain (loss)					75				(186	)
Total assets				$	221,728			$	226,985
	Interest expense					(4,197	)			(5,087	)
		LIABILITIES, REDEEMABLE PREFERRED STOCK AND DEFICIT
	Loss before taxes					(172	)			(2,064	)
Current Liabilities
	Income tax expense					510				250
	Revolving credit facility			$	25,380			$	39,800
	Net loss					(682	)			(2,314	)
	Current portion of term loans				—				6,012
	Preferred dividends:
	Current portion of capital leases				1,056				960
			Senior redeemable preferred stock			1,194				1,041
	Accounts payable				16,787				18,462
			Junior preferred stock			796				694
	Accrued expenses				21,585				16,903
Net loss attributable to common stock					$	(2,672	)		$	(4,049	)
	Accrued dividends				3,232				—
	Product warranty				3,740				2,978
	Income taxes payable				9,644				9,518
	Advance payments from customers				6,588				5,210
Total current liabilities					88,012				99,843
Senior term loans					20,000				10,000
Senior subordinated notes					100,000				100,000
Deferred income on sale-leaseback					7,842				—
Obligations under capital leases					204				895
Total liabilities					216,058				210,738
Senior Redeemable Preferred Stock					28,425				28,265
Commitments and contingencies
Stockholders’ Deficit:
	Junior preferred stock				2				2
	Common stock				—				—
	Additional paid-in capital				40,483				38,328
	Accumulated deficit				(62,071	)			(49,215	)
	Stockholder loans				(1,169	)			(1,133	)
Net stockholders’ deficit					(22,755	)			(12,018	)
Total liabilities, senior redeemable preferred stock and stockholders’ deficit				$	221,728			$	226,985

See accompanying notes to the unaudited consolidated condensed financial statements.

- 6 -

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

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

		13-Week		~~13-Week~~		13-Week		~~13-Week~~
		period ended		~~period ended~~		period ended		~~period ended~~
				June 29,				June 30,
		December 28,				December 29,
		2001		~~2001~~		2000		~~2000~~
Sales				$	72,724			$	66,367
OPERATING ACTIVITIES
Cost of sales					57,071				49,894
	Net cash provided by operating activities	$	9,815			$	1,053
Gross profit					15,653				16,473
INVESTING ACTIVITIES
Operating costs and expenses:
	Proceeds from sale of property to parent		—				17,250
	Research and development				1,466				2,476
	Purchase of property, plant and equipment, net		(664	)			(896	)
	Selling and marketing				4,648				4,737
	Net cash (used in) provided by investing activities		(664	)			16,354
	General and administrative				6,109				4,876
FINANCING ACTIVITIES
Total operating costs and expenses					12,223				12,089
	Repayments on capital leases		(257	)			(228	)
Operating income					3,430				4,384
	Payment of debt issue costs		—				(1,709	)
Foreign currency loss					(250	)			(119	)
	Repayments of terminated revolving credit facility		—				(40,000	)
Interest expense					(4,530	)			(4,681	)
	(Repayments) proceeds from revolving credit facility		(8,307	)			20,942
Loss before taxes					(1,350	)			(416	)
	Repayments of terminated senior term loans		—				(16,049	)
Income tax expense					250				170
	Proceeds from senior term loan		—				20,000
Net loss					(1,600	)			(586	)
	Net cash used by financing activities		(8,564	)			(17,044	)
Preferred dividends:
NET INCREASE IN CASH AND CASH EQUIVALENTS			587				363
	Senior redeemable preferred stock				1,115				972
Cash and cash equivalents at beginning of period			2,903				4,766
	Junior preferred stock				743				648
Cash and cash equivalents at end of period		$	3,490			$	5,129
Net loss attributable to common stock				$	(3,458	)		$	(2,206	)

See accompanying notes to the unaudited consolidated condensed financial statements.

- 7 -

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

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (in thousands - unaudited)

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

See accompanying notes to the unaudited consolidated condensed financial statements

-8-

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

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

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

See accompanying notes to the unaudited consolidated condensed financial statements.

-9-

COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

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

NOTES TO CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS
(unaudited)

1. Basis of Presentation

The accompanying unaudited consolidated condensed financial statements of Communications & Power Industries Holding Corporation (“Holding”) and Communications & Power Industries, Inc. (“CPI”, both companies together referred to as the “Company”) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in annual financial statements have been condensed or omitted and, accordingly, these financial statements should be read in conjunction with the financial statements and the notes thereto contained in the Company’s September 2928, ~~2000~~2001 Annual Report on Form 10-K. Management believes that these unaudited interim condensed financial statements contain all adjustments, all of which are of a normal recurring nature, necessary to present fairly the financial position of the Company, and its results of operations and cash flows for the interim ~~periods~~period presented. The results for the interim periods reported are not necessarily indicative of the results for the complete fiscal year ~~2001~~2002.

2. Inventories

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

(Dollars in thousands)	June 29, 2001		September 29, 2000
	December 28,		September 28,
Raw materials and parts	$	48,278	$	46,859
(Dollars in thousands)	2001		2001
Work in process		18,124		14,731
Raw materials and parts	$	37,299	$	40,776
Finished goods		2,418		2,359
Work in process		10,894		14,874
Total inventories	$	68,820	$	63,949
Finished goods		2,642		2,028
Total inventories	$	50,835	$	57,678

3. Supplemental Cash Flow Information

Cash paid by Holding for interest was $111.62 million and $1.9 million for the 13-week periods ended December 28, 2001 and December 29, 2000, respectively. Cash paid by CPI for interest was $0.9 million and $1.9 million for the 3913-week periods ended ~~June~~December 2928, 2001 and ~~June~~December 3029, 2000, respectively. Cash paid ~~for~~ (refunded) for taxes was $0.62 million and $(0.062) million for the 3913-week periods ended ~~June 29~~December 28, 2001 and ~~June~~December 3029, 2000, respectively.

Non-cash financing activities ~~of CPI~~ included the ~~payment~~following: ofDividends ~~preferred~~on ~~stock~~Senior ~~dividends~~Redeemable ~~on its Junior~~ Preferred Stock ~~through the issuance~~ of ~~7,432~~$1.2 million ~~shares~~and ~~of its~~$1.0 million ~~Junior~~for ~~Preferred Stock during~~ the ~~quarter~~fiscal quarters ended ~~June~~December 2928, 2001. ~~During~~and ~~the nine months ended June~~December 29, ~~2001~~2000, ~~CPI~~respectively. Preferred ~~paid preferred~~ stock dividends on ~~its~~ Junior Preferred Stock through the issuance of 7,962 21and 6,~~551~~938 shares of Junior Preferred Stock during the quarters ended December 28, 2001 and December 29, 2000, respectively.

~~4. Segments~~- ~~and~~8 ~~Related Information~~-

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

-10-

COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

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

~~Summarized financial information concerning Holding’s reportable segments is shown in the following table~~4. ~~Included~~Segments ~~in the “Other” column is financial information for the Company’s Solid State Products Division, which did not meet the quantitative thresholds,~~ and ~~certain~~Related ~~unallocated corporate-level operating expenses.~~Information ~~Intersegment product transfers are recorded at cost.~~

The Company has two reportable segments: vacuum electronic devices (~~Dollars~~“VEDs”) inand satcom ~~thousands~~equipment. The CEO, identified as the Chief Operating Decision Maker, evaluates performance and allocates resources based on the Company’s principle performance measure, earnings before income taxes, interest, depreciation and amortization (“EBITDA”).

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

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

(Dollars in thousands)


(Dollars in thousands)
			Satcom
13-Week Period Ended	VED's		Equipment			Other			Total

December 28, 2001:
Revenues from external customers	$	51,329	$	15,861		$	(962	)	$	66,228
Intersegment product transfers		2,259		0			76			2,335
EBITDA — Holding		8,073		281			(889	)		7,465
EBITDA — CPI		8,073		281			(1,398	)		6,956
December 29, 2000:
Revenues from external customers	$	47,344	$	11,516		$	1,516		$	60,376
Intersegment product transfers		3,558		—			414			3,972
EBITDA — Holding		7,460		(62	)		(1,050	)		6,348
EBITDA — CPI		7,460		(62	)		(1,050	)		6,348

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

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

-11-


	Holding						CPI

	13-Week Period Ended						13-Week Period Ended

	December 28,			December 29,			December 28,			December 29,
(Dollars in thousands)	2001			2000			2001			2000

Segment EBITDA	$	7,465		$	6,348		$	6,956		$	6,348
Less:
Depreciation and amortization		3,094			3,336			2,931			3,325
Interest expense		4,725			5,167			4,197			5,087

Loss before taxes	$	(354	)	$	(2,155	)	$	(172	)	$	(2,064	)

- 9 -

COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

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

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

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

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

5. New Credit Facility

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

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

-12-

COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION and subsidiaries

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

6. Sale-Leaseback Transaction

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

7. Recent Accounting Pronouncements

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

-13-

COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION and subsidiaries

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

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

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

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

Orders during the ~~third~~first quarter of Fiscal ~~2001~~2002 were $5771.54 million as compared to $5567.8 million for the ~~third~~first quarter of Fiscal ~~2000~~2001. ~~The~~This increase of $13.76 million, orfor ~~3.1%,~~the ~~was~~quarter ~~driven~~reflects bya ~~increases~~higher indemand ~~orders~~for products in the ~~communications~~radar and ~~radar~~scientific markets., ~~Orders~~offset ~~for~~somewhat ~~the~~by ~~first~~decreases ~~nine~~in ~~months~~orders offor ~~Fiscal~~the ~~2001~~Company’s remaining offour ~~$203~~markets.~~3 million~~ ~~were~~Radar ~~slightly~~orders ~~higher~~increased ~~than~~by ~~the~~ $~~201.~~7.6 million, inor ~~the same time period of Fiscal 2000~~29. ~~However~~7%, ~~excluding~~due to ~~the~~higher ~~effect~~demand offor ~~the~~spare ~~$13.6 million~~and XMrebuilt ~~Radio satellite~~VED’s ~~service~~used ~~order generated~~ in ~~the~~military ~~second quarter of Fiscal 2000, the~~applications. ~~increase~~Orders in ~~adjusted~~the ~~orders~~scientific ~~was~~market increased $155.20 million. ~~There~~from ~~was~~approximately ~~higher~~$1.0 million ~~demand~~ in the first ~~nine~~quarter ~~months~~of ~~for~~Fiscal ~~products~~2001 indue ~~five~~primarily ofto the ~~Company’s~~booking ~~six~~of ~~markets. Radar~~the ~~orders~~final ~~increased~~phase ~~$11.0 million~~of ~~due~~an toorder ~~higher~~from ~~demand~~a ~~for~~government ~~spare~~research ~~and rebuilt VED’s primarily for military applications~~laboratory. ~~Industrial~~ Communication orders ~~increased~~decreased $24.94 million ~~due~~ toor ~~orders for build-to-print power supplies manufactured by CPI’s Canadian operation~~17.3% ~~Medical orders improved~~ from the first ~~nine~~quarter ~~months~~ of Fiscal ~~2000~~2001 ~~by $2.7 million~~ due ~~primarily~~ to ~~increased~~reduced ~~demand~~capital ~~for~~spending by the Company’s ~~line~~customers ofdriven by current ~~x-ray~~economic ~~generators~~conditions. ~~Electronic~~Medical, ~~countermeasure~~electronic ~~orders~~countermeasures ~~for~~and ~~the~~industrial ~~first nine months~~orders ofalso ~~Fiscal~~decreased ~~2001~~by ~~were~~$1.9 million, ~~lower~~$0.7 million ~~than~~and ~~the~~$1.9 million, ~~comparable period in Fiscal 2000~~ respectively, due primarily to ~~the~~ timing of ~~a large~~ order ~~for~~releases ~~airborne~~from ~~decoy~~quarter ~~products~~to ~~which was booked in July 2001~~quarter. Overall, incoming order levels fluctuate significantly on a quarterly basis and a particular quarter’s order rate may not be indicative of future order levels. In ~~particular~~addition, the Company is beginning to see a moderate slowdown in a portion of its communications market due primarily to the excess capacity in internet based demand and cautious ordering due to concerns about the economy. However, the demands from the Company’s government/military customers remain consistent and this, along with a large installed base that requires replacement products, should provide some stability to the Company’s revenue stream. None-the-less, the Company’s sales are highly dependent upon ~~manufacturing~~ manufacturing scheduling, performance and shipments and, accordingly, it is not possible to accurately predict when these orders will be recognized as sales.

As of ~~June~~December 2928, 2001, the Company had an order backlog of $~~160~~157.70 million, representing approximately seven-and-a-half months of sales, compared to order backlog of $~~164~~166.8 million, or approximately eight months of sales, as of ~~June~~ December 3029, 2000. Order backlog atincreased ~~the~~during ~~end of~~ the ~~third~~first quarter ~~also~~of ~~decreased~~Fiscal 2002 ~~slightly~~by $5.5 million from $~~161~~151.6 5 million at the end of Fiscal ~~2000~~2001.

~~-14-~~Sales for the first quarter of Fiscal 2002 were $66.2 million, an increase of $5.8 million, or 9.6%, from the same period in Fiscal 2001. This increase was driven primarily by sales in the communications and scientific markets, which demonstrated growth of 20.1% and 113.9% respectively, compared to the first quarter of Fiscal 2001. Sales in the communications market for the first quarter of Fiscal 2002 included the final units of the XM Radio project, which contributed sales of approximately $5.0 million. Sales to

- 10 -

COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

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

~~Sales for~~ the third quarter of Fiscal 2001 were $72.7 million, an increase of $6.4 million, or 9.6%, compared to $66.4 million for the same period in Fiscal 2000. The increase from a year ago was primarily attributable to the communications market with an increase of $5.8 million, or 24.8%. Sales in the communications market increased as a result of two new products. The Gen IV, the Company’s ~~next~~other ~~generation,~~markets ~~high~~were ~~power~~up ~~amplifier,~~slightly ~~and~~on ~~the~~average XMfrom ~~Radio project both began shipping in volume in Fiscal 2001. Sales for~~ the first ~~nine months~~quarter of Fiscal 2001 ~~were $199~~.~~7 million compared to $181.7 million for the first~~ ~~nine months of Fiscal 2000, an increase of $18.0 million, or 9.9%. This~~ increase reflects increased sales of products serving the communications, medical and industrial markets of $10.7 million, $5.5 million and $2.7 million, respectively. The increase in the communications market was discussed above. Medical sales increased as a result of a new line of INDICO generators which are used in x-ray applications. The improvement in sales in the industrial market can be attributed to build-to-print power supplies.

Gross profit for the ~~third~~first quarter of Fiscal ~~2001~~2002 was $1514.72 million, or 21.54% of sales, ~~compared~~consistent with the $1612.58 million, or 2421.82% of sales, ~~generated~~earned in the ~~third~~first quarter of Fiscal ~~2000. Gross profit for the first nine months of Fiscal~~ 2001 ~~was $41~~.~~1 million,~~ orMargin ~~20.6%~~fluctuations ~~compared~~are toexpected $41.9 million, or 23.1% of sales, for the same period of Fiscal 2000. The decline as a percentage of sales for both periods was primarily attributable to higher start-up and warranty costs on several new satcom products, and to a lesser degree, due to ~~increases in energy related costs at~~ the ~~Company’s California operations. Energy related~~mix ~~costs~~of ~~remain~~products asold ~~concern~~during ~~going~~any ~~forward and could have a more significant impact on future margin performance~~quarter.

Operating costs and expenses were $119.89 million, or 1614.29 % of sales, for the ~~third~~first quarter of Fiscal ~~2001~~2002 as compared to $129.16 million, or 1815.29 % of sales, a ~~year~~for ~~ago. The decrease is attributable to lower research and development costs in~~ the ~~satcom~~first equipment segment as that segment’s engineering resources were predominantly focused on production ramp-up issues rather than new product development. The decrease in research and development costs were partially offset by costs associated with certain consolidation activities including the relocation of the Satcom Division’s production from Palo Alto, California to the Company’s facility in Ontario, Canada, and the relocation of the Company’s administrative offices into a single building in Palo Alto. Costs-to-date attributable to these consolidation efforts were approximately $0.8 million for the quarter ~~and $2.6 million year-to-date. Operating costs and expenses for the first nine months~~ of Fiscal 2001 ~~were $33~~.~~4 million,~~ orThis ~~16.7%~~improvement ofas ~~sales, compared~~a topercentage ~~$34.0 million, or 18.7%~~ of sales, ~~for~~reflects the ~~same~~cost ~~period~~savings ofresulting ~~Fiscal 2000.~~from ~~Excluding~~ the ~~effects of the~~ Company’s ~~consolidation~~cost ~~efforts, operating~~cutting ~~costs~~measures asimplemented ain ~~percentage of sales for~~ the ~~first~~latter ~~nine~~half ~~months~~ of Fiscal 2001 ~~were 15.4%~~and ~~compared~~in ~~to 18.7% for~~ the ~~same~~first ~~period~~ quarter of Fiscal ~~2000~~2002. The ~~decline~~reduction in ~~operating~~ ~~costs and~~ expenses ~~from~~was aoffset ~~year~~in ~~ago~~part ~~reflects~~by ~~cost control measures~~approximately ~~implemented~~$370,000 inassociated with the ~~latter~~relocation ~~half~~ of ~~Fiscal~~the ~~2000~~Satcom asDivision ~~well~~operation ~~as lower research and~~from ~~development~~Palo ~~costs~~Alto, inCalifornia to the ~~satcom~~facility ~~equipment~~in ~~segment~~Ontario, Canada.

Earnings before interest, income taxes, depreciation and amortization (“EBITDA”)1 for the ~~third~~first quarter of Fiscal ~~2001~~2002 were $67.95 million, or 911.53% of sales, compared to $86.3 million, or 1210.5% of sales, for the first quarter of Fiscal 2001. This increase in EBITDA can be attributed to the improved sales volume coupled with the impact of lower operating costs in the current quarter.

Net loss was $1.0 million for Fiscal 2002 compared to a net loss of $2.4 million for Fiscal 2001. The decrease in the net loss from the first quarter of Fiscal 2001 resulted from improved operating income and reduced interest expense partially offset by an increase in tax expense as a result of a U.S. tax gain on the sale of the Satcom Division to Canada.

CPI’s operating results differ slightly from Holding due to a sale-leaseback transaction between CPI and Holding which took place in December 2000. In the first quarter of Fiscal 2002, CPI’s net loss before taxes was $172,000, which was approximately $182,000 lower than Holdings’ net loss before taxes of $354,000. As a result of this transaction, operating costs for CPI were approximately $346,000 higher than those of Holding due to rental payments paid by CPI to Holding for use of the San Carlos facility offset by amortization of the deferred gain on the sales-leaseback and additional depreciation on the San Carlos facility. Interest expense, net, for CPI was approximately $528,000 lower than that of Holding. The decrease primarily relates to the fact that Holding’s interest expense figure includes interest paid on the mortgage financing of the San Carlos facility. All other operations data for CPI is consistent with Holding’s for the first quarter of Fiscal 2002.

FINANCIAL CONDITION

Cash flows provided by operating activities for the first quarter of Fiscal 2002 were $9.8 million, an increase of $8.6 million from the $1.2 million provided by operating activities during the first quarter of Fiscal 2001. The positive cash flow was generated primarily from reductions in accounts receivable and inventories, offset by decreases in accounts payable and advance payments from customers.

Investing activities were comprised principally of investment in property, plant and equipment totaling

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

-15 11 -

COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

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

~~third~~$664,000 ~~quarter of Fiscal 2000. EBITDA~~ for the first ~~nine~~quarter ~~months~~ of Fiscal ~~2001 was $18~~2002.~~4 million,~~ orPurchases ~~9.2%~~ of ~~sales~~property, ~~compared~~plant toand ~~$19.3 million,~~equipment orwere ~~10.6%~~down slightly offrom ~~sales~~approximately $896,000 ~~for~~ in the ~~same~~first ~~period~~quarter inof Fiscal ~~2000~~2001. ~~Excluding~~ ~~the effects of the consolidation costs, as previously discussed, and~~The aCompany ~~$0.9 million~~currently ~~gain~~anticipates onthat ~~the~~capital ~~sale~~expenditure ofrequirements afor ~~building in Beverly, Massachusetts,~~Fiscal ~~adjusted~~2002 ~~EBITDA~~will ~~for~~be ~~the~~approximately ~~first nine months was~~ $204.05 million, orsimilar ~~10.0% of sales, compared~~ to ~~$19.3 million, or 10.6% of sales, during~~ the ~~same~~amounts ~~period~~spent in Fiscal ~~2000. The increase in adjusted EBITDA for the first nine months of Fiscal~~ 2001 ~~was~~ ~~due primarily to lower research~~ and ~~development~~2000 ~~costs,~~for ~~partially~~normal ~~offset by lower gross profit, as discussed above~~operations.

~~FINANCIAL~~Financing ~~CONDITION~~activities during the first quarter of Fiscal 2002 were related to repayments on the Company’s secured credit facility (“Credit Facility”) of $8.3 million and repayments on capital leases of $257,000.

~~Holding~~During ~~used cash of $4.0 million in operating activities for the first nine months of~~ Fiscal 2001, ~~whereas for~~ the ~~corresponding~~Company ~~period~~relocated ofits ~~Fiscal~~administrative ~~2000, Holding~~offices ~~generated~~into ~~cash of $9.0 million. This decrease of $13.0 million was~~a ~~mainly~~single ~~attributable~~building ~~to changes~~ in ~~accounts~~Palo ~~receivable~~Alto and ~~advance~~as ~~payments~~a ~~from customers that contributed less cash flow of $8.0 million and $4.5 million~~result, ~~respectively,~~ ~~and~~is aactively ~~decrease~~looking into ~~accounts payable that consumed $4.7 million~~sublease ~~more~~up into ~~cash~~52,300 ~~partially~~square ~~offset~~feet byof ~~$5.3 million~~office ~~less cash consumed by inventory changes~~space. ~~Accounts~~Also ~~receivable~~during ~~levels have increased as a result of higher shipments in the third quarter of~~ Fiscal 2001, ~~compared to~~ the ~~same period in~~Company ~~Fiscal~~relocated ~~2000~~its ~~but~~Satcom ~~days~~Division’s ~~sales~~production ~~outstanding~~operation ~~has~~from ~~improved~~Palo toAlto, ~~60 days in June 2001~~California ~~compared~~ to ~~64 days~~its facility in ~~June~~Ontario, ~~2000~~Canada. ~~Inventory~~The ~~levels,~~relocation ~~although~~is ~~not~~substantially ~~consuming as~~complete, ~~much~~however ~~cash~~additional inexpenses ~~Fiscal~~of ~~2001~~$300,000 asto ~~in Fiscal 2000~~$500,000 ~~remain~~are ~~high~~expected ~~due~~ to ~~longer~~be incurred ~~production~~during ~~cycle~~the ~~times~~remainder of ~~several~~Fiscal ~~new products~~2002.

~~CPI~~The ~~used~~Company’s ~~cash~~short-term debt includes mortgage financing of $318.70 million inand senior ~~operating~~term ~~activities~~loans ~~for~~of ~~the~~$20.0 million ~~first~~that ~~nine~~expire ~~months of~~on ~~Fiscal~~June 1, ~~2001~~2002 and December 22, 2002, ~~whereas~~respectively. itManagement ~~generated~~expects that cash ofto ~~$9.0 million~~be ~~for~~generated ~~the~~by ~~corresponding~~operations ~~period~~and ofborrowing ~~Fiscal~~under ~~2000.~~its ~~The~~Credit ~~decrease~~Facility in ~~operating~~conjunction ~~cash~~with ~~flows~~either ~~was~~extending ~~due primarily~~or tofinding ~~the~~alternative ~~factors~~financing ~~discussed~~will ~~above~~allow it to meet the obligations.

~~Net~~There ~~cash~~can ~~used~~be byno ~~Holding~~assurance inthat ~~investing~~the ~~activities~~combination inof cash generated by operations, borrowing availability from the ~~first~~Company’s ~~nine~~Credit ~~months~~Facility ofand additional ~~Fiscal~~collateral-based ~~2001~~financing ~~was~~will ~~$1.9 million~~be ~~compared~~sufficient to $4meet the Company’s cash requirements.~~6 million~~ inIf the ~~first~~Company ~~nine~~is ~~months of~~unable ~~Fiscal~~to ~~2000.~~satisfy ~~This~~such ~~decrease~~cash inrequirements ~~cash~~from these ~~used~~sources, ofthe ~~$2.7 million~~Company ~~was~~will ~~due~~adopt toone aor more alternatives, such as ~~reduction~~reducing inor delaying capital expenditures, ~~compared~~reducing discretionary costs, negotiating an increase to the ~~same~~Company’s ~~period~~borrowing ofcapacity ~~Fiscal~~under ~~2000~~its line of ~~$0.8 million~~credit, ~~coupled~~and ~~with~~selling ~~$1.9 million~~and inleasing ~~proceeds~~back ~~from~~its ~~the~~facility ~~sale~~in ofSan ~~the building~~Carlos, California in a ~~Beverly,~~transaction ~~Massachusetts~~with inan ~~March~~outside ~~2001~~party.

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

~~Capital~~The ~~expenditure~~Company’s ~~requirements~~market ~~for~~risk ~~both~~disclosures ~~Holding~~set ~~and~~forth ~~CPI for Fiscal 2001 are expected to be similar to the amount spent~~ in ~~Fiscal~~its ~~2000,~~Annual ~~including expenditures~~Report ~~related~~on ~~to consolidation efforts discussed below. Capital~~Form ~~expenditures~~10-K ~~related~~for to the ~~consolidation~~fiscal ~~totaled~~year ~~$1.25 million~~ended ~~as of June~~September 2928, 2001, ~~and~~have ~~the~~not ~~Company expects to spend approximately $0.3 million on these~~changed ~~efforts during the remainder of Fiscal 2001~~significantly.

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

In July 2001, the FASB issued SFAS No. 142, “Goodwill and Other Intangible Assets.” SFAS No. 142 addresses financial accounting and reporting for acquired goodwill and other intangible assets. SFAS No. 142 changes the accounting for goodwill from an amortization method to an impairment-~~16-~~only approach. Goodwill will be tested annually and whenever events or circumstances occur indicating that goodwill might be impaired. Upon adoption of SFAS No. 142, amortization of goodwill recorded for business combinations will cease. Companies are required to adopt SFAS No. 142 for fiscal years beginning after December 15, 2001, but early adoption is permitted. The Company plans to adopt this Statement beginning in the first quarter of Fiscal 2003 and therefore has not yet determined the impact on its consolidated financial position or results of operations.

- 12 -

COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

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

~~and~~The ~~expenses~~FASB ~~from~~issued ~~its~~SFAS ~~new $61~~No.~~0 million~~ 143, ~~secured~~“Accounting ~~credit~~for ~~facility~~Asset ~~(“Credit~~Retirement ~~Facility~~Obligations”)., ~~This new facility~~in ~~consists~~August of2001, aand ~~$41~~SFAS No.~~0 million~~ ~~revolving~~144, ~~line~~“Accounting offor ~~credit,~~the ~~with~~Impairment aor ~~sub-facility~~Disposal of ~~$10.0 million~~Long-lived ~~for letters of credit~~Assets”, ~~which~~in ~~expires~~October ~~December~~2001. SFAS No. ~~22,~~143 ~~2004,~~is ~~and~~effective ~~a $20.0 million~~for ~~term~~fiscal ~~loan~~years ~~which~~beginning ~~expires~~after ~~December~~June 2215, 2002. ~~The~~and will ~~facility~~require isthat ~~secured~~the byfair ~~substantially~~value ~~all~~ of ~~the~~an ~~assets~~asset ofretirement ~~CPI,~~obligation ~~and~~be recorded isas ~~guaranteed~~a byliability ~~Holding~~in ~~and~~the ~~all~~period ofin ~~CPI’s~~which ~~subsidiaries.~~it ~~Availability~~incurs ~~under~~ the ~~revolving~~ ~~credit~~obligation. ~~facility~~SFAS isNo. 144 ~~based upon eligible receivables, machinery and~~is ~~equipment~~effective ~~and~~for ~~certain~~fiscal ~~real~~years ~~estate.~~beginning ~~Also~~after on December 2215, ~~2000,~~2001. aIt ~~sale-leaseback~~provides a ~~transaction~~single ~~related~~accounting tomodel ~~CPI’s~~for ~~facilities~~long-lived inassets ~~San~~to ~~Carlos~~be ~~was~~disposed ~~accomplished~~of ~~between CPI~~ and ~~Holding.~~replaces SFAS ~~Holding paid CPI aggregate consideration of $23~~No.0 ~~million~~121 “Accounting for the ~~San~~Impairment ~~Carlos real estate, consisting~~ of ~~$17.25 million~~Long-Lived inAssets ~~cash~~ and anLong-Lived ~~unsecured~~Assets ~~promissory~~to ~~note~~Be ofDisposed $5Of.~~75 million~~” ~~maturing~~The inCompany ~~nine~~does ~~years.~~not ~~CPI~~expect ~~and Holding~~the ~~entered~~adoption ~~into a lease~~ of ~~the~~these statements ~~San~~to ~~Carlos~~have ~~real property for~~ a ~~term~~material ~~of twenty~~effect ~~years~~ on athe ~~net~~Company’s ~~basis~~consolidated ~~with a fixed annual rent of $2.45 million. Holding~~financial ~~financed~~position ~~the~~or ~~cash~~results ~~portion~~ of ~~the San Carlos purchase price by borrowing $18~~operations.0 ~~million, which loan matures June 1, 2002.~~

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

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

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

Market Risk

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

Forward-Looking Statements

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

-17-

COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION and subsidiaries

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

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

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

Risk Factors

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

-18 13 -

COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

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

raw material price fluctuations; the Company’s ability to generate the significant amount of cash needed to service its debt; and the Company’s ability to obtain financing in the future. If any of the following risks actually occur, the Company’s business, results of operations, or financial condition would likely suffer and actual results could differ materially from those projected.

- 14 -

COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

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

PART II: OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

None.

ITEM 2: CHANGES IN SECURITIES.

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

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

None.

ITEM 5. OTHER INFORMATION.

None.

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

None.

(a)		None

(b)		Reports on Form 8-K:

		No reports were filed on Form 8-K during the quarter ended December 28, 2001.

-19 15 -

SIGNATURES

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

	COMMUNICATIONS & POWER INDUSTRIES, INC.
	By:	/s/ Bart F. Petrini
		Bart F. Petrini
		Bart F. Petrini Chief Executive Officer and President Date: February 8, 2002
		Chief Executive Officer and President
		Date: August 9, 2001
	By:	/s/ Lynn E. Harvey
		Lynn E. Harvey
		Chief Financial Officer, Treasurer and Secretary (Principal Financial and Accounting Officer)
		Date: August 9, 2001

~~-20-~~ By: /s/ Joel Littman Joel Littman Chief Financial Officer, Treasurer and Secretary (Principal Financial and Accounting Officer) Date: February 8, 2002

- 16 -

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Filing Compare · COMMUNICATIONS & POWER INDUSTRIES HOLDING CORP