10-K 1 a2085360z10-k.txt FORM 10-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM 10-K FOR ANNUAL REPORT AND TRANSITION REPORTS PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 /X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED APRIL 27, 2002 OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 1-4737 ------------------------ HIGH VOLTAGE ENGINEERING CORPORATION (Exact name of Registrant as specified in its charter) MASSACHUSETTS 04-2035796 (State or Other Jurisdiction of (I.R.S. Employer Identification No.) Incorporation or Organization) 401 EDGEWATER PLACE, SUITE 680, WAKEFIELD, MA 01880 (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code (781) 224-1001 ------------------------ SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE ------------------------ Indicate by check mark whether the 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. (1) Yes /X/ No / / (2) Yes / / No /X/ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. /X/ The number of shares of the Registrant's Common Stock, par value $.01 per share, outstanding as of July 30, 2002 was 1082.7429. DOCUMENTS INCORPORATED BY REFERENCE: NONE CONTENTS

PAGE -------- PART I Item 1. Business.................................................... 1 Item 2. Properties.................................................. 1311 Item 3. Legal Proceedings........................................... 1312 Item 4. Submission of Matters to a Vote of Security Holders......... 1412 PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters......................................... 1412 Item 6. Selected Historical Consolidated Financial Data............. 1513 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations................................... 1917 Item 7A. Quantitative and Qualitative Disclosures About Market Risk........................................................ 2624 Item 8. Financial Statements and Supplementary Data................. 2725 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.................................... 2725 PART III Item 10. Directors and Executive Officers of the Registrant.......... 2826 Item 11. Executive Compensation...................................... 2927 Item 12. Security Ownership of Certain Beneficial Owners and Management.................................................. 3230 Item 13. Certain Relationships and Related Transactions.............. 3331 PART IV Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.................................................... 3432

i PART I. ITEM 1.--BUSINESS Company Overview High Voltage Engineering Corporation (the "Company") owns and operates a diversified group of three industrial and technology based manufacturing business segments. The Company's businesses focus on designing and manufacturing high quality, applications engineered products which are designed to address specific customer needs. The Company's products are sold to a broad range of domestic and foreign Original Equipment Manufacturers (OEMs) and end-users in a variety of industries including process automation, metal and steel, water and wastewater treatment, petrochemicals, pulp and paper, marine and cable, oil and gas extraction and transportation, semiconductor fabrication, chemicals, construction, agriculture, materials handling, and for scientific and educational research. The diversified nature of the products sold and end-markets served by the Company's businesses reduce the effect on the Company of operating performance fluctuations in any single operating unit arising from cyclical downturns within individual industries and end-markets. As used in this filing, the terms "fiscal 2002, "fiscal 2001", "fiscal 2000", "fiscal 1999" and "fiscal 1998" refer to the Company's fiscal years ended April 27, 2002, April 28, 2001, April 29, 2000, April 24, 1999, and April 25, 1998,respectively. The Company operates on a 52 or 53 week fiscal year. Fiscal 2002 and 2001 include the results of operations of the Company for 52 week periods. Fiscal 2000 includes the results of operations of the Company for a 53 week period. Fiscal 1999 and fiscal 1998 include the results of operations of the Company for 52 week periods. Business Segment Information The Company's products and services are divided into three segments: Industrial Power Control segment includes Ansaldo Sistemi Industriali, S.p.A. and subsidiaries ("ASI"), Robicon Corporation and subsidiaries ("Robicon"), together operated as "ASIRobicon". The Advanced Surface Analysis segment has two main components, equipment sales and analytical services. The segment consists of Physical Electronics, Inc. and subsidiaries ("PHI") and High Voltage Engineering Europa, B.V. ("HVE Europa"), together operated as "Phymetrics". The third industry segment, Customized Monitoring Instrumentation, reflects the results of operations of Maxima Technologies, Inc. and subsidiaries ("Maxima"). The principal products and services offered by the Company in the three industry segments are described in detail below (see "The Operating Units"). Financial information concerning the Company's industry segments is summarized in Note S to the Consolidated Financial Statements included in Item 8, herein. 1 The Operating Units ASIRobicon Ansaldo Sistemi Industriali, S.p.A. ASI is one of the leading manufacturers of electrical and automation systems, power electronics, motors and generators for various applications and industrial sectors, such as iron and steel, non-ferrous metals, pulp and paper, rubber and plastics, power generation, cement, marine and offshore, chemical and petrochemical, cable transport, glass, textile, food and water treatment. ASI headquarters are located in Milan, Italy with additional operations in Genoa, Montebello, Brendola (Vicenza), Monfalcone and Trieste, Italy. For fiscal 2002, ASI's net sales amounted to $174.4 million, which represented 43.2% of the Company's consolidated net sales for such period. Products ASI power converters offer advanced technology, versatility, reliability and ease of use with high technology power modules, standardization and unified control systems. ASI power electronics are used in many applications such as pumps, fans, compressors, mixers, extruders, mills, and cranes in many industrial sectors. Power electronics products include AC/AC and, AC/DC converters, special converters, excitation systems and static reactive power compensators. The product power range comprises: - DC converters from 25A up to 20,000A - AC converters from 1kVA up to 30 MW - Cyclo converters for AC motors up to 30 MW - Reactive power static compensators up to 200 MVAR, 36 kV - High current AC/DC convectors for arc furnaces up to 300 kA - Static excitation systems for synchronous machines from 10 A up to 6,000 A - Special converters, DC feeders ASI supplies turn-key electrical and automation systems for manufacturing industries, especially those requiring advanced real time control technologies, where ASI's capabilities are internationally recognized. ASI is capable of assuming complete project responsibility, starting from basic design up to system tuning, which satisfies customer demand for requiring a unified interface and reduces engineering, purchasing and plant maintenance costs. ASI provides power distribution, coordinated drives, process automation, mathematical models and production management facilities. Computer simulation tools are used for the in-house tests of the complete systems with the aim of minimizing commissioning time. ARTICS (Ansaldo Real Time Integrated Control System) automation system is an open architecture VME-based system designed to meet the requirements of sophisticated real time applications. One advantage of ASI's products is the capability to integrate most brands of industry standard programmable logic controllers ("PLC's"). This is especially useful in plants with a current installed base of PLC's or in revamp projects. The ASI process knowledge, based on hundreds of applications already supplied, is implemented in software packages including: - level 1--basic automation - level 2--process control optimization - level 3--plant supervision and production management ASI drives are fully integrated into the control system allowing set-up, monitoring and diagnostics from a central room. 2 In the sector of motors and generators, ASI's production range includes machines with a variety of mounting arrangements, degrees of protection, and cooling types. Based on a long-term manufacturing and service experience in both standard and specific custom applications, ASI motors and generators incorporate modern design and technology. A flexible modular design structure using progressive computer engineering methods, allows appropriate selection of constant and variable speed rotating machinery for diverse and sophisticated applications. Motors and generators produced by ASI meet all acknowledged standards: IEC, National Standards harmonized by CENELEC (BSI, VDI, etc.), NEMA (electromagnetic performance only), and industry specific standards (API, AISE, etc.). Production range includes: - High voltage, constant speed squirrel cage and wound rotor induction motors and generators from 150kW to 21,000kW - High voltage, constant speed synchronous motors and generators from 500kVA up to 40,000kVA - DC motors and generators from 2kW up to 5,000kW at 400rpm - Variable speed induction and synchronous motors - High speed and low speed large power induction and synchronous motors - Low voltage AC machines for vector control inverters completely interchangeable with DC machines Markets and Customers ASI markets and sells adjustable speed AC and DC drives ("ASD's"), motors and generators, and specialty power converters primarily in Europe and the Middle East with an expanding presence in North America. Electrical and automation systems are sold worldwide with significant sales in Europe, Asia and the Middle East. The metals industry represents over 60% of the global market for ASI's electrical and automation systems. Steel processing can be broken down into two segments: "primary" applications for blast furnaces, melt shop and continuous casting and "secondary" applications for hot and cold rolling mills, tube mills and finishing lines. In addition to metals, ASI provides comprehensive solutions for the production and finishing of paper and paper products including converting. ASI's electrical and automation systems customers include Danieli, SMS, Thyssen Krupp Stahl, Valmet, Voest-Alpine, IPSCO Steel, Sollac, Pechiney, China Steel, Burgo Group and the Lucchese Group. Major industrial markets for variable frequency drives (VFD's) and motors and generators include oil and gas extraction, transportation and storage, power generation and load management, cement, marine including main propulsion and auxiliaries, chemical and petro-chemical, and cable transport including cable lifts and funicular railways. In many cases ASI bundles VFD's, motors and auxiliary electrical equipment to provide comprehensive process solutions. Industrial market customers include Sulzer Turbo, Italcementi, Pirelli, Suncor, Snamprogetti, Enel, British Gas, Duke Power, Schlumberger and Hyundai. The market for specialty power converters includes DC arc furnaces for iron and steel making, traction and railway power distribution, static excitation systems for synchronous motors and generators, static VAR compensators for power quality management and cyclo-converters for large AC machines. In the metals industry specialty power converters and static VAR compensators are often bundled as part of an integrated solution. Specialty power conversion customers include Clecim, Mannesmann-Demag, SNCF, Dalmine and Ansaldo Transporti. Sales and Marketing ASI products are sold through a direct sales force and by independent representatives worldwide. In addition, ASI operates through its subsidiaries and certain affiliates: Ansaldo Loire Automation SA, based in Roche-La-Moliere, France, operating in the sector of industrial systems with special focus on the sector of iron and steel; Ansaldo Industrial Systems Gmbh, based in Dusseldorf, Germany operating in the sector of industrial systems and components; and Hill Graham Controls LTD, based in High Wycombe, England operating in the sector of Marine and Industrial systems and components. In the US markets, ASI sells its products through Robicon located in New Kensington, Pennsylvania. 3 ASI also has equity investments in two companies in the same sector located in Russia (Ansaldo VEI), and India (Kirloskar Ansaldo Industrial Systems), and representative offices in Cairo, Egypt, Bangkok, Thailand and Beijing, China. Technical assistance, warranty and support are provided by a large network of service centers worldwide. Competition Within the metals and motors markets, increased competition is evident, especially in countries where low production costs and growing supply are combined to improve technological capabilities. In addition, many international groups are rationalizing their production and commercial synergies, thus increasing their competitiveness. Siemens, ABB, Alstom and GE are regarded as ASI's principal competitors. Robicon Robicon is a leading designer and manufacturer of high power conversion products, which are used to regulate electric power, reduce energy costs and improve process control in a wide variety of industrial applications. Products include variable frequency drives ("VFDs") for large electric motors and power control systems for other applications. These products are used in process automation, water and wastewater treatment, electric utility power generation, oil and gas extraction and transportation, petrochemical processing, silicon processing, glass manufacturing, cement production and other general industrial applications. In general, Robicon's products are designed to provide engineered solutions to specific customer requirements by utilizing a combination of standard product platforms and options, with customized features. Robicon's growth strategy is to increase sales of existing product lines through focused global penetration of existing markets, entrance into selected new end markets, and to add new products and services complementary to its existing product lines. The Company believes that Robicon is able to differentiate itself from its competitors through the use of proprietary technology, innovative product development, superior customer service, and the ability to offer applications-engineered solutions based on standard platforms. Robicon's headquarters and primary manufacturing facility are located in New Kensington, Pennsylvania. For fiscal 2002, Robicon had net sales of $100.9 million, which represented 25.0% of the Company's consolidated net sales for such period. Products Historically, Robicon primarily manufactured low voltage (480 volts) VFDs for small and medium size electric motors (20 to 1,500 horsepower) for use in industrial applications such as commercial building climate control, incinerators and water and wastewater treatment plants, and in other general industrial uses. In 1995, Robicon introduced the Perfect Harmony-TM- series of medium voltage (2,300 to 13,800 volts) VFDs for large electric motors (400 to 30,000 horsepower). Heavy industrial processes such as water and wastewater treatment, oil and gas extraction and transportation, petrochemical processing, and cement production, utilize large electric motors that require high levels of power to drive pumps and fans. An undesirable byproduct of using medium voltage VFDs on a large electric motor is the creation of harmonic distortion which causes stress and fatigue to the electric motor and shortens its useful life, as well as current and voltage fluctuations which may result in damage to other equipment on the power grid. Most VFDs also place greater demands on a power grid than the actual power consumed by the motor, an occurrence referred to as reduced power factor, which can result in assessments of penalty charges against the user by the local utility. Perfect Harmony, Robicon's patented technology for medium 4 voltage VFDs, virtually eliminates harmonic distortion and poor power factor in large electric motors and as a result has significantly expanded the market for medium voltage VFDs. The Company believes that Perfect Harmony is the leading technology for reducing harmonic distortion and improving power factor in medium voltage VFD applications and that this technology complements Robicon's applications expertise and long-term customer relationships. Perfect Harmony drives can be installed on virtually any large electric motor without costly modifications and can be customized using a standard set of options. While VFDs regulate electricity for motors, power control systems regulate electric power for other applications. Typical applications for Robicon's power control systems include: (i) power supplies for high-power melting applications, such as glass and fiberglass furnaces and plasma arc torches used in steel mills and smelters; (ii) power supplies for polysilicon extraction and silicon crystal growing for use in the semiconductor industry; and (iii) power supplies for plasma generators used in sputtering equipment for coating the surface of glass or plastics. Power control systems are critical to process control and reducing overall energy costs in these applications. Robicon's power control systems incorporate patented technology that virtually eliminates harmonic distortion and "flicker." Markets and Customers Robicon markets and sells VFDs primarily in North and South America, the United Kingdom and Southeast Asia. The market for VFDs is comprised primarily of three customer segments: industrial, energy and municipal. The industrial market for VFDs is comprised of large power users such as metals smelting plants, cement plants, pulp and paper mills, chemical processing plants and power generation facilities. The energy market consist of oil and gas extraction and transportation. The municipal market for VFDs is comprised primarily of municipalities which operate water and wastewater treatment facilities. Demand for power control systems is driven by the construction of new, or the upgrading of existing, steel mills or smelting facilities, polysilicon extraction facilities, glass and fiberglass furnaces and other large electrical process manufacturing facilities. Because of the long lead time required to design, permit and build such facilities, demand for power systems does not necessarily correlate to general economic cycles. Sales and Marketing Robicon's VFDs and power control systems are sold through Robicon's direct sales force, ASI's sales channels and by independent manufacturers' representatives. Robicon targets large industrial users in select markets and segments and applications engineers in both industrial and commercial projects. Bids for large municipal VFD contracts are typically conducted through a "request for proposal" process and handled by Robicon's independent manufacturers' representatives. In addition to direct sales efforts in the United States, Robicon has sales offices in Edmonton, Alberta; Shanghai, China, San Paolo, Brazil and London, England. Competition Robicon's principal competitors in the VFD market are Rockwell Automation and ABB. Other competitors include divisions of multinational corporations such as Eaton, Toshiba and Siemens. Robicon's major competitors in the power control systems market include multinational corporations such as ABB and Siemens, and several niche engineering firms. As with VFDs, power systems are often produced by divisions of large multinational corporations that may offer a broader product range than that of Robicon. Phymetrics The has two main components: equipment and analytical services. The equipment part of this segment consists of PHI and HVE Europa. Analytical services consists of Charles Evans & Associates ("CE&A"), a subsidiary of PHI purchased on July 2, 1999 and PHI's analytical services business, operating as Evans Analytical Group ("EAG"). 5 PHI is a designer and manufacturer of advanced surface analysis instruments and components used to determine the elemental and/or chemical composition of materials found on or near the surface of a sample. Advanced surface analysis instruments are used in commercial applications in central support laboratories that support semiconductor fabrication, computer peripherals, chemicals, aerospace, metals, polymers, automotive and biomaterials industries, among others, for product and process development, process control, defect review and failure analysis, and for other applications. Surface analysis instruments are also used for materials science research by universities and government institutions. PHI is also a supplier of ultrahigh vacuum ion pumps and controls required for the production of clean vacuums used for commercial products and scientific applications. PHI's headquarters are located in Eden Prairie, Minnesota. HVE Europa is a leading designer and manufacturer of particle accelerator systems used in scientific, educational and industrial research. HVE Europa's products are used primarily for materials science, semiconductor research and carbon dating. HVE Europa's headquarters are located in Amersfoort, The Netherlands. In addition to its core research markets, HVE Europa is a supplier of ion accelerator subsystems to a major equipment manufacturer in the high energy ion implantation market that supplies complete systems to leading semiconductor manufacturers. For fiscal 2002, Phymetrics and its subsidiaries had net sales of $81.3 million, which represented 20.2% of the Company's consolidated net sales for such period. Products PHI's products include Auger Electron Spectroscopy ("Auger"), Electron Spectroscopy for Chemical Analysis ("ESCA"), Time-of-Flight Secondary Ion Mass Spectrometry ("TOF-SIMS") and Dynamic Secondary Ion Mass Spectrometry ("Dynamic SIMS") instruments. Under ultrahigh vacuum conditions, PHI's surface analysis instruments direct a particle beam at the surface of a solid under investigation, causing the emission of particles from the specimen that may be analyzed to determine the elemental and/or chemical composition of the sample surface. Analytical software, customized for each of PHI's surface analysis instruments, interprets data received from the instrument's analyzer and creates images that show the distribution of elements or molecules on a surface. Graphical and numerical data may also be obtained. In addition, by removing and analyzing successive layers of material, each surface analysis instrument is capable of generating a depth profile, which indicates how elemental and/or chemical composition varies throughout the thickness of a sample. PHI's Auger surface analysis instruments direct a highly focused continuous electron beam onto a sample, which causes high energy "Auger electrons" to be emitted from the sample surface. Because the energy level of such Auger electrons is unique to the element from which they were emitted, it may be measured to identify the elements present on the surface. PHI's ESCA surface analysis instruments direct a continuous x-ray beam onto a sample, which causes "photoelectrons" to be emitted from the sample surface. Because the energy level of such photoelectrons is unique to the element or arrangement of atoms from which they were emitted, it may be measured to identify the elements and/or determine the chemical composition of molecules on the surface. PHI's TOF-SIMS surface analysis instruments direct short, intermittent bursts of charged atoms ("ions") onto a sample, which causes other ions to be emitted from the sample surface. These emitted ions traverse a long flight path, with the time required for an ion to reach the analyzer (the "time of flight") being directly related to its mass. Because the mass of such ions is unique to the material from which they were emitted, it may be measured to identify the elements or molecules present. The "time of flight" method of determining the mass of the emitted ions is highly precise and can be used to accurately identify both the elemental and chemical composition of a surface. PHI's Dynamic SIMS surface analysis instruments direct a highly focused continuous beam of ions onto a sample, which causes other ions to be emitted from the sample surface. Because the mass of such ions is unique to the material from which they were emitted, it may be measured to identify the elements present. In general, Dynamic SIMS is used to examine inorganic samples. 6 EAG's principal services in commercial analytical techniques use beams of ions, electrons or x-rays to probe the surface and micro-regions of high-technology materials in order to provide information on composition and chemistry. HVE Europa's products include ion accelerator systems, research ion implanters, accelerator mass spectrometer systems and component parts such as accelerator tubes. In a particle accelerator, ions are accelerated to a high velocity under the influence of a strong electrical field and then fired into the material to modify its properties and/or analyze its structure. Accelerator mass spectrometer systems are specialized ion accelerator systems for which uses include carbon dating in the fields of archeology, oceanography and geosciences. Markets and Customers PHI markets and sells its surface analysis instruments worldwide, with Japan and North America representing its two largest markets. The diversity of applications for PHI's surface analysis instruments reduces the effect of operating performance fluctuations resulting from cyclical downturns with any one individual market. PHI's products are suitable for a wide variety of applications without the need for substantial customization or significant modification. This versatility of function permits PHI to respond quickly to changes in the marketplace that favor new technologies or demonstrate new applications. In addition, PHI has the ability to tailor each surface analysis instrument to specific applications through changes in hardware configuration, software customization and varying degrees of automation of operation in response to industry-specific demands or customer requirements. EAG's services are used in industrial markets where there is a high value-added in a high-technology product. Customers are typically engineers or scientists. EAG's services are used primarily by the following industries: semiconductors (manufacturers of integrated circuits and their suppliers of capital equipment and materials), optoelectronics, data storage and biomedical devices. These services are used by customers in their research and development, manufacturing yield improvements and failure analysis, and in technical sales of their products. EAG supports a "one-stop" worldwide analytical service business, through its California and Minnesota operations, and through a U.S., European and Pacific Rim network of affiliates. HVE Europa's products are been sold for various applications in materials science, including semiconductor research. Other applications include ratio spectrometry in archaeology, oceanography, geosciences, materials science and biochemistry. Accelerator mass spectrometer systems are used by universities and research institutes for carbon dating in the fields of archaeology, oceanography and geosciences. The demand for particle accelerator systems has historically been tied to the construction of new or expanded research facilities, which for educational institutions is mainly dependent upon grants and fundraising. Sales and Marketing PHI markets its products domestically and internationally on the basis of product performance and quality, availability and quality of after-sales support and industry reputation in the manufacture of advanced surface analysis instruments. PHI's experienced and technically oriented sales force is organized geographically and consists of teams responsible for North America, Japan, the Pacific Rim region and Europe. Technical service personnel (most of whom are scientists and engineers) are decentralized within each region and strategically situated in close proximity to major customers. PHI presently has a 50% interest in a joint venture with ULVAC, a Japanese company, which resells and services PHI's surface analysis instruments in the Japanese market. This joint venture (ULVAC-PHI) has enabled PHI to successfully sell products into Japan, currently one of the top two markets for advanced surface analysis instruments. In addition, PHI provides surface analysis services on a contract basis in its analytical laboratories located in the United States and Japan. 7 EAG's services are sold worldwide, primarily through contacts often initiated by scientific/technical personnel. Due to the complex nature of technical problems clients want addressed, frequent and extensive interaction is required between EAG and its customers. EAG presents technical papers at, and participates in, scientific conferences, advertises in scientific periodicals and distributes product literature and information on new developments to its existing and potential new customers. HVE Europa's products are sold worldwide by its direct sales force. Due to the complex, custom-built nature of HVE Europa's particle accelerators, frequent and extensive interaction is required between HVE Europa and the customer. HVE Europa presents technical papers at, and participates in, scientific conferences, advertises in scientific periodicals and distributes product literature and information on new developments to its existing and potential new customers. Competition Competition in the surface analysis market is highly concentrated. The only broad-line competitor in the markets served by PHI's products is VG Scientific (Thermo Electron). In Auger, PHI's primary competitors are VG Scientific and JEOL (Nihon Densi). In ESCA, PHI's primary competitors are Kratos Analytical (Shimadzu) and VG Scientific. In TOF-SIMS, PHI's primary competitor is ION-TOF. In Dynamic SIMS, PHI's primary competitor is Cameca. Competition in HVE Europa's market is highly concentrated. HVE Europa's sales in the particle accelerator market are often bid competitively against National Electrostatics Corporation, a privately held U.S. manufacturer. Maxima Technologies The Company believes that Maxima Technologies is a leading designer, manufacturer and supplier of electronic controls, monitoring systems and accessories for the off-highway vehicle, industrial, specialty vehicle and on-highway (truck & bus) markets, as well as the heavy-duty and automotive retail aftermarket. Maxima's products include electronic control units (ECUs), instrument controllers, vehicle and battery-related monitoring systems, Smart-Registered Trademark- instrument products with engine shut-down features, analog and digital instrument clusters, displays and conventional instruments, fuel/temperature/pressure and specialty gauges, tachometers and speedometers, voltmeters and ammeters, hourmeters, pyrometers and thermocouples, fuel/temperature/pressure senders, electronic fuel sensors (IntelliSensor-Registered Trademark-), speed sensors, switches, flashers and relays, steering column modules, vehicle accessories and custom-engineered products. Markets served include the off-highway, industrial (in-plant equipment), engine-powered equipment, on-highway (truck & bus), specialty vehicle and motorcycle, marine, power turf equipment, emergency vehicle, and recreational vehicle markets, as well as the heavy-duty aftermarket. Maxima's business is split between original equipment manufacturers (OEMs) (approximately 75% of total sales) and the aftermarket (25%). Products are sold directly to either OEMs or through a worldwide network of more than 500 distributors. Maxima is a leading manufacturer and supplier to the agricultural vehicle market in Western Europe. Maxima is also a supplier to the heavy-duty (truck) and automotive aftermarket in North America. Maxima also acquired the exclusive distribution rights for Hobbs brand products for the heavy-duty aftermarket from its acquisition of Stewart Warner in 1998. Hobbs is a leading producer of hour meters, lighting products and switches. A principal element of Maxima's strategy is to position itself as a strategic consolidator of high-quality brands and a systems integrator in order to offer value-added modules of products and services. As such, Maxima is able to provide a more complete solution for OEM customers who will consolidate their supply base. Maxima operates a Technology Center in Lancaster, Pennsylvania to develop new products and applications for its core markets and customers. For fiscal year 2002, Maxima's net sales totaled $46.3 million, which represented 11.5% of the Company's consolidated net sales. 8 Products Due in large measure to its past acquisitions and marketing agreements, Maxima believes that its product portfolio is one of the broadest in its markets. The company has specifically defined its product lines along four categories: 1) "standard" products (i.e. warehoused items that are sold "as is"), 2) "custom" (typically, "same as except..." products that reflect only minor changes), 3) "engineered" (meaning that products are significantly changed), and 4) "IPD" (i.e. developed as completely new products using "Integrated Product Development" and a method for planning and implementation called "Integrated Product and Quality Planning", or IPQP that is compliant with QS-9000 requirements). In an ongoing effort over the past several years to increase market share, Maxima has introduced many new innovative products including IllumaSeal-Registered Trademark-, a line of fully sealed instruments for applications in high-moisture environments (currently approved and in use by Caterpillar, Harley-Davidson, and many others); Smart-Registered Trademark- instrument-Registered Trademark- products featuring integral warning lights, switch outputs and engine shut-down features; IntelliSensor-Registered Trademark-, a fully electronic hydrocarbon-based liquid-level sensing unit); INFOTRAK 2000-TM- and DATLINK-TM- data-bus systems which include instrument controllers and corresponding digital gauges and meters; Streamline-TM- instruments, a new product line featuring unique retro styling and oversized meters; Sentinel-TM- hourmeters, featuring a new quartz stepper motor movement; Sentry-TM- vehicle/battery monitoring systems for gasoline and electrically powered industrial and specialty vehicles; Compatino-TM-, a new line of stylish, yet compact instrument clusters; and Wings-TM-, a family of 1940s-style Stewart Warner branded gauges and meters especially designed for the classic car and performance oriented aftermarket. Maxima has developed a "menu" of electronically oriented, data-bus related products that tap into a vehicle's "distributed network" of nodes which in turn manage the vehicle's various functions. One benefit resulting from Maxima's focus on OEM business and its approach to systems integration is that the company naturally extends these same products into the aftermarket. Further, the aftermarket typically has different expectations and thus, Maxima's products are more easily accepted without the normal long and involved qualification process. Maxima believes that having a strong OEM focus naturally contributes to a certain amount of "pull-through" of product into the aftermarket. Markets and Customers Approximately one third of Maxima's sales come from the OEM "off-highway" vehicle market (agricultural, construction and mining equipment). Maxima's top five market segments account for over 80% of sales and its top 25 customers account for over 50% of total sales. Products are sold in 42 countries. Competition Maxima's frame of reference for its competition has fundamentally changed as a result of the push toward electronic products and systems integration. Major competitors include Ametek-Dixson, Cobo, Planar, Phoenix, Pollak, Preco, Taytronics, Vansco and VDO, among others. Some OEMs make their own display and control systems, typically through specialized operations that support assembly plants. Maxima's formula for differentiating itself from the competition depends on: high-quality, on-time delivery, competitive price, good service and engineering support--coupled with breakthroughs in product applications and a systems integration approach that seeks to provide value-added solutions with Maxima's emphasis on speed-to-market within its customer-focused philosophy. Sales and Marketing Maxima's sales force is located primarily in North America and Europe. Customers are supported based on certain criteria that take into account customer preferences, geography and a particular expertise. In addition, Maxima employs regionally based sales agents and in some cases, distributors which use their own sales personnel to provide coverage in the market. 9 Marketing activities include direct mail, targeted advertising, media relations and trade show participation, promotional support for distributors, ongoing distributor training and workshops, and general control and support of corporate identification programs. Each brand is also supported to retain their unique identity and sustain brand awareness. Maxima Technologies also made an investment in Six Sigma training and education. Twenty-three associates received greenbelt certificates and Six-Sigma concepts are now used throughout the company for problem analysis and resolution and for cost savings. Distribution AST and Datcon products are distributed through a network of over 70 Class "A" distributors who generally operate as "master" distributors. Stewart Warner products are marketed through a large network of wholesale distributors located in North America, who typically resell products to jobbers. In addition, Stewart Warner brand products are distributed through large retail outlets such as NAPA and CarQuest, where the products are marketed directly to end-users. Distribution sales represent approximately 25% of Maxima's total business. Operations Maxima's European operations are located in Barcelona, Spain. Maxima's U.S. operations are located in Lancaster, Pennsylvania and in El Paso, Texas where Maxima warehouses Stewart Warner brand products. The operation in Juarez, Mexico is set up as a "Maquiladora", wherein products are manufactured in Juarez and moved to El Paso for warehousing and distribution. BACKLOG The Company's backlog was as follows as of the dates indicated (dollars in thousands):

~~APRIL~~April 27, 2002 April 28, 2001 ~~APRIL~~April 29, 2000 ~~APRIL 24, 1999~~ ---------------------- ---------------------- ---------------------- ~~PERCENTAGE~~Percentage ~~PERCENTAGE~~Percentage ~~PERCENTAGE~~Percentage ~~AMOUNT~~Amount OFof ~~TOTAL~~Total ~~AMOUNT~~Amount OFof ~~TOTAL~~Total ~~AMOUNT~~Amount OFof ~~TOTAL~~Total -------- ----------- -------- ----------- -------- ----------- ASI~~(1)~~............................. $124,840 60.5% $115,245 56.6% $126,553 61.9% ~~$ -- --%~~ Robicon......................... 57,749 28.0 52,804 25.9 44,296 21.7 ~~35,741 63.5~~ Phymetrics...................... 14,972 7.2 26,379 12.9 20,323 9.9 ~~10,273 18.2~~ Maxima Technologies............. 8,873 4.3 9,433 4.6 13,129 6.5 ~~10,324 18.3~~ -------- ----- -------- ----- -------- ----- Total........................... $~~203~~206,~~861~~434 100.0% $~~204~~203,~~301~~861 100.0% $56204,~~338~~301 100.0% ======== ===== ======== ===== ======== =====

The Company believes that its backlog as of any particular date may not be indicative of sales for any future period. The Company expects that $186,941 million of its backlog will be shipped before April 26, 2003. Research and Development Research and development activities are conducted separately by each operating unit. The Company's operating units focus on developing applications-engineered products designed to meet their customers' needs. Teams representing different functional areas within an operating unit work closely with customers early in the product design process to ensure that the product meets the customer's specifications and is designed for ease of manufacturing. Research and development expenditures that the Company has made have resulted in innovative new products such as Phymetrics' new SMART-Tool, Robicon's Perfect Harmony series of medium voltage VFDs, and Maxima's Intellisensor fuel measurement systems. Phymetrics incurs significant research and development expenses due to the high technology content of its surface analysis instruments and its growth strategy of increasing penetration to the semiconductor fabrication market, increasing sales through the identification of new applications for its existing products, enhancements in the technological capability of its instruments, the development of application-specific hardware configurations for its instruments and the continued improvement in the operating ease and efficiency of its instruments through increased automation and software development. The Company's research and development expenses were $16.5 million, $16.5 million and $17.4 million for fiscal 2002, 2001 and 2000, respectively. In addition, the Company recorded charges to earnings of $1.7 million in fiscal 2000 for the write-off of purchased research and development related to the acquisitions of CE&A. Substantially all research and development expenses of the Company are related to Company-sponsored research. 10 Patents and Trademarks The Company holds domestic and foreign patents covering certain products and processes in all of its operating units, as well as trademarks covering certain of its products. Certain patents relating to Robicon's Perfect Harmony series of medium voltage VFDs are of particular significance; these patents were issued in April and June of 1997 and expire in 2014. Employees At April 27, 2002, the Company had a total of 2,591 employees, of whom 2,577 were employed by the Company's operating units. The Company's domestic employees are not covered by collective bargaining agreements, however, substantially all of the personnel employed by its foreign subsidiaries belong to national workers' councils. The Company considers it relations with its employees to be good. The following table provides information relating to the employees of the Company's operating units as of April 27, 2002:

~~TOTAL~~Total ~~OPERATING~~Operating ~~UNIT~~Units ~~EMPLOYEES~~Employees --------------- --------- ASI......................................................... 1,~~397~~326 Robicon..................................................... ~~387~~420 Phymetrics.................................................. ~~476~~386 Maxima...................................................... ~~597~~445 ----- Total Operating Unit Employees.......................... 2,~~857~~577 ======

ITEM 2.--PROPERTIES The following are the principal operating facilities of the Company listed by operating unit, each of which includes general office and administrative space:

~~USABLE~~Usable ~~SPACE~~Space ~~OPERATING~~Operating ~~UNIT~~Units ~~FUNCTION~~Function (~~SQUARE~~Square ~~FEET~~Feet) ~~OWNED~~Owned/~~LEASED~~Leased --------------- ------------------------- ------------- ------------ ASI: Milan, Italy.............................. Design and assembly 126,000 Leased Monfalcone, Italy......................... Design and assembly ~~796~~408,~~500~~880 Owned Montebello Vicentino, Italy............... Design and assembly 201,240 Owned Trieste, Italy............................ Design and assembly 78,480 Owned ~~Brendola, Italy........................... Design and assembly 190,800 Owned~~ ROBICON: New Kensington, Pennsylvania.............. Design and assembly 123,000 Owned Pittsburgh, Pennsylvania.................. Design ~~and assembly~~ 80,000 Owned PHYMETRICS: Eden Prairie, Minnesota................... Design and assembly ~~232~~205,~~800~~000 Owned Sunnyvale, California..................... Design and ~~assembly~~service 74,859 Leased Amersfoort, The Netherlands............... Design and assembly 60,000 Owned MAXIMA: ~~Lancaster~~Barcelona, ~~Pennsylvania~~Spain.......................... Design and assembly 7176,~~873~~773 ~~Leased~~Owned ~~Barcelona~~Lancaster, ~~Spain~~Pennsylvania...................~~.......~~ Design and assembly 6471,~~217~~873 ~~Owned~~Leased Juarez, Mexico............................ Assembly 75,000 Leased

------------------------- In addition to the facilities described above, the Company leases various warehouses and sales and administrative facilities. The Company believes that its manufacturing facilities are properly maintained and that production capacity is adequate to meet the requirements of its operating units. 11 ITEM 3.--LEGAL PROCEEDINGS In March 1998, the Company's Robicon Corporation subsidiary initiated litigation against Toshiba International Corporation ("Toshiba") in the United States District Court for the Western District of Pennsylvania alleging infringement of one of Robicon's Perfect Harmony patents. In June 1998, Toshiba filed suit against Robicon and several other defendants in the United States District Court for the Southern District of Texas alleging, among other things, false and disparaging comments concerning Toshiba, interference with contract, violation of the Texas Competition and Trade Practices Statute and civil conspiracy to restrict Toshiba's business and cause the wrongful termination of a purchase order of one of its customers. Damages under each section are claimed to be in excess of $75,000, the federal statutory minimum, in addition to a claim for punitive damages. In its suit, Toshiba has also claimed that Robicon is infringing a patent held by Toshiba and requested a declaratory judgment that Robicon's patent, which is the subject of the Pennsylvania action, is invalid. In March 1999, the Texas District Court dismissed without prejudice all claims except the alleged patent infringement by Robicon and the request for declaratory judgment. These claims were then transferred to the Western District of Pennsylvania. Also in March 1999, Toshiba filed a petition in Harris County, Texas in which it realleged the claims dismissed by the Texas district court, citing the additional costs by Toshiba to reinstate its purchase order and damages to its reputation not exceeding $5.0 million. On November 29, 1999, the Pennsylvania district court granted Robicon's Motion to dismiss Toshiba's patent infringement claim against Robicon. The only remaining transferred claim is Toshiba's request for declaratory judgment. In November 1999, Toshiba filed a motion to dismiss without prejudice all of the claims pending in Harris County, Texas pursuant to a Tolling Agreement which permitted Toshiba one (1) year to re-file its claims. In December 1999, the Texas state court granted Toshiba's motion. Toshiba did not re-file its claims prior to the expiration of the Tolling Agreement. There has been no substantive change in the status of this litigation. Certain other claims, suits and complaints have been filed or are pending against the Company. In the opinion of the Company, all such matters are without merit or are of such kind, or involve such amounts, as would not have a material effect on the consolidated financial position or the results of operations of the Company if resolved unfavorably to the Company. If estimates change, there is no assurances these items will not require additional accruals by the Company. ITEM 4.--SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. PART II. ITEM 5.--MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The Company's common stock is not publicly traded. 12 ITEM 6.--SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA (Dollars in Thousands) The Selected Historical Consolidated Financial Data presented below under the captions "Statement of Operations Data" and "Balance Sheet Data" as of and for each of the fiscal years in the five-year period ended April 27, 2002, are derived from the audited consolidated financial statements of High Voltage Engineering Corporation and its subsidiaries, as restated. The Selected Historical Consolidated Financial Data of the Company should be read in conjunction with the audited historical consolidated financial statements of Company for the fiscal years in the three-year period ended April 27, 2002 and the notes thereto included elsewhere herein.

~~FISCAL~~Fiscal ~~YEAR~~Years ~~ENDED~~Ended -------------------------------------------------------------- ~~APRIL~~April 27, April 28, ~~APRIL~~April 29, ~~APRIL~~April 24, ~~APRIL~~April 25, ~~APRIL~~2002 ~~26,~~ 2001 2000 1999 1998 ~~1997~~ ---------- ---------- ---------- ---------- ---------- ~~STATEMENT~~Statement OFof ~~OPERATIONS~~Operations ~~DATA~~Data: Net sales............................... $403,012 $416,547 $271,485 $220,683 $192,658 ~~$124,066~~ Cost of sales (Includes subassembly exit costs of $2,661 and $405 in fiscal 2001 and 2000, respectively, and restructuring charge--inventory markdown of $855 in fiscal 2000)(a)...~~...~~ ~~319~~306,~~917~~533 ~~197~~322,~~342~~593 199,654 144,426 125,354 ~~85,327~~ -------- -------- -------- -------- -------- Gross profit............................ 96,~~630~~479 7493,~~143~~954 71,831 76,257 67,304 ~~38,739~~ Administrative and selling expenses(b)........................... 83,547 73,636 56,108 46,328 43,958 ~~25,384~~ Research and development expenses....... 1916,~~209~~485 1916,~~673~~533 17,361 16,518 14,615 ~~7,711~~ Write off of purchased in-process research and development.............. -- -- 1,650 -- 8,100 -- Restructuring charge(a)................. 859 143 1,795 580 186 ~~-- Reimbursed environmental and litigation costs~~Other, net(c)......................... ~~52 404 293 3,633 26 Other, net(d)~~..~~.........................~~ 6,314 5,~~054~~106 67,~~768~~172 (1,~~424~~131) ~~451~~4,084 89 -------- -------- -------- -------- -------- (Loss) income from operations........... (10,726) (1,464) (12,255) 13,962 (3,639) ~~5,529~~ Interest expense........................ (25,043) (22,044) (19,122) (17,242) (17,077) ~~(9,899)~~ Interest income......................... 1,690 753 921 1,886 983 ~~351~~ -------- -------- -------- -------- -------- Loss from continuing operations before income taxes, discontinued operations and extraordinary item... (34,079) (22,755) (30,456) (1,394) (19,733) ~~(4,019)~~ Income taxes (credit)................... 2,948 (2,291) (631) (3,606) (2,355) ~~(343)~~ -------- -------- -------- -------- -------- (Loss) income from continuing operations before discontinued operations and extraordinary item.................... (37,027) (20,464) (29,825) 2,212 (17,378) ~~(3,676)~~ Discontinued operations: Income from discontinued operations, net of income taxes................. -- 2,078 2,158 3,188 3,327 ~~1,179~~ Gain on disposal of discontinued operations, net of income taxes..... -- 34,270 559 9,633 8,771 -- Extraordinary loss, net of income taxes................................. (327) (530) -- -- (7,464) ~~(259)~~ -------- -------- -------- -------- -------- Net ~~income~~ (loss) income....................... $(37,354) $ 15,354 $(27,108) $ 15,033 $(12,744) ~~$ (2,756)~~ ======== ======== ======== ======== ========

FISCAL YEAR ENDED -------------------------------------------------------------- ~~APRIL~~April 27, April 28, ~~APRIL~~April 29, ~~APRIL~~April 24, ~~APRIL~~April 25, ~~APRIL~~2002 ~~26,~~ 2001 2000 1999 1998 ~~1997~~ ---------- ---------- ---------- ---------- ---------- ~~BALANCE~~Balance ~~SHEET~~Sheet ~~DATA~~Data (ATat ~~PERIOD~~Period ~~END~~End): Working capital......................... $ 53,500 $ 44,007 $ 5,991 $ 79,269 $ 39,388 ~~$ 6,024~~ Total assets............................ 372,389 411,623 357,812 243,455 225,376 ~~106,559~~ Total ~~debt~~indebtedness (including redeemable put warrants and foreign receivable facilities)............................. 244,936 229,368 204,912 174,731 174,627 ~~83,763~~ Redeemable preferred stock.............. 53,847 46,122 40,642 35,229 30,457 ~~11,474~~ Stockholders' deficiency................ (117,835) (65,521) (73,568) (40,961) (50,935) ~~(36,596)~~Other ~~OTHER DATA~~Data: Adjusted EBITDA (unaudited)(ed).......... $ 25,097 $ 27,467 $ 14,655 $ 22,292 $ 16,511 ~~$ 8,174~~ Depreciation and amortization(fe)........ 28,755 20,766 1516,~~250~~486 9,075 5,976 ~~2,492~~ Capital expenditures(gf)................. 20,191 9,563 12,898 10,564 4,058 ~~2,569~~ Backlog (unaudited)..................... 206,434 203,861 204,301 56,338 72,432 ~~61,164~~ Ratio of earnings to fixed charges(h)... -- -- -- -- -- ~~OPERATING~~Operating ~~UNIT~~Unit ~~DATA~~Data: Net sales: ASI................................... $174,423 $178,283 $ 53,960 $ -- $ -- ~~$ --~~ Robicon............................... 100,912 85,986 74,913 84,299 94,192 ~~83,096~~ Phymetrics............................ 81,340 96,319 81,418 75,453 60,508 ~~8,488~~ Maxima................................ 46,337 55,959 61,194 60,931 37,958 ~~32,482~~ -------- -------- -------- -------- -------- Total net sales..................... $403,012 $416,547 $271,485 $220,683 $192,658 ~~$124,066~~ ======== ======== ======== ======== ======== Adjusted EBITDA (unaudited): ASI................................... $ 7,579 $ 7,220 $ (5,762) $ -- $ -- ~~$ --~~ Robicon............................... 7,954 4,565 3,407 5,927 8,140 ~~6,030~~ Phymetrics............................ 7,958 10,530 10,360 9,855 8,713 ~~673~~ Maxima................................ 5,245 7,305 8,672 9,127 5,491 ~~4,338~~ -------- -------- -------- -------- -------- Total operating unit Adjusted EBITDA............................ 28,736 29,620 16,677 24,909 22,344 ~~11,041~~ Corporate overhead.................... (3,639) (2,153) (2,022) (2,617) (5,828) ~~(2,867)~~ -------- -------- -------- -------- -------- Total Adjusted EBITDA............... $ 25,097 $ 27,467 $ 14,655 $ 22,292 $ 16,516 ~~$ 8,174~~ ======== ======== ======== ======== ======== ~~CASH~~Cash ~~FLOW~~Flow ~~PROVIDED~~Provided BYBy (~~USED~~Used ~~FOR~~for): Operating activities.................. $(34,568) $(32,682) $ (149) $ 8,617 --$ -- Investing activities.................. (10,605) 60,491 (70,580) 13,589 -- -- Financing activities.................. 33,684 (2,401) (46,452) (7,381) -- --

See accompanying Notes to Selected Historical Consolidated Financial Data. 14 NOTES TO SELECTED CONSOLIDATED FINANCIAL DATA (Dollars in Thousands) (a) In fiscal 2002, the Company incurred a total restructuring charge of $859 which comprised of $732 related to the closing of the HVE Europa Billerica, Massachusetts facility and $127 for the closing of PHI's Singapore analytical service facility. In fiscal 2001, the Company incurred a total restructuring charge of $143 comprised of severance relating to reducing the headcount at Robicon. In fiscal 2000, the Company incurred a total restructuring charge of $2,650 comprised primarily of: (i) $1,830 at PHI for severance and inventory markdown relating to the outsourcing of certain manufacturing activities and (ii) $820 at Robicon for severance relating to the reduction of headcount. In fiscal 1999, the Company incurred a total restructuring charge of $580 comprised primarily of: (i) $390 at Robicon for severance relating to the reduction of headcount and (ii) $190 at PHI for severance paid to a former executive. In fiscal 1998, the Company incurred restructuring costs of $186 at PHI relating to a program designed to reduce costs to manage the weaker order rates expected from Asia. (b) Adjusted EBITDA excludes severance expenses of $636 included in administrative and selling expenses in fiscal 1998. See note (d) below. (c) Other, net is comprised of the following:

(d) Adjusted EBITDA is defined as earnings from continuing operations before interest, income taxes, depreciation, amortization and non-recurring items. Non-recurring items are comprised of: (i) restructuring charge, and other, net (ii) non-recurring severance payments of $636 to certain former senior executives included in administrative and selling expenses of the Company in fiscal 1998, and (iii) purchase accounting expenses relating to the acquisition of CE&A of $1,650 in fiscal 2000, and purchase accounting expenses relating to the acquisitions of PHI of $6,800 and Stewart Warner of $2,620 in fiscal 1998. See notes (a) through (c) above and notes I, N and Q to "Notes to Consolidated Financial Statements" of High Voltage Engineering Corporation and subsidiaries. Adjusted EBITDA is not considered a measure of performance under GAAP. While Adjusted EBITDA should not be considered as a substitute for net income, cash flows from operating activities, other income or cash flow statement 15 data prepared in accordance with GAAP, or a measure of profitability or liquidity, management understands that some form of EBITDA is often used as a measurement in evaluating companies. In particular, since Adjusted EBITDA excludes the non-recurring items described above, the Company believes that trends in Adjusted EBITDA may provide meaningful information as to one factor in the Company's ability to satisfy its cash requirements on an on-going basis. Moreover, substantially all of the Company's financing agreements contain covenants in which EBITDA, as defined therein, is used as a measure of financial performance. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" for a discussion of other measures of performance determined in accordance with GAAP and an analysis of changes in Adjusted EBITDA in recent periods. Readers should note, however, that "Adjusted EBITDA" as used in this document may not be comparable to similarly titled measures presented by other companies and could be misleading, since not all companies and analysts calculate such measures in the same fashion or on the same basis. (e) Depreciation and amortization excludes $1,409, $1,393, $2,082, and $2,157 attributable to discontinued operations in fiscal 2001, 2000, 1999 and 1998, respectively, and $118, $120, $217, $194 and $147 related to assets held for sale in fiscal 2002, 2001, 2000, 1999 and 1998, respectively. Depreciation and amortization in fiscal 2000 includes $1,236 for the writedown of long lived assets and assets held for sale to net realizable value. (f) Capital expenditures include assets acquired under capital leases and exclude capital expenditures from discontinued operations in the amounts of $2,038, $1,244, $2,252, and $2,723 in fiscal 2001, 2000, 1999, and 1998, respectively. (g) For purposes of this computation, earnings are defined as income or loss from continuing operations before income taxes, discontinued operations and extraordinary item and fixed charges. Fixed charges are the sum of: (i)interest cost; (ii) accretion of redeemable put warrants; (iii) amortization of deferred financing costs; (iv) the portion of operating lease rental expense that is representative of the interest factor (deemed to be one third); (v) accretion of preferred stock; (vi) preferred stock dividends; and (vii) capitalized interest. Earnings were inadequate to cover fixed charges by $41,804, $29,461, $35,869, $6,166 and $23,088 in fiscal 2002, 2001, 2000, 1999, and 1998, respectively. 16 ITEM 7.--MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Except as otherwise indicated, the following discussion relates to the Company on a historical basis without giving effect to certain acquisitions completed by the Company. This report may make forward-looking statements regarding future events or the future financial performance of the Company. We caution you that these statements are only predictions and that actual events or results may differ materially. We refer you to documents the Company files from time to time with the Securities and Exchange Commission. This document identifies and describes important factors that can cause the after-results to differ materially from those contained in any forward looking statements we may make. The following discussion should be read in conjunction with the Selected Historical Consolidated Financial Data and the consolidated financial statements and notes thereto contained elsewhere in this document. The consolidated financial statements of the Company include the accounts of High Voltage Engineering Corporation and its subsidiaries after elimination of material inter-company transactions and balances. As a result of the sale by the Company of substantially all of the assets of the Company's Anderson operating unit on March 7, 2001, the Company's consolidated results have been restated to reclassify the results of such operations as discontinued operations. Seasonality; Variability Operating Results The majority of the Company's operating units have historically recorded the strongest operating results in the fourth quarter of the fiscal year due in part to seasonal considerations and other factors. The timing of orders placed by the Company's customers has varied with, among other factors, the introduction of new products, product life cycles, customer attempts to manage inventory levels, competitive conditions, general economic conditions and the availability of funding for scientific and educational research. The variability of the level and timing of orders has, from time to time, resulted in significant periodic and quarterly fluctuations in the operations of the Company's operating units. Results of Operations Consolidated Net sales for the fiscal 2002 were $403.0 million, which was a decrease of $13.5 million or 3.2% from fiscal 2001. The Company reported a net loss from continuing operations before extraordinary item and discontinued operations of $37.0 million for fiscal 2002 compared to an operating loss of $20.5 million for the same period in fiscal 2001. The primary differences in the results of operations of fiscal 2002 as compared to fiscal 2001 were: (i) lower sales volume due to the depressed semiconductor market, served by Phymetrics, continued downward trend in the off-highway equipment, heavy truck and specialty vehicles markets served by Maxima and a weak global economy, (ii) offset by higher margins primarily in the Industrial Power Control segment(iii) increase in goodwill amortization, (iv) increase in workforce reorganization costs, (v) higher foreign tax provisions and (vi) higher interest costs offset by lower receivable securitization costs. Segment Analysis: Fiscal 2002 Compared to Fiscal 2001 The Industrial Power Control Segment reported net sales of $275.3 million for fiscal 2002, an increase of $11.1 million or 4.2% from fiscal 2001. Net sales for Robicon increased $14.9 million or 17.4% during the fiscal 2002 compared to fiscal 2001. The increase in net sales was primarily attributable to the increased volume in the Medium Voltage product line and higher service revenues due to stronger energy and utility markets, partially offset by weakness in products serving industrial markets. Net sales for ASI decreased $3.9 million or 2.2% during fiscal 2002 as compared to fiscal 2001. The decrease can be attributed to a stronger U.S. dollar during fiscal 2002 as compared to fiscal 2001. Excluding the effect of the currency translation, net sales increased 1.0% during fiscal 2002 as compared to fiscal 2001. This increase is due in part to and increase in the Motor and Power Control businesses, driven by strong demand in the Energy and power generation and 17 transmission markets and higher volumes of add-on revenues. This impact was offset by significant reduction in sales that had contained a large one time contract in fiscal 2001. Order levels remain strong increasing 5.1% and 12.0% at ASI and Robicon, respectively during fiscal 2002 compared to fiscal 2001. Backlog at ASI has increased $9.6 million or 8.3% to $124.8 million compared to the backlog at April 28, 2001 of $115.2 million due to strong demand for AC Motors, Medium voltage drives and systems, combined with the booking of a large Metals systems order. Backlog at Robicon increased $4.9 million or 9.4% to $57.7 million compared to backlog at April 28, 2001 of $52.8 million. Operating income for the segment increased $5.5 million to $6.5 million during fiscal 2002 compared to operating income of $1.0 million in fiscal 2001. This increase in operating income was primarily due to improved gross margins of 2.6% or $9.5 million during fiscal 2002 compared to fiscal 2001. This was the result of higher volumes, cost reductions and efficiencies of production at Robicon. ASI increased gross margin by 2.2% as the benefits of the restructuring carried out during fiscal 2001, improved product mix with increased service revenue and more selective contract management improved the profitability of the company. The improved gross margin was offset by increases in operating expenses as the whole business segment invested in sales channel development and infrastructure to create the organization and structure to deliver sustained growth in the future. The Advanced Surface Analysis Segment reported net sales of $81.3 million for fiscal 2002, which is a decrease of $15.0 million or 15.6% compared to fiscal 2001. Equipment sales, which includes PHI and HVE Europa, declined $10.8 million or 15.8% to $57.6 million during fiscal 2002 as compared to fiscal 2001. The decrease is the result of the severely depressed conditions in the semiconductor markets, weakness in the worldwide market for electronics and other markets in the U.S. This has resulted in many companies canceling or postponing capital expenditures during fiscal 2002 as compared to fiscal 2001. The stronger U.S. dollar has increased the cost of PHI's equipment products in certain foreign markets compared to PHI's foreign based competitors. Operating loss increased $12.8 million to $16.1 million for fiscal 2002 compared to fiscal 2001. The increase in operating loss is primarily due to the decreased gross margin on certain equipment sales and the higher mix of sales to Ulvac-PHI which has lower gross margins. Also contributing to the increase operating loss is an increase in operating expenses of $9.5 million, which is due to the write off of goodwill of $8.8 million, and a restructuring charge of $0.7 million recorded during the fourth quarter of fiscal 2002 related to the closing of the Billerica, Massachusetts facility. Also contributing to the increase in operating loss is $2.8 million of other expenses related to reorganization efforts at PHI during fiscal 2002. The Company has implemented cost reduction plans that has resulted in reduced headcount, greater focus on the semiconductor industry, outsourcing of certain subassemblies and reduction of many variable costs to help offset the reduced gross margin. The Customized Monitoring Instrumentation Segment reported net sales of $46.3 million during fiscal 2002, which was a decrease of $9.6 million or 17.2% compared to fiscal 2001. The reduction in this segment was primarily a result of reduced volume from the continued weakness in OEM and distribution channels in all major markets. New products such as the digital tachometer and instrument clusters partially offset the sales reduction. An adverse economy that resulted in reduced sales from both the OEM and distribution markets on a worldwide basis is the major cause for the volume reduction. The focus for turnaround and growth is in development of new electronic products for distribution and OEM markets and the attainment of new programs from major OEM customers. The operating income decreased $1.6 million to $2.7 during fiscal 2002 as compared to fiscal 2001 due to the sales volume decline and 2.7% decline in the gross margin that was significantly offset by cost containment in all areas of spending. Cost containment included a 19% reduction in headcount and significant material cost reductions. 18 Maxima Technologies has made major investments during fiscal 2002 to position itself for the coming years. These investments include a Surface Mount Technology (SMT) based production line for assembly of electronic circuits (screen printer, component pick and place, axial component insertion, re-flow oven, wave solder and in-circuit test system). In addition, Maxima has invested in "pockets of automation" for mistake-proofing and productivity improvements. Fiscal 2001 Compared to Fiscal 2000 The Industrial Power Control Segment reported net sales of $264.3 million for fiscal 2001 which was a increase of $135.4 million, or 105.1%, from fiscal 2000. The primary difference in the results of operations in fiscal 2001 as compared to fiscal 2000 was a full year of operations from ASI, which was acquired on December 22, 1999. Net sales for Robicon increased $11.1 million or 14.8% during fiscal 2001 as compared to fiscal 2000. The increase in net sales was due to incremental increases across all Robicon product lines with the greatest increase in revenue from power control systems which increased 78.4% over fiscal 2000 net sales. The core product lines, consisting of medium voltage drives, low voltage drives, heating and regulating and service, increased a combined $6.1 million or 8.8% over fiscal 2000 net sales. Order levels have been strong and backlog for Robicon has increased $8.5 million or 19.2% to $52.8 million compared to backlog at April 29, 2000. Robicon saw stronger activity in the energy market as evidenced by orders received in the fourth quarter of fiscal 2001 totaling $5.3 million, which is an increase of $2.7 million or 103.8% compared to the same period in fiscal 2000. Operating income for fiscal 2001 of $1.0 million increased $9.8 million compared to a loss of $8.8 million in fiscal 2000. The increase in operating income is due primarily to realizing the benefits of the restructuring plan at ASI and continued streamlining of synergies between ASI and Robicon. Integration of the ASI operations, Robicon, and the subsidiaries in France, Germany, and the UK progressed according to plan. The Company created a single, company-wide technology organization and developed multi-generation product development plans for each major product line. Excluding operating income of $1.9 million at ASI, operating loss in fiscal 2001 of $0.9 million remained flat compared to fiscal 2000. The operating loss was primarily due to significant cost overruns on certain power control systems contracts and higher amortization of $1.7 million. Also contributing to the loss was lower medium voltage margins due to price erosion on orders taken in the prior fiscal year and margin erosion in the low voltage drives product line due to a higher mix of low horsepower drives. Fiscal 2000 included a restructuring charge of $0.8 million. The Advanced Surface Analysis Segment reported net sales of $96.3 million for fiscal 2001 which was an increase of $14.9 million, or 18.3% from fiscal 2000. Excluding net sales from CE&A, which was acquired on July 2, 1999, net sales for this segment increased $8.9 million during fiscal 2001 as compared to the fiscal 2000. The increase was the result of PHI shipping two additional large systems and HVE Europa shipping one additional system during fiscal 2001 as compared to fiscal 2000. Operating loss decreased $0.3 million to a loss of $3.3 million in fiscal 2001 as compared to $3.6 million in fiscal 2000. Excluding operating income from CE&A, operating loss increased $0.4 million to a loss of $4.5 million during fiscal 2001 as compared to $4.1 million in fiscal 2000. The increase in the operating loss was partially due to a decline in the gross margin percentage of 2% or $1.2 million on PHI's fiscal 2001 sales due to a shift to lower margins systems in addition to non-recurring charges incurred in the outsourcing of major subassemblies of $2.7 million in fiscal 2001 compared to $0.4 million in fiscal 2000. Backlog at April 28, 2001 of $26.4 million increased $6.1 million or 29.8% over the backlog at April 29, 2000. During fiscal 2001, net sales from CE&A of $24.7 million increased $5.9 million or 31.5% from fiscal 2000. This increase is a result of two additional months of sales at CE&A in fiscal 2001 or $3.2 million as compared to fiscal 2000. Additionally, fiscal 2001 included higher volume and a price increase, which was effective January, 2001. Operating income from analytical services of $1.2 million in fiscal 2001 increased $0.7 million compared to fiscal 2000 income of $0.5 million. This increase reflects twelve months results in fiscal 2001 versus ten months in fiscal 2000 and is offset by a one time charge in fiscal 2000 of $1.7 million to write off purchased in-process research and development expense, which had been valued in accordance with purchase accounting procedures. 19 The Customized Monitoring Instrumentation Segment reported net sales of $56.0 million for fiscal 2001 which was a decrease of $5.2 million, or 8.6%, from fiscal 2000. The reduction in net sales was primarily a result of lost business early in fiscal 2001 from a large customer due to a planned model year changeover and reduced volume from the heavy truck market including a major company that was placed on credit hold. The total value of lost sales to these two customers amounts to $2.5 million for fiscal 2001 as compared to fiscal 2000. These factors plus the slowdown in distribution markets coupled with forced price concessions from certain key accounts reflect the major cause for the sales decline. New products such as the digital tachometer and instrument clusters partially offset the sales reduction. Gross margin declined $4.4 million, due to a decrease in the gross margin percentage of 5.1% during fiscal 2001 as compared to fiscal 2000. The decrease in gross margin is a result of higher warranty cost on some discontinued Stewart Warner brand products and a shift towards lower margin products. To offset the deterioration of gross margin, Maxima announced a 5% price increase during the second quarter of fiscal 2001. Operating income decreased $1.7 million to $4.3 million for fiscal 2001 as compared to fiscal 2000. The decrease in operating income was attributable to lost business, lower gross margin of $0.2 million due to foreign currency translation which was partially offset by expense savings during fiscal 2001. Liquidity and Capital Resources The Company's liquidity needs are primarily for working capital, capital expenditures and debt service. The Company's primary sources of liquidity have been funds provided by operations, proceeds from the sale of discontinued operations and asset sales, and proceeds from financing activities. The Company has made significant acquisitions, which are inherently subject to risk. The successful integration of the acquired operations and the substantial demands on the attention of senior management may adversely impact their ability to manage the Company's existing businesses. On March 7, 2001, the Company completed the sale of substantially all the net assets of its Anderson Power division and all the capital stock of Anderson Power Products Ireland B.V. (together "Anderson") to Ideal Industries, Inc. for $78.7 million in cash. The Asset Sale Proceeds, as defined, received by the Company in connection with the disposition of Anderson was subject to a covenant of the Senior Notes Indenture which requires the Company to apply the net cash received to (i) repay debt ranking pari passu to the Senior Notes within 180 days, (ii) contractually commit to acquisitions, capital expenditures or investments relating to the Company's presently conducted business within 180 days and paid within 360 days or (iii) offer to purchase the Senior Notes pursuant to an Excess Proceeds Offer, as defined. In connection with the sale of Anderson the Company has invested a portion of the Asset Sale Proceeds through the purchase of certain receivables from High Voltage Funding Corporation ("HV-FC") a limited purpose subsidiary of the Company and invested in certain capital expenditures. From time to time, the Company achieves liquidity through receivables purchase arrangements with HV-FC, a limited purpose subsidiary of the Company. Under these arrangements, the domestic subsidiaries of the Company sell a defined pool of trade accounts receivables, and the related rights inherited from the Company and its domestic subsidiaries to HV-FC. HV-FC then sells participating interests in such assets to one or more third parties which, in turn, purchases and receives ownership and security interests in those assets. Under the Company's Senior Notes Indenture, the Company is limited to making investments in HV-FC of up to $25.0 million. While the Company is not currently utilizing these receivables purchase arrangements, the Company has retained the right to reinitiate these arrangements with HV-FC or another limited purpose subsidiary at any time. 20 On June 19, 2001, the Company signed an amendment to the Financing Agreement ("Amended and Restated Financing Agreement"). The Amended and Restated Financing Agreement amends certain financial ratios and restates the Refinanced Revolving Credit Facility, Term Loan A, and Term Loan B to a combined $25,000 revolving credit facility ("New Revolving Credit Facility") with a sub-facility of $5.0 million for the issuance of letters of credit. Availability under the New Revolving Credit Facility is limited to the sum of (i) 85% of eligible receivables, (ii) 50% of eligible joint venture receivables, (iii) 125% of the appraised orderly liquidation value of the eligible inventory less certain reserves as is considered reasonable and customary by the lenders and (iv) $5.0 million. Interest under the facility is computed and payable monthly at the greater of the lender's reference rate (4.75% at April 27, 2002) or 7.0% plus 2.5%. At April 27, 2002, $25.0 million was outstanding under the New Revolving Credit Facility Agreement. As of April 27, 2002, the Company had total indebtedness (including redeemable put warrants and foreign receivables facilities) of $244.9 million and mandatory redeemable preferred stock with an aggregate liquidation preference of $55.9 million. The change in total indebtedness of $15.6 million as compared to $229.4 million at April 28, 2001 is the result of an net increase of $11.5 million in unrestricted subsidiary borrowings and $4.1 million net increase in restricted subsidiary borrowings. As of April 27, 2002, the Company had outstanding and issuable redeemable put warrants representing 6.25% of its fully diluted common stock. The holders of such warrants have the right to require the Company to purchase all or any portion of such warrants or any shares of common stock issued upon the exercise of such warrants at the greater of (i) a valuation prepared by an independent financial advisor or (ii) a formula value calculated as 8.0x the Company's EBITDA (as defined therein) less preferred stock and debt outstanding plus excess cash. The ability of the Company to satisfy its obligations under existing indebtedness and preferred stock will be primarily dependent upon the future financial and operating performance of its operating units and upon the Company's ability to renew or refinance borrowings, to sell assets or to raise additional equity capital as necessary. The Company expects it will be able to refinance any principal payment obligations that are scheduled to mature prior to maturity of the Senior Notes. The Company's working capital was $53.5 million at April 27, 2002. The Company's cash flows used in continuing operations were $34.6 million during the fiscal 2002 which includes $17.2 million of federal, state and foreign income tax related to the sale of the Company's Anderson division and certain tax obligations in Italy and The Netherlands, $23.0 million in cash interest payments, $4.7 million of post employment payments in Italy, as compared to cash used in continuing operations of $37.6 million in fiscal 2001. The Company's principal source of liquidity is operating cash flows, including improvements in working capital turns, the refinancing of existing indebtedness and occasional asset sales. If there was further decrease in demand for the Company's products and services due to either economic or competitive conditions, there could be a reduction in liquidity due to (i) lower margins, since the Company might not be able to cut costs in the full amount of revenue decreases, (ii) lower working capital turns due to a longer inventory-to-receivables cycle time, or reduced customer advance progress payments, or slower receivable payments from customers, during such economic conditions, or (iii) reduced collateral available for financing due to lower, or overall older receivables held during such economic conditions or a period of reduced sales. The Company invested $20.1 million in capital expenditures during fiscal 2002 including $10.9 million at ASI for facility upgrades and investment in information technology and $5.3 million in upgrades and additions to PHI's demo and lab equipment. On June 14, 2002 the Company sold a former manufacturing facility located in Brighton, Massachusetts for $9.2 million of gross proceeds. Net proceeds of $8.0 million from the asset sale were deposited in a restricted account pursuant to the New Revolving Credit Facility Agreement. Critical Accounting Policies and Significant Judgments and Estimates The Company's discussion and analysis of its financial condition and results of operations are based on the Company's consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported revenues and expenses during the reporting periods. On an ongoing basis, management evaluates its estimates and judgments, including those related to revenue recognition, receivable reserves, inventory reserves, warranty reserves, goodwill and intangible assets and income taxes. 21 Management bases its estimates on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The significant accounting policies that management believes are most critical to aid in fully understanding and evaluating the Company's reported financial results include the following: Revenue Recognition Sales of goods that are not part of a long-term contract are generally recognized upon shipment of products, in accordance with SEC Staff Accounting Bulletin No. 101, Revenue Recognition. Service revenue is recognized when the service is performed and accepted by the customer. Product revenue is recognized when there is persuasive evidence of an arrangement, the fee is fixed or determinable, delivery of the product to the customer has occurred and the Company has determined that collection of the fee is probable. Title to the product generally passes upon shipment of the product as the products are shipped FOB shipping point, except for certain foreign shipments. If the product requires significant installation to be performed by the Company that is not perfunctory and inconsequential, such revenue related to the product is deferred and recognized upon the completion of the installation. The Company provides for a warranty reserve at the time the product's revenue is recognized. The Company follows both the completed-contract method and the percentage-of completion methods of accounting for contract revenue. Contracts are considered complete upon completion of all essential contract work, including support for integrated testing and customer acceptance. Under the completed-contract method, revenue and costs of individual contracts are included in operations in the year during which they are completed. Losses expected to be incurred on contracts in progress are charged to operations in the period such losses are determined. The aggregate of costs of uncompleted contracts in excess of related billings is shown as a current asset, and the aggregate of billings on uncompleted contracts in excess of related costs is shown as a current liability. Under the percentage-of-completion method, income is recognized on contracts as work progresses based on the relationship between total contract revenues and total estimated contract costs. The percentage of work completed is determined by comparing the accumulated costs incurred to date with management's current estimate of total costs to be incurred at contract completion. Revenue is recognized on the basis of actual costs incurred plus the portion of income earned. Contract costs include all direct material, subcontractor costs, and labor costs and those indirect costs related to contract performance. Revisions in profit estimates during the period of a contract are reflected in the accounting period in which the revised estimates are made on the basis of the stage of completion at the time. If estimated total costs on a contract indicate a loss, the entire amount of the estimated loss is provided for currently. Costs and estimated earnings in excess of billings on uncompleted contracts represent revenue recognized in excess of amounts billed to customers. These amounts are not yet billable under the terms of the contracts and are recoverable from customers upon various measures of performance. Billings in excess of costs and estimated earnings on uncompleted contracts represents billings to customers in excess of earned revenue and advances on contracts. Goodwill and Intangible Assets Purchase accounting requires extensive use of accounting estimates and judgments to allocate the purchase price to the fair market value of the assets purchased and liabilities assumed. The Company has accounted for its acquisitions using the purchase method of accounting. Values were assigned to goodwill and intangible assets based on third-party independent valuations, as well as management's forecasts and projections that include assumptions related to future revenues and cash flows generated from the acquired assets. 22 Effective April 28, 2002, the Company adopted the provisions of SFAS No. 142, Goodwill and Other Intangible Assets. This statement affects the Company's treatment of goodwill and other intangible assets. The statements require that goodwill existing at the date of adoption be reviewed for possible impairment and that impairment tests be periodically repeated, with impaired assets written down to fair value. Additionally, existing goodwill and intangible assets must be assessed and classified within the statement's criteria. Intangible assets with finite useful lives will continue to be amortized over those periods. Amortization of goodwill and intangible assets with indeterminable lives will cease. The Company completed the first step of the transitional goodwill impairment test during the three months ended July 27, 2002 based on the amount of goodwill as of the beginning of the fiscal year ending April 26, 2003, as required by SFAS No. 142. The Company utilized a third party independent valuation to determine the fair value of each of the reporting units based on a discounted cash flow income approach. Based on the results of the first step of the transitional goodwill impairment test, the Company has determined that the fair value of each of the reporting units exceeded their carrying amounts and, therefore, no goodwill impairment existed as of July 27, 2002. As a result, the second step of the transitional goodwill impairment test is not required to be completed. The Company will be required to continue to perform a goodwill impairment test on an annual basis. Accounting for Income Taxes The preparation of the Company's consolidated financial statements requires it to estimate its income taxes in each of the jurisdictions in which it operates, including those outside the United States which may be subject to certain risks that ordinarily would not be expected in the United States. The income tax accounting process involves estimating its actual current exposure together with assessing temporary differences resulting from differing treatment of items, such as deferred revenue, for tax and accounting purposes. These differences result in the recognition of deferred tax assets and liabilities. The Company must then record a valuation allowance to reduce its deferred tax assets to the amount that is more likely than not to be realized. Significant management judgment is required in determining its provision for income taxes, its deferred tax assets and liabilities and any valuation allowance recorded against deferred tax assets. The Company had recorded a full valuation allowance against its deferred tax assets as of April 27, 2002, due to uncertainties related to its ability to utilize these assets. The valuation allowance is based on its estimates of taxable income by jurisdiction in which it operates and the period over which its deferred tax assets will be recoverable. In the event that actual results differ from these estimates or the Company adjusts these estimates in future periods it may need to adjust its valuation allowance which could materially impact its financial position and results of operations. New Accounting Pronouncements In August 2001, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS No. 144"), Accounting for the Impairment or Disposal of Long-Lived Assets, which supersedes SFAS No. 121. SFAS No. 144 addresses financial accounting and reporting for the impairment or disposal of long-lived assets and is effective for fiscal years beginning after December 15, 2001. The Company is currently evaluating the impact of SFAS No. 144. In June 2001, the FASB issued SFAS No. 141, Business Combinations, and SFAS 142, Goodwill and Intangible Assets. SFAS No. 141 is effective for all business combinations completed after June 30, 2001. SFAS No. 142 is effective for fiscal years beginning after December 15, 2001; however, certain provisions of this statement apply to goodwill and other intangible assets acquired between July 1, 2001 and the effective date of SFAS 142. Major provisions of these statements and their effective dates for the Company are as follows: (i) all business combinations initiated after June 30, 2001 must use the purchase method of accounting; (ii) under certain conditions intangible assets acquired in a business combination must be recorded separately from goodwill; (iii) goodwill and intangible assets with indefinite lives acquired after June 30, 2001, will not be amortized. Effective April 28, 2002, the Company adopted the Provisions of SFAS No. 141 and SFAS 142. Adoption is not expected to have a material impact on the Company's financial statements. 23 Effective April 29, 2001, the Company adopted SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended, which requires that all derivative instruments be reported on the balance sheet at fair value and that changes in a derivative's fair value be recognized currently in earnings unless specific hedge criteria are met. If the derivative is designated as a fair value hedge, the changes in the fair value of the derivative and of the hedged item attributable to the hedged risk are recognized as a charge or credit to earnings. Adoption did not have a material impact on the Company's financial statements. ITEM 7A.--QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The primary market risks for the Company is interest rate risk and foreign currency risk. Other risks dealing with contingencies are described in Note Q to the Company's consolidated financial statements included under Item 8. Interest Rate Risk The Company's exposure to interest rate risk is limited to the Company's borrowing arrangements under the New Revolving Credit Facility, Term Loans and certain foreign bank and loan facilities. The interest rates on the Company's other long-term debt are fixed and primarily matures in 2004. The Company has not, to date, engaged in derivative transactions, such as interest rate swaps, caps or collars, in order to reduce it risk, nor does the Company have any plans to do so in the future. A 100 basis point increase in interest rates would have approximately a $350,000 negative impact on the earnings of the Company. Foreign Currency Risk The Company manufactures product in the U.S., Italy, The Netherlands, Spain Germany, France, England and Mexico and sells products worldwide. Therefore the Company's operating results are subject to fluctuations in foreign currency exchange rates, as well as the translation of its foreign operations into U.S. dollars. The risks associated with operating in foreign currencies could adversely affect the Company's future operating results. Additionally, currency fluctuations could improve the competitive position of the Company's foreign competition if the value of the U.S. Dollar rises in relation to the local currencies of such competition. The Company sometimes enters into forward exchange contracts to manage exposure related to certain foreign currency commitments, certain foreign currency denominated balance sheet positions and anticipated foreign currency denominated expenditures. All forward exchange contracts are designated as and effective as a hedge and are highly inversely correlated to the hedged item. If a derivative contract terminates prior to maturity, the investment is shown at its fair value with the resulting gain or loss reflected in operating results. Gains and losses on contracts to hedge identifiable foreign currency commitments are deferred and accounted for as part of the related foreign currency transaction. Gains and losses on all other forward exchange contracts are included in current income. 24 ITEM 8.--FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The Company's Financial Statements, together with the auditors' reports thereon, appear at pages F-1 through F-7 of this annual report Form 10-K. ITEM 9.--CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE None. 25 PART III. ITEM 10.--DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Executive Officers and Directors The executive officers, directors and key employees of the Company as of April 27, 2002 were as follows:

~~NAME~~Name ~~AGE~~Age ~~POSITION~~Position ----- -------- ----------------------------------------------------- Clifford Press......................... 4748 Chairman of the Board, President and Director Russell L. Shade, Jr................... 5152 Chief Executive Officer and Director Laurence S. Levy....................... 4546 Vice President and Director Joseph W. McHugh, Jr................... 4647 Vice President and Chief Financial Officer Oddie V. Leopando...................... 5556 President of Maxima David Ring............................. 40 President of Phymetrics Christopher F. Carmel.................. 4647 Director H. Cabot Lodge III..................... 4546 Director

Clifford Press is the Chairman of the Board, President and a Director of the Company. Mr. Press joined the Company in 1988 in connection with its acquisition and reorganization and has been a member of the Board of Directors since that time. Since 1991, he has served as President. From 1983 to 1986, Mr. Press was employed by Morgan Stanley & Co., Incorporated in its Mergers and Acquisitions Department. Mr. Press is a graduate of Oxford University and the Harvard Business School. Russell L. Shade, Jr. is the Chief Executive Officer and a Director of the Company. Prior to joining the Company, Mr. Shade was Vice President, Industrial Systems, at GE. Mr. Shade was named a Corporate Officer of GE and Vice President of GE Drive Systems in March 1995. During his 25-year career with GE, Mr. Shade held numerous design, engineering, and manufacturing positions in power generation, as well as general management positions in the military and industrial product lines. Mr. Shade graduated from M.I.T with a Master of Science degree in Mechanical Engineering and holds five U.S. patents. Laurence S. Levy is a Vice President and a Director of the Company. Mr. Levy joined the Company in 1988 in connection with its acquisition and reorganization and has been a member of the Board of Directors since that time. From 1983 to 1986, Mr. Levy was a consultant with Bain & Co., a leading strategic management company. Mr. Levy is a graduate of the University of Witwatersrand in South Africa and the Harvard Business School. Joseph W. McHugh, Jr. is a Vice President and the Chief Financial Officer of the Company. Mr. McHugh joined the Company in January 1992. From 1983 to 1992, Mr. McHugh worked at GCA Corporation as a Division Controller and later as Controller. In the former capacity, he participated in the workout and recapitalization of GCA before its purchase in 1988 by General Signal. From 1977 to 1983, Mr. McHugh served in various financial management positions at Honeywell Information Systems. Mr. McHugh received both a Bachelor of Science degree in accounting and a Masters degree in Business Administration from Bentley College. Oddie V. Leopando has served as President of Maxima since November 1995. Prior to joining the Company, Mr. Leopando was employed by MascoTech, Inc. as President of the MascoTech Body Systems & Assembly Division from 1994 to 1995. From 1991 to 1994, Mr. Leopando was the Senior Vice President/General Manager of MascoTech Manufacturing & Assembly Division. Prior to 1991, Mr. Leopando acted in managerial roles in several other companies, including Massey Ferguson, Inc. 26 and Daimler/Chrysler. Mr. Leopando earned a Masters of Business Administration in Finance and Operations from the University of Detroit and a Bachelor of Science in Mechanical Engineering from the Mapua Institute of Technology in Manila, Philippines. Mr. Leopando is a licensed professional engineer. David Ring became President and CEO of Phymetrics in November 2001. Mr. Ring joined Phymetrics from LTX Corporation, a leading supplier of semiconductor test equipment, where he was executive vice president of the LTX's Worldwide Customer Operations Group. Prior to LTX Corporation, Mr. Ring was President of the Microelectronics Group of Entegris, Incorporated, a leading provider of wafer handling products. Mr. Ring holds an MBA from Lehigh University and a BS in Business from the University of Minnesota. Christopher F. Carmel became a Director of the Company effective July 12, 2001. Mr. Carmel is the managing member of Echo Bridge LLC, which is a private equity investment firm. Prior to founding Echo Bridge LLC, Mr. Carmel was a managing member of ROC Partners Inc., and APS Partners LLC between 2000 and 2001. From 1995 to 2000, Mr. Carmel was a partner of Hamilton Robinson LLC, which is a private equity investment firm. Mr. Carmel served on the board of directors of Applied Process Solutions, Inc., was audit committee chairman and served as a member of the executive committee. From 1992 to 1995, Mr. Carmel was a consultant at Citicorp Venture Capital, Ltd. Prior to 1992, Mr. Carmel acted in managerial roles in several other companies, including The Lynx Partners, Inc. Cazenove, Inc. and Casscapedia Partners, L.P. Mr. Carmel earned a Bachelor of Arts degree from the University of Vermont. H. Cabot Lodge III has been a Director of the Company since August 8, 1997. Mr. Lodge is Executive Vice President of iStar Financial, the largest publicly traded finance company focused on the commercial real estate industry. He is a principal of Carmel Lodge LLC, a New York based financial advisory firm he founded in 1996. Mr. Lodge also served as Executive Vice President, Managing Director and in other senior management positions at W.P. Carey & Co., an investment banking firm from 1983 to 1995. Mr. Lodge is a director of Meristar Hospitality Corporation and of TelAmeria Media, Inc. From 1995 to 1997 Mr. Lodge was Chairman of Superconducting Core Technologies, Inc. ("SCT"), a manufacturer of high tech wireless telecommunications equipment he co-founded in 1988. Mr. Lodge is a graduate of Harvard University and the Harvard Business School. Section 16(A) Beneficial Ownership Reporting Compliance Not applicable. ITEM 11.--EXECUTIVE COMPENSATION Compensation Committee Interlocks and Insider Participation The Board of Directors appoints the member of the Compensation Committee. At April 27, 2002 the committee consisted of Mr. Clifford Press and Mr. Christopher Carmel. Employment Agreements Russell L. Shade, Jr., the Company's Chief Executive Officer and a Director, entered into an employment agreement with the Company (the "Employment Agreement"), dated February 24, 1998. For each year of Mr. Shade's employment, the Compensation Committee of the Company's Board of Directors establishes a base salary and an incentive compensation program generally based upon the Company's performance. The Employment Agreement contains a customary confidentiality provision and an agreement that Mr. Shade will not, for three years after his employment ends, engage in business competitive with the Company or solicit customers or employees of the Company. The Employment Agreement also provides shadow stock benefits, shadow stock appreciation benefits and deferred compensation benefits described in the following paragraphs. Upon the commencement of his employment with the Company, Mr. Shade received twenty-two shadow stock units. The stock units vest in yearly increments over a period of five years, beginning on April 30, 1998, with each vested stock unit representing the right to receive, following the fifth 27 anniversary after the vesting thereof, an amount of cash equal to the market value of a share of the Letitia common stock determined as of the end of the most recent fiscal quarter. Upon termination of employment for any reason other than death, all unvested stock units shall be forfeited, and any vested units shall become redeemable by the Company, at the market value of a share of Letitia Common Stock determined as of the end of the most recent fiscal quarter preceding redemption, at any time, but in any event the Company shall redeem the vested units on the scheduled payment date therefore. Upon death, all stock units vest and each stock unit shall be promptly redeemed at the market value of a share of common stock of Letitia Corporation, the corporate parent of the Company, at the end of the most recent fiscal quarter. The Employment Agreement further provides for a stock appreciation arrangement whereby Mr. Shade is entitled to receive additional shadow stock units each year during the term of the Employment Agreement. At April 27, 2002, the shadow stock units granted pursuant to this arrangement represents 8.75% of the outstanding shares of Letitia common stock upon vesting. For the Company's fiscal 2000 and each subsequent year, the number of shadow stock units granted is calculated based on a formula taking into account Mr. Shade's base salary and the market value of Letitia Common Stock. Under the deferred compensation arrangement, the Company shall contribute $35,000 per year into a designated account and Mr. Shade may elect to make additional contributions. Mr. Shade will receive distributions from the account in ten installments, commencing in 2011, or earlier upon termination of employment or death. The Employment Agreement terminates upon Mr. Shade's resignation or discharge, with or without cause. Upon termination by reason of disability, death, or resignation or discharge under certain circumstances, Mr. Shade shall be entitled to receive compensation through the date of his termination, including all benefits enjoyed under the Employment Agreement. Upon termination by reason of resignation or discharge under certain other circumstances, Mr. Shade shall be entitled to receive his base salary and all benefits until the earlier of one year following the date of termination or receipt of income earned from a source unaffiliated with the Company. Laurence S. Levy, a Vice President and Director of the Company, entered into an employment agreement, dated as of May 10, 2001 ("Levy Employment Agreement"). The Levy Employment Agreement has an initial three year term, which may be extended for an additional three years at Mr. Levy's option. The Levy Employment Agreement otherwise terminates upon Mr. Levy's resignation, discharge under certain circumstances or by reason of disability or death. Under the agreement, Mr. Levy is to be employed as Vice President of the Company and the Company is required to cause him to be elected to the Board of Directors of the Company. The Levy Employment Agreement provides for an annual base salary of $140,000 or such greater amount as may be determined by the Board, provided that it shall not be less than what Mr. Clifford Press shall receive as President of the Company, and other customary benefits including office space and support at a location specified by Mr. Levy. In addition, the Levy Employment Agreement entitles Mr. Levy to receive, substantially concurrent with the payment of any management fees, bonus or other distribution made by the Company, excluding distributions made proportionately to equity holders, a payment equal to 42.86% of such amounts made directly or indirectly to Mr. Clifford Press. Value Creation Plan and Related Plans The Company's Value Creation Plan (the "VCP") is a long-term cash incentive compensation plan for certain key officers and employees of the Company which is intended to provide participants in the VCP with an opportunity to share in an increase in the value of the Company or operating unit with which the participating employee is associated. The VCP is designed to provide incentives for employees in the Company's by tracking increases in the economic value based generally upon a multiple of EBITDA, as defined in the VCP, but also reflecting actual proceeds of dispositions of 28 operating units or public offerings of operating units. An aggregate amount equal to up to 5-7% of the incremental increases in value achieved in the Company is allocated to the VCP. In the event that the value of the Company or any of the operating units increases over time, the interests of its participating employees in the VCP will increase proportionally. Interests are granted in the VCP to certain key employees as they are hired or promoted and vest over five years. The value of an employee's interest is based on increases in value (based generally on a multiple of EBITDA but also reflecting actual proceeds of dispositions of operating units or public offerings by operating units) from the date of grant to the end of the year prior to the determination date. Vested interests are cashed out when an employee leaves the Company or retires, or when his operating unit is sold or he is transferred to another division; provided that if the employee is dismissed for cause, his interests (vested and unvested) are forfeited. Subject to the Company's discretion to defer cash payments, an employee may cash out up to 50% of his vested interest while remaining employed. The VCP is a non-qualified and non-funded plan. While Messrs. Leopando, McHugh and certain other key employees have each received interests in the VCP, Mr. Laurence S. Levy, Mr. Press and Mr. Shade currently do not participate in the VCP. As of April 27, 2002, the Company had an accrued liability of $273,000 under the VCP. Stock Appreciation Rights Plan PHI maintains a Phantom Stock Appreciation Rights Plan ("PSAR") which has two variations, an Appreciation Rights Plan, under the terms of which PSARs are offered at the fair market value ("FMV") of PHI and its wholly owned subsidiaries including, CE&A and a Discounted Appreciation Rights Plan, under the terms of which PSARs are offered at a discounted FMV. The authorized amount of PSARs which can be issued under these plans equals 12% of the authorized capital of PHI. The plans are designed to provide incentives for certain key employees of PHI and CE&A, by tracking increases in the FMV of the combined PHI and CE&A subsidiaries. The exercise rights under the Plans are subject to vesting schedules ranging from 4 to 5 years from date of award. The plans have a ten year termination date. Discounted PSARs were issued to certain employees of CE&A who at the time of the acquisition of CE&A by PHI in July of 1999 had an "in the money value" of their unvested CE&A options. The discount amounted equal 75% of the then combined FMV. The CE&A vesting schedule was carried over for the exercise rights of these discounted PSARs. Additionally, PHI created a Deferred Value plan, which is a deferred compensation plan and does not include the issuance of PSARs. The plan was created for the benefit of certain CE&A employees at the time of the CE&A acquisition in July of 1999. Awards earn interest at the rate of prime as of July 1st of each year, plus 1%. Exercise rights are subject to a four or five year vesting schedule from date of award. No additional awards have been made under this plan since its inception. At the time employees exercise their vested rights under the Discounted Appreciation Rights Plan they must execute a Protection Agreement which, among other items, stipulates that for a period of 18 months after termination of a Participant's employment by PHI, or any of its subsidiaries (the "PHI Group") the employee cannot participate in any business which is then in competition with the PHI Group. Appreciation Rights PSARs are awarded at their FMV to certain employees as they are hired or promoted. All three Plans are non-qualified and non-funded. ASIRobicon also maintains a PSAR plan. The authorized amount of PSARs which can be issued under this plan equals 10% of the authorized capital of ASIRobicon. This plan is designed to provide an incentive for certain key employees by tracking increases in the FMV of ASIRobicon. The exercise rights under the plan are subject to a vesting schedule of 5 years from date of award. The plan has a ten year termination date. Retirement Plans The Company maintains the High Voltage Engineering Corporation 401(k) Retirement Plan, a Section 401(k) savings plan for qualified domestic employees, pursuant to which the Company matches fixed employee contributions up to $1,800 and currently contributes an annual profit-sharing amount equal to 2.5% of the employee's annual salary and bonus. Messrs. Laurence S. Levy, Press, Leopando, Shade, and McHugh currently participate in this plan. The Company also maintains the High Voltage Engineering Corporation Retirement Plan (the "Retirement Plan"), a defined benefit plan, which provides for the payment of annual pension benefits, payable on retirement, based on the 29 participating employee's salary during the time of accrual. Participation in the Retirement Plan, and the accrual of additional benefits there under, was frozen by the Company in 1992. Messrs. Laurence S. Levy and Press will receive monthly benefits under the Retirement Plan of $191.05 and $148.35, respectively, beginning upon their retirement. Mr. Shade does not participate in the Retirement Plan. Bonus Plans The Company has in effect various plans pursuant to which the Company's executive officers and certain other employees may receive incentive cash bonuses based upon the achievement of certain earnings goals in the preceding fiscal year by an operating unit or by the Company as a whole, and upon individual performance. The amounts of incentive and discretionary awards, and the performance criteria for such awards, are currently fixed by the Board of Directors. Such amounts, and the related performance criteria, will be set by the Compensation Committee. ITEM 12.--SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth information concerning the beneficial ownership of the Company's common stock, as of the date of this filing by: (i) each person known to the Company to own beneficially more than 5% of the outstanding shares of common stock; (ii) each director; and (iii) all directors and executive officers of the Company as a group. All shares are owned by such person with sole voting and investment power.

~~COMMON~~Common ~~STOCK~~Stock ------------------------- ~~NUMBER~~Number OFof ~~PERCENT~~Percent OFof ~~NAME~~Name OFof ~~STOCKHOLDERS~~Stockholders, ~~DIRECTORS~~Directors ~~AND~~and ~~EXECUTIVE~~Executive ~~OFFICERS~~Officers ~~SHARES~~Shares ~~COMMON~~Common ~~SHARES~~Shares ------------------------------------------------------- --------- ------------- Letitia Corporation(1)...................................... 1,000 92.4% Laurence S. Levy(1)(2)...................................... 1,000 92.4% Clifford Press(1)(3)........................................ 1,000 92.4% Russell L. Shade, Jr........................................ 0.60(4) --(5) Christopher F. Carmel....................................... -- -- H. Cabot Lodge III.......................................... -- -- Directors and executive officers as a group................. 1,000 92.4%

------------------------- (1) The address of each of these persons or organizations is c/o Hyde Park Holdings, Inc., 595 Madison Avenue, 35th Floor, New York, New York 10022. (2) All of such shares of the Company's Common Stock (92.4% of the outstanding common stock) are held by Letitia Corporation. Mr. Laurence S. Levy is an officer of Letitia Corporation. Mr. Laurence S. Levy is also a limited partner of, and an executive officer and 50% shareholder of the corporate general partner of, a limited partnership that owns all of the stock of Letitia Corporation. Mr. Laurence S. Levy disclaims beneficial ownership of any shares of the Company's common stock. (3) All of such shares of the Company's common stock (92.4% of the outstanding common stock) are held by Letitia Corporation. Mr. Press is the Chairman of the Board and President of Letitia Corporation. Mr. Press is also a limited partner of, and an executive officer and 50% shareholder of the corporate general partner of a limited partnership that owns all of the stock of Letitia Corporation. Mr. Press disclaims beneficial ownership of any shares of the Company's common stock. (4) Represents shares issuable upon exercise of warrants to purchase shares of the Company's common stock. (5) Mr. Shade beneficially owns less than 1% of the Company's common stock. 30 ITEM 13.--CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Laurence S. Levy and Clifford Press, officers and directors of the Company, are directors of Letitia Corporation, which owns 92.4% of the Company's outstanding Common Stock. Hyde Park Holdings, Inc. ("Hyde Park"), a corporation wholly owned by Laurence S. Levy and Clifford Press, is a minority stockholder of Letitia Corporation. Historically, the Company has paid to Hyde Park and its affiliates an annual fee for services performed in managing the Company. The management fees paid to Hyde Park and its affiliates were $0.6 million, $0.8 million and $0.8 for fiscal 2002, 2001 and 2000, respectively. Under the terms of the Indenture, while there are any of the Senior Notes outstanding, management fees to Hyde Park in excess of $0.8 million for any fiscal year of the Company subsequent to August 8, 1997 are limited by the Indenture. 31 PART IV. ITEM 14.--EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

~~EXHIBIT~~Exhibit ~~NUMBER~~Number ~~DESCRIPTION~~Description ---------------------- ----------- 3.1 Restated Articles of Organization of the Registrant.* 3.2 Amended and Restated By-laws of the Registrant.* 4.1 Indenture, dated as of August 8, 1997, by and between Registrant and State Street Bank and Trust Company as Trustee.* 4.2 First Supplemental Indenture, dated as of March 19, 1998 to Indenture, dated as of August 8, 1997, by and between the Registrant and State Street Bank and Trust Company, as Trustee.** 4.3 Registration Rights Agreement, dated as of March 19, 1998, by and among the Registrant and CIBC Oppenheimer Corp.** 4.4 Form of Exchange Note.** 4.5 Second Supplemental Indenture, dated as of December 22, 1999, to Indenture, dated as of August 8, 1997, by and between the Registrant and State Street Bank and Trust Company, as Trustee. 10.2 Lease Agreement, dated as of November 10, 1988, by and between Corporate Property Associates 8, L.P. and Datcon Instrument Company (Lancaster, PA).* 10.4 Installment Sale Agreement, dated as of September 23, 1994, by and between Monroeville Area Industrial Development Corporation and Robicon Corporation (New Kensington, PA).* 10.7 Value Creation Plan of the Registrant.* 10.8 High Voltage Engineering Corporation Employment Agreement, by and between Registrant and Russell L. Shade, Jr., dated as of February 24, 1998.** 10.9 Amended and Restated Financing Agreement, dated as of June 19, 2001, by and among the Registrant and the other Borrowers named therein, Ableco Finance LLC and the other Lenders named therein, and the Guarantors named therein. 12 Statement of Computation of Financial Ratios. 21.1 List of Subsidiaries. 24.1 Power of Attorney (included in signature page to Form 10-K).

------------------------- * Incorporated by reference from the Registrant's Registration Statement No. 333-33969, on Form S-4, filed by the Registrant with respect to $135,000,000 aggregate principal amount of the Registrant's 10 1/2% Senior Notes due 2004. ** Incorporated by reference from the Registrant's Registration Statement No. 333-51643, on Form S-4, filed by the Registrant with respect to $20,000,000 aggregate principal amount of the Registrants 10 1/2% Senior Notes due 2004. (b) All schedules have been omitted because either they are not required, are not applicable, or the information is otherwise set forth in the Consolidated Financial Statements and notes thereto. 32 HIGH VOLTAGE ENGINEERING CORPORATION AND SUBSIDIARIES

PAGE -------- Consolidated Financial Statements--April 2827, ~~2001~~2002, April 2928, ~~2000~~2001, April 2429, ~~1999~~2000 Report of Grant Thornton LLP, Independent Certified Public Accountants............................................... F-2 Consolidated Balance Sheets................................. F-3 Consolidated Statements of Operations....................... F-4 Consolidated Statements of Stockholders' Deficiency......... F-5 Consolidated Statements of Cash Flows....................... F-6 Notes to Consolidated Financial Statements.................. F-8

F-1 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS Board of Directors and Stockholders High Voltage Engineering Corporation We have audited the accompanying consolidated balance sheets of High Voltage Engineering Corporation and subsidiaries as of April 27, 2002 and April 28, 2001 and the related consolidated statements of operations, stockholders' deficiency, and cash flows for each of the three years in the period ended April 27, 2002. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of High Voltage Engineering Corporation and subsidiaries as of April 27, 2002 and April 28, 2001 and the consolidated results of their operations and their consolidated cash flows for each of the three years in the period ended April 27, 2002, in conformity with accounting principles generally accepted in the United States of America. GRANT THORNTON LLP Boston, Massachusetts July 12, 2002 F-2 HIGH VOLTAGE ENGINEERING CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in Thousands)

~~APRIL~~April 2827, ~~APRIL~~April 2928, 2002 2001 ~~2000~~ --------- --------- ASSETS CURRENT ASSETS Cash and cash equivalents................................. $ 2615,~~932~~133 $ 526,~~307~~932 Restricted cash........................................... 4,891 29,472 ~~4,061~~ Accounts receivable, net of allowance for doubtful accounts................................................ 136,117 81,853 ~~89,279~~ Refundable income taxes................................... 266 -- ~~1,075~~ Inventories............................................... 60,542 61,631 ~~50,456~~ Costs and earnings in excess of billings.................. 11,343 13,032 ~~7,414~~ Prepaid expenses and other current assets................. 7,016 8,694 ~~11,094~~ -------- -------- Total current assets.................................... 235,308 221,614 ~~168,686~~ PROPERTY, PLANT AND EQUIPMENT, NET.......................... 85,489 82,980 ~~94,535~~ INVESTMENT IN JOINT VENTURE................................. 3,263 2,040 ~~1,829~~ ASSETS HELD FOR SALE........................................ 2,~~510~~393 112,~~528~~510 OTHER ASSETS, NET........................................... 25,912 69,447 ~~46,277~~ COST IN EXCESS OF NET ASSETS ACQUIRED, NET.................. 20,024 33,032 ~~34,957~~ -------- -------- $~~411~~372,~~623~~389 $~~357~~411,~~812~~623 ======== ======== LIABILITIES AND STOCKHOLDERS' DEFICIENCY CURRENT LIABILITIES Current maturities of long-term debt obligations.......... $ 814,~~805~~573 $ 98,~~836~~805 Foreign receivables facilities............................ 12,285 6,075 ~~1,937~~ Accounts payable.......................................... 74,940 73,157 ~~82,896~~ Accrued interest.......................................... 4,~~104~~602 4,~~207~~104 Accrued liabilities....................................... 40,265 43,529 ~~42,950~~ Billings in excess of costs............................... 5,512 4,296 ~~5,788~~ Advance payments by customers............................. 22,156 18,886 ~~7,450~~ Federal, foreign and state income taxes payable........... 557 12,519 ~~3,707~~ Deferred income taxes..................................... 4,018 3,336 ~~1,024~~ Redeemable put warrants................................... 2,900 2,900 -------- -------- Total current liabilities............................... 181,808 177,607 ~~162,695~~ LONG-TERM OBLIGATIONS, LESS CURRENT MATURITIES.............. 215,178 211,588 ~~190,239~~ DEFERRED INCOME TAXES....................................... 14,053 13,519 ~~6,485~~ OTHER LIABILITIES........................................... 25,245 28,249 ~~31,319~~ REDEEMABLE PREFERRED STOCK (AGGREGATE LIQUIDATION PREFERENCE OF $4855,~~892~~934 AS OF APRIL 2827, ~~2001~~2002).......................... 53,847 46,122 ~~40,642~~ MINORITY INTEREST........................................... 93 59 -- COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' DEFICIENCY Common stock.............................................. 1 1 Paid-in-capital........................................... 20,140 1920,~~527~~140 Accumulated deficit....................................... (86131,~~215~~294) (9486,~~863~~215) Common stock warrants..................................... 2,813 2,~~200~~813 Other comprehensive (loss)................................ (29,~~260~~495) (~~433~~2,260) -------- -------- Total stockholders' deficiency.......................... (65117,~~521~~835) (7365,~~568~~521) -------- -------- $~~411~~372,~~623~~389 $~~357~~411,~~812~~623 ======== ========

The accompanying notes are an integral part of these statements. F-3 HIGH VOLTAGE ENGINEERING CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in Thousands, Except Per Share Data)

~~YEARS~~Years ~~ENDED~~Ended ---------------------------------------- ~~APRIL~~April 2827, ~~APRIL~~April 2928, ~~APRIL~~April 2429, 2002 2001 2000 ~~1999~~ ----------- ------------ ----------- Net sales................................................... $403,012 $416,547 $ 271,485 ~~$ 220,683~~ Cost of sales (Includes subassembly exit costs of $2,661 and $405 in fiscal 2001 and 2000, respectively, and restructuring charge--inventory markdown of $855 in fiscal 2000)..................................................... ~~319~~306,~~917~~533 ~~197~~322,~~342~~593 ~~144~~199,~~426~~654 --------~~---~~ --------~~----~~ --------~~---~~ Gross profit.............................................. 96,~~630~~479 7493,~~143~~954 7671,~~257~~831 Administrative and selling expenses......................... 83,547 73,636 56,108 ~~46,328~~ Research and development expenses........................... 1916,~~209~~485 1916,~~673~~533 1617,~~518~~361 Write off of purchased in-process research and development............................................... -- -- 1,650 -- Restructuring charge........................................ 859 143 1,795 ~~580 Reimbursed environmental and litigation costs, net.......... 52 404 293~~ Other, net.................................................. 56,~~054~~314 65,~~768~~106 (17,~~424)~~172 --------~~---~~ --------~~----~~ --------~~---~~ (Loss) ~~income~~ from operations...................................... (10,726) (1,464) (12,255) ~~13,962~~ Interest expense............................................ (25,043) (22,044) (19,122) ~~(17,242)~~ Interest income............................................. 1,690 753 921 ~~1,886~~ --------~~---~~ --------~~----~~ --------~~---~~ Loss from continuing operations before income taxes, discontinued operations and extraordinary item.......... (34,079) (22,755) (30,456) ~~(1,394)~~ Income taxes (credit)....................................... 2,948 (2,291) (631) ~~(3,606)~~ --------~~---~~ --------~~----~~ --------~~---~~ (Loss) ~~income~~ from continuing operations before discontinued operations and extraordinary item....................... (37,027) (20,464) (29,825) ~~2,212~~ Discontinued operations: Income from discontinued operations, net of income taxes................................................... -- 2,078 2,158 ~~3,188~~ Gain on disposal of discontinued operations, net of income taxes................................................... -- 34,270 559 ~~9,633~~ --------~~---~~ --------~~----~~ --------~~---~~ (37,027) 15,884 (27,108) ~~15,033~~ Extraordinary loss, net of income taxes..................... (327) (530) -- -- ------~~-----~~ --------~~----~~ --------~~---~~ Net ~~income~~ (loss) income........................................... (37,354) 15,354 (27,108) ~~15,033~~ Preferred dividends......................................... (67,~~101~~036) (46,~~965~~101) (4,~~329~~965) Accretion of redeemable preferred stock..................... (~~605~~689) (~~448~~605) (~~443~~448) --------~~---~~ --------~~----~~ --------~~---~~ Net ~~income~~ (loss) income applicable to common stockholders......... $(45,079) $ 8,648 $ (32,521) ~~$ 10,261~~ ========~~===~~ ========~~====~~ ========~~===~~ Basic (loss) income per common share: Continuing operations..................................... $(41,322.25) $(25,087.71) $ (32,537.39) ~~$ (2,363.80)~~ Income from discontinued operations....................... -- 1,918.74 1,992.61 ~~2,943.67~~ Gain on disposal of discontinued operations............... -- 31,643.58 516.16 ~~8,894.74~~ Extraordinary item........................................ (301.94) (489.38) -- -- ----------- ------------ ----------- Net ~~income~~ (loss) income applicable to common stockholders....... $(41,624.19) $ 7,985.23 $ (30,028.62) ~~$ 9,474.61~~ =========== ============ =========== Diluted ~~income~~ (loss) income per common share: Continuing operations..................................... $(21,512.27) ~~$ (2,069.52)~~ Income from discontinued operations....................... 1,645.29 ~~2,577.20~~ Gain on disposal of discontinued operations............... 27,133.81 ~~7,787.39~~ Extraordinary item........................................ (419.64) -- ----------- ~~-----------~~ Net income applicable to common stockholders.............. $ 6,847.19 ~~$ 8,295.07~~ =========== ~~===========~~ Weighted average common stock outstanding................... 1,083 1,083 1,083 Weighted average common stock outstanding and dilutive equivalents outstanding................................... 1,~~263~~276 1,~~243~~263 1,~~237~~243 =========== ============ ===========

The accompanying notes are an integral part of these statements. F-4 HIGH VOLTAGE ENGINEERING CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY (Dollars in Thousands)

~~COMMON~~Common ~~OTHER~~Other ~~COMMON~~Common ~~PAID~~Paid-INIn ~~ACCUMULATED~~Accumulated ~~STOCK~~Stock ~~COMPREHENSIVE~~Comprehensive ~~STOCK~~Stock ~~CAPITAL~~Capital ~~DEFICIT~~Deficit ~~WARRANTS~~Warrants (~~LOSS~~Loss) ~~TOTAL~~Total -------- -------- ----------- -------- ------------- -------- Balance, April 2524, ~~1998~~1999...........~~....~~ $ 1 $19,527 $ (7262,~~603~~342) $2,200 $ (60347) $ (5040,~~935~~961) Net ~~income~~loss............................ 15(27,~~033~~108) 15(27,~~033~~108) Preferred stock dividends.........~~....~~ (4,~~329~~965) (4,~~329~~965) Accretion of redeemable preferred stock...........................~~....~~ (~~443~~448) (~~443~~448) Change in foreign currency........~~....~~ (~~287~~86) (~~287~~86) -------- ------- --------- ------ ------- --------- Balance, April 2429, ~~1999~~2000...........~~....~~ 1 19,527 (6294,~~342~~863) 2,200 (~~347~~433) (4073,~~961~~568) Net ~~loss~~income........................~~......~~ ~~(27~~15,~~108)~~354 ~~(27~~15,~~108)~~354 Preferred stock dividends.........~~....~~ (46,~~965~~101) (46,~~965~~101) Accretion of redeemable preferred stock...........................~~....~~ (~~448~~605) (~~448~~605) Issuable shares of common stock and common stock warrants........... 613 613 1,226 Change in foreign currency translation..................... (1,451) (1,451) Pension liability adjustment...... (86376) (86376) -------- ------- --------- ------ ------- --------- Balance, April 2928, ~~2000~~2001...........~~....~~ 1 1920,~~527~~140 (9486,~~863~~215) 2,~~200~~813 (~~433~~2,260) (7365,~~568~~521) Net ~~income~~loss............................ 15(37,354) 15(37,354) Preferred stock dividends.........~~....~~ (67,~~101~~036) (67,~~101~~036) Accretion of redeemable preferred stock...........................~~....~~ (~~605~~689) (~~605~~689) ~~Issuable shares of common stock and common stock warrants............... 613 613 1,226~~ Change in foreign currency translation.....................~~....~~ (~~1,451~~525) (~~1,451~~525) Pension liability adjustment......~~....~~ (~~376~~6,710) (~~376~~6,710) -------- ------- ---------- ------ ------- --------- Balance, April 2827, ~~2001~~2002...........~~....~~ $ 1 $20,140 $(86131,~~215~~294) $2,813 $(29,~~260~~495) $(65117,~~521~~835) ======== ======= ========== ====== ======= =========

The accompanying notes are an integral part of these statements. F-5 HIGH VOLTAGE ENGINEERING CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in Thousands, Except Per Share Data)

~~YEARS~~Years ~~ENDED~~Ended --------------------------------- ~~APRIL~~April 2827, ~~APRIL~~April 2928, ~~APRIL~~April 2429, 2002 2001 2000 ~~1999~~ --------- --------- --------- Cash flows from operating activities: Net ~~income~~ (loss) income......................................... $(37,354) $ 15,354 $(27,108) ~~$15,033~~ Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Income from discontinued operations, net of income taxes................................................. -- (2,078) (2,158) ~~(3,188)~~ Extraordinary item, net of income taxes................. 327 530 -- -- Depreciation and amortization........................... 28,755 20,766 1516,~~250~~486 ~~9,075 Write down for impairment of long lived assets and assets held for sale to net realizable value.......... -- 1,236 --~~ Restructuring charge--inventory markdown................ -- ~~855~~ -- 855 Write-off of purchased research and development......... -- -- 1,650 -- Non-cash interest....................................... 1,~~255~~396 1,~~095~~255 1,~~289~~095 Deferred income taxes................................... 1,216 9,346 (897) ~~2,203~~ Undistributed earnings of affiliate..................... (851,256) (~~269~~85) (~~222~~269) Gain on sale of discontinued operations................. -- (34,270) (559) ~~(9,633)~~ Gain on sale of assets and other........................ (~~250~~364) (~~154~~250) (~~379~~154) Change in assets and liabilities, net of effects of business acquisitions and divestitures: Accounts receivable................................... (4,050) (9,024) (3,894) ~~(115)~~ Proceeds from the sale of accounts receivable......... (10,279) (2,921) 13,200 -- Refundable income taxes............................... 2,592 1,075 (596) ~~2,013~~ Inventories........................................... 1,089 (11,175) (718) ~~(4,350)~~ Cost and earnings in excess of billings............... 1,689 (5,618) 4,706 -- Prepaid expenses and other current assets............. 1,678 2,400 (3,847) 55 Other assets.......................................... 258 (7,835) (719) ~~(633)~~ Accounts payable, accrued interest and accrued liabilities......................................... (10,149) (11,378) (4,084) ~~1,884~~ Billings in excess of cost............................ 1,216 (1,492) (526) -- Advance payments by customers......................... 3,270 11,436 2,726 ~~(1,889)~~ Federal, foreign and state income taxes payable....... (14,602) (13,682) (1,209) ~~(5,575)~~ -------- -------- -------- Net cash (used in) ~~provided by~~ continuing operations..............~~..........................~~ (34,568) (37,646) (6,020) ~~5,568~~ Net cash provided by discontinued operations........ -- 4,964 5,871 ~~3,049~~ -------- -------- -------- Net cash (used in) ~~provided by~~ operating activities...............~~.........................~~ (34,568) (32,682) (149) ~~8,617~~ Cash flows from investing activities: Additions to property, plant and equipment, continuing operations.............................................. (14,605) (9,365) (11,531) ~~(6,958)~~ Additions to property, plant and equipment, discontinued operations.............................................. -- (2,038) (1,244) ~~(2,252)~~ Acquisition of Ansaldo Sistemi Industriali, S.p.A., net of cash acquired........................................... -- 5,679 (24,202) -- Acquisition of Charles Evans & Associates, net of cash acquired................................................ -- ~~(38,001)~~ -- ~~Acquisition of Industrial Power Rectifier product line.... -- --~~ (338,~~226~~001) Acquisition of Vivirad High Voltage, net of cash acquired................................................ -- (2,281) -- -- Proceeds from sales of discontinued operations, net of expenses................................................ -- 65,011 1,190 ~~25,295~~ Proceeds from sales of assets and other, net of expenses................................................ 4,000 3,551 3,208 ~~681~~ Other..................................................... -- (66) -- 49 -------- -------- -------- Net cash ~~provided by~~ (used in) provided by investing activities........................................ (10,605) 60,491 (70,580) ~~13,589~~ -------- -------- --------

F-6 HIGH VOLTAGE ENGINEERING CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (Dollars in Thousands, Except Per Share Data)

~~YEARS~~Years ~~ENDED~~Ended --------------------------------- ~~APRIL~~April 2827, ~~APRIL~~April 2928, ~~APRIL~~April 2429, 2002 2001 2000 ~~1999~~ --------- --------- --------- Cash flows from financing activities: Net borrowings ~~(payments)~~ from foreign credit line. ................. $ 6,106 $ 4,193 $ 2,084 ~~$(2,129)~~ Net decrease (increase) ~~decrease~~ in restricted cash................ 24,581 (25,411) 12,870 ~~(2,986)~~ Principal (payments) ~~borrowing~~ on long-term obligations............... (3,876) (4,404) ~~19,580~~ (13,~~762~~773) Net borrowings under credit ~~agreement~~agreements..................... 117,~~756~~363 16,581 8,373 -- Proceeds from the issuance of long-term obligations, net of issuance costs....................................... 1324 8,~~766~~941 124,~~326~~679 21 Minority interest......................................... 34 59 -- -- Cash overdraft, continuing operations..................... (548) (2,360) 2,209 ~~(195)~~ Cash overdraft, discontinued operations................... -- -- 10 ~~(330)~~ -------- -------- -------- Net cash provided by (used in) ~~provided by~~ financing activities... 33,684 (2,401) 46,452 ~~(7,381)~~ -------- -------- -------- Effect of foreign exchange rate changes on cash............. (310) (3,783) (1,043) ~~(139)~~ -------- -------- -------- Net ~~increase~~ (decrease) increase in cash and cash equivalents......................................... (11,799) 21,625 (25,320) ~~14,686~~ Cash and cash equivalents, beginning of year................ 26,932 5,307 30,627 ~~15,941~~ -------- -------- -------- Cash and cash equivalents, end of year...................... $ 15,133 $ 26,932 $ 5,307 ~~$30,627~~ ======== ======== ======== Supplemental Disclosure of Cash Flow Information: Cash paid for: Interest................................................ $ 23,032 $ 22,496 $ 18,853 ~~$17,972~~ Income taxes............................................ 17,196 1,977 3,880 ~~1,947~~ Supplemental Schedule of Non-cash Investing and Financing Activities: Preferred stock dividends-in-kind and issuable preferred stock dividends-in-kind................................. $ 67,~~101~~036 $ 46,~~965~~101 $ 4,~~329~~965 Leased asset additions.................................... 5,586 198 1,367 ~~3,606 Fixed assets transferred to inventory..................... -- -- 243~~

The accompanying notes are an integral part of these statements. F-7 HIGH VOLTAGE ENGINEERING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in Thousands, Except Per Share Data) NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A summary of significant accounting policies consistently applied in the preparation of the accompanying financial statements follows: Nature of Operations High Voltage Engineering Corporation (the "Company") owns and operates a diversified group of three industrial and technology based manufacturing business segments with multiple product lines that serve a broad spectrum of original equipment manufacturers and end-users. Business and customer concentration is lessened due to the diversified nature of its portfolio of businesses, with respect to products sold and end-markets served on a world-wide basis. Examples of end-markets served include process automation, metal and steel, water and wastewater treatment, petrochemicals, pulp and paper, marine and cable, oil and gas exploration and transportation, semiconductor fabrication, chemicals, construction, agriculture, materials handling, and for scientific and educational research. Financial Statement Presentation The Company is 92.4% owned by Letitia Corporation ("Letitia"). The Company's wholly owned subsidiaries include Ansaldo Sistemi Industriali S.p.A. and subsidiaries ("ASI"), Robicon Corporation and subsidiaries ("Robicon"), Physical Electronics, Inc. and subsidiaries ("PHI"), Maxima Technologies, Inc. and subsidiaries ("Maxima"), and High Voltage Engineering Europa B.V. ("HVE Europa"). The consolidated financial statements include the accounts of the Company and its domestic and foreign subsidiaries after elimination of material intercompany transactions and balances. The Company maintains non-controlling interest in certain affiliated companies which are accounted for using the equity method. Separate disclosure is not presented as the amounts are not significant. Accounting Period The Company operates on a 52 or 53 week fiscal period. The terms "fiscal 2002", "fiscal 2001" and "fiscal 2000" refer to the Company's fiscal years ended April 27, 2002, April 28, 2001 and April 29, 2000, respectively. Fiscal 2002, fiscal 2001 and fiscal 2000 include the results of operations of the Company for 52 weeks, 52 weeks and 53 weeks, respectively. Revenue Recognition Sales of goods that are not part of a long-term contract are generally recognized upon shipment of products, in accordance with SEC Staff Accounting Bulletin No. 101, Revenue Recognition. Service revenue is recognized when the service is performed and accepted by the customer. Product revenue is recognized when there is persuasive evidence of an arrangement, the fee is fixed or determinable, delivery of the product to the customer has occurred and the Company has determined that collection of the fee is probable. Title to the product generally passes upon shipment of the product as the products are shipped FOB shipping point, except for certain foreign shipments. If the product requires significant installation to be performed by the Company that is not perfunctory and inconsequential, such revenue related to the product is deferred and recognized upon the completion of the installation. The Company provides for a warranty reserve at the time the product's revenue is recognized. The Company follows both the completed-contract method and the percentage-of completion methods of accounting for contract revenue. Contracts are considered complete upon completion of all essential contract work, including support for integrated testing and customer acceptance. Under the completed-contract method, revenue and costs of individual contracts are included in operations in the year during which they are completed. Losses expected to be incurred on contracts in progress are charged to operations in the period such losses are determined. The aggregate of costs of uncompleted contracts in excess of related billings is shown as a current asset, and the aggregate of billings on uncompleted contracts in excess of related costs is shown as a current liability. F-8 HIGH VOLTAGE ENGINEERING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Dollars in Thousands, Except Per Share Data) NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Under the percentage-of-completion method, income is recognized on contracts as work progresses based on the relationship between total contract revenues and total estimated contract costs. The percentage of work completed is determined by comparing the accumulated costs incurred to date with management's current estimate of total costs to be incurred at contract completion. Revenue is recognized on the basis of actual costs incurred plus the portion of income earned. Contract costs include all direct material, subcontractor costs, and labor costs and those indirect costs related to contract performance. Revisions in profit estimates during the period of a contract are reflected in the accounting period in which the revised estimates are made on the basis of the stage of completion at the time. If estimated total costs on a contract indicate a loss, the entire amount of the estimated loss is provided for currently. Costs and estimated earnings in excess of billings on uncompleted contracts represent revenue recognized in excess of amounts billed to customers. These amounts are not yet billable under the terms of the contracts and are recoverable from customers upon various measures of performance. Billings in excess of costs and estimated earnings on uncompleted contracts represents billings to customers in excess of earned revenue and advances on contracts. Allowance for Doubtful Accounts A summary of activity in the allowance for doubtful accounts is as follows:

~~YEARS~~Years ~~ENDED~~Ended --------------------------------- ~~APRIL~~April 2827, ~~APRIL~~April 2928, ~~APRIL~~April 2429, 2002 2001 2000 ~~1999~~ --------- --------- --------- Balance at beginning of year................................ $ 4,040 $ 7,046 $ 1,835 ~~$1,990~~ Provision................................................... (~~732~~132) ~~112~~ (70732) 112 Charge-offs, net of recoveries.............................. (1,254) (2,197) (1,407) ~~(118)~~ Acquisitions, divestitures and effect of receivable securitization............................................ 1,333 (77) 6,506 33 --------- --------- --------- Balance at end of year...................................... $ 3,987 $ 4,040 $ 7,046 ~~$1,835~~ ========= ========= =========

CASH EQUIVALENTS For purposes of the statements of cash flows, all highly liquid debt instruments purchased with a maturity of three months or less are considered to be cash equivalents. Cash overdrafts included in trade accounts payable were $3,703 and $4,251 at April 27, 2002 and April 28, 2001, respectively. At April 27, 2002 and April 28, 2001, cash in the amounts of $11,361 and $11,119 respectively, was in uninsured foreign bank accounts, including $4,891 and $4,432, respectively which was generally used for collateral for bank guarantee facilities in support of customer advances. F-9 HIGH VOLTAGE ENGINEERING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Dollars in Thousands, Except Per Share Data) NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Inventories Inventories are primarily stated at the lower of cost (first-in, first-out method) or market. Certain inventories are stated at the lower of cost or market determined by the last-in, first-out (LIFO) method. The amount by which the replacement cost exceeds the LIFO value was not material at April 27, 2002. Property, Plant and Equipment Property, plant and equipment are recorded at cost. Depreciation and amortization are provided for in amounts sufficient to relate the cost of depreciable assets to operations over their estimated service lives. Leasehold improvements are amortized over the lives of the respective leases or the service lives of the improvements, whichever is shorter. Leased property under capital leases is amortized over the lives of the respective leases or over the service lives of the assets for those leases which substantially transfer ownership. The straight-line method of depreciation is followed for substantially all assets for financial reporting purposes, while accelerated methods are used for tax purposes. Future income taxes resulting from depreciation temporary differences have been provided for as deferred income taxes. Depreciation is based upon the following estimated useful lives: Building and building improvements.......................... 30 to 40 years Leasehold improvements...................................... 5 to 20 years Machinery and equipment..................................... 2 to 15 years Other....................................................... 3 to 5 years

Cost in Excess of Net Assets Acquired The cost in excess of net assets acquired (goodwill) was amortized on the straight-line basis over the expected period of benefit of three to forty years, through April 27, 2002. The Company continually evaluates the carrying value of goodwill. Any impairments are recognized when the expected undiscounted future operating cash flows derived from such goodwill is less than the carrying value. Intangible Assets Costs incurred to obtain debt financing are amortized over the expected term of the related debt. Amortization of deferred financing costs is recorded as interest expense. The costs associated with consulting agreements are amortized over the period to which the agreements relate. Patents are amortized on the straight line basis over the remaining legal lives. Long-Term Compensation Plans Costs associated with a Valuation Creation Plan ("VCP") which provides long-term compensation for key individuals are recorded, on a quarterly basis, based on the formula as defined in the VCP. Cost associated with a Phantom Stock Appreciation Rights Plan ("PSAR Plan") which provides long-term incentive compensation for key individuals of PHI and reviewed on a quarterly basis, based on an formula as defined in the PSAR Plan and are recorded on a quarterly basis. F-10 HIGH VOLTAGE ENGINEERING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Dollars in Thousands, Except Per Share Data) NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Accumulated Other Comprehensive Income (Loss) The after-tax components of accumulated other comprehensive income (loss) are as follows:

~~CE&A~~Foreign ~~ASI~~Pension ~~VHV~~Other ~~TOTAL~~Currency Liability Comprehensive Translation Adjustment Loss -------- --- ----- ----- --- ---------- ~~Working capital~~Balance, ~~other~~April ~~than~~24, ~~cash acquired~~1999............... $ ~~836~~(347) $ ~~15,230 $~~ -- $ ~~16,066~~(347) ~~Property,~~Change ~~plant~~in ~~and~~foreign ~~equipment~~currency translation........................... ~~15,737~~(86) ~~29,551~~(86) ------- ~~45,288~~-------- ~~Other assets (includes purchased in~~-~~process~~------- ~~research~~Balance, ~~and~~April ~~development)~~29, 2000............... (433) -- (433) Change in foreign currency translation........................... 10(1,~~014~~451) ~~2,785~~ -- 12(1,~~799~~451) ~~Cost~~Pension inliability ~~excess of assets acquired~~adjustment.......... -- (376) (376) ------- -------- -------- Balance, April 28, 2001............... 14(1,~~104~~884) --(376) (2,~~281~~260) ~~16,385~~Change ~~Other~~in ~~liabilities~~foreign currency translation......................... (525) -- (525) Pension liability adjustment..........~~....~~ ~~(2,690)~~-- (296,~~043~~710) -- (316,~~733~~710) -------- -------- ------ --~~------~~ ~~Purchase price~~Balance, ~~net~~April of27, ~~cash received~~2002...............~~.....~~ $38(2,~~001~~409) $ 18(7,~~523~~086) $2(9,~~281~~495) ~~$ 58,805~~ ======== ======== ====== ==~~======~~

Foreign subsidiaries primarily use the local currency as their functional currency, except for those in highly inflationary economies. Assets and liabilities of these entities are translated into U.S. dollars at rates of exchange in effect at the balance sheet date. The resulting translation adjustments are accumulated in a separate component of stockholders' deficiency and are included in operations only upon the sale or liquidation of the underlying foreign investment. Revenue and expense transactions are translated at the weighted average exchange rates for the fiscal month in which the transaction occurred. Also included are the effects of exchange rate changes on intercompany balances of a long-term investment nature. Derivatives The Company sometimes enters into forward exchange contracts or currency swaps to manage exposure related to certain foreign currency commitments. Forward exchange contracts or swaps may be designated as hedges depending upon their effectiveness as measured by their ability to be considered highly inversely correlated to the hedged item as required by generally accepted accounting principles. If a derivative contract terminates prior to maturity, the investment is shown at its fair value with the resulting gain or loss reflected in operating results. Gains and losses on contracts to hedge identifiable foreign currency commitments are deferred and accounted for as part of the related foreign currency transaction. Gains and losses on all other forward exchange contracts are included in current income. At April 27, 2002, the notional amounts of forward exchange contracts and currency swaps, primarily to sell or buy U.S. dollars, totaled $5,188. All of these contracts mature within the next twelve months. Deferred unrealized gains or losses from hedging firm commitments are immaterial. The Company's forward exchange contracts and currency swaps contain credit risk in that its banking counter-parties may be unable to meet the terms of the agreements. The Company minimizes such risk by limiting its counter-parties to major financial institutions. In addition, the potential risk of loss with any one party resulting from this type of credit risk is monitored. Management does not expect any material losses as a result of default by other parties. The Company does not use derivative financial instruments for speculative trading purposes, nor does it hold or issue leveraged derivative financial instruments. F-11 HIGH VOLTAGE ENGINEERING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Dollars in Thousands, Except Per Share Data) NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Certain Risks and Concentrations The Company operates in highly competitive and rapidly changing markets and some competitors have substantially greater sales and financial resources. Entry into the market by new competition or the development of new technologies could adversely affect operating results. Significant concentration of credit risk is with trade receivables, which is somewhat mitigated due to the Company's diversity of regions and customers. At April 27, 2002, one customer accounted for 6.5% of trade receivables. Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of billed and unbilled receivables. Concentrations of credit risk with respect to billed and unbilled contracts receivable is mitigated by obtaining letters of credit to ensure payment from international customers. Generally, collateral is not required of customers who are located in countries where the Company has operations. The Company has manufacturing operations in seven foreign countries (Italy, Spain, Germany, France, the United Kingdom, The Netherlands and Mexico). Risks inherent in foreign operations include changes in social, political and economic conditions, changes in currency exchange rates, changes in the laws and policies that govern foreign investments in countries, changes in United States laws and regulations relating to foreign trade and investment. The Company has made significant acquisitions that are inherently subject to risk. The successful integration of the acquired operations and the substantial demands on the attention of senior management may adversely impact their ability to manage the Company's existing businesses. Liquidity The ability of the Company to satisfy its obligations under existing indebtedness and preferred stock will be primarily dependent upon the future financial and operating performance of its operating units and upon the Company's ability to renew or refinance borrowings, to sell assets or to raise additional equity capital as necessary. The Company expects it will be able to refinance any principal payment obligations that are scheduled to mature prior to maturity of the 1998 Senior Notes. Use of Estimates In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements as well as revenues and expenses during the reporting period. Actual results could differ from those estimates. Income Taxes Deferred tax assets and liabilities are determined based on the differences between the financial statement and tax basis of assets and liabilities as measured by the enacted tax rates which will be in effect when these differences reverse, subject to a valuation allowance. F-12 HIGH VOLTAGE ENGINEERING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Dollars in Thousands, Except Per Share Data) NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Deferred income taxes result from changes in deferred tax assets, deferred tax liabilities and changes in the valuation allowance. Income tax expense consists of the taxes payable for the year and deferred income taxes as discussed above. Net Income (Loss) Per Share The Company computes basic EPS utilizing only weighted shares outstanding, while diluted EPS is computed considering the dilution of warrants and issuable shares of common stock. Dilutive EPS is not presented for fiscal 2002 and 2000 because losses from continuing operations exist for this period and results in an antidilutive effect. Advertising Advertising costs are expensed as incurred. Advertising expense was $4,623, $3,304 and $4,034 for fiscal 2002, fiscal 2001 and fiscal 2000, respectively. Research and Development Research and development costs are substantially charged to operations as incurred. Environmental Expenditures Costs associated with remediation activities are expensed except to the extent such expenses were previously accrued. Liabilities relating to probable remedial activities are recorded when the cost of such activities can be reasonably estimated. The liability is discounted when the amount and timing of the cash payments for that remediation site are fixed or reliably determinable. The liabilities are adjusted as further information develops or circumstances change. Fair Value of Financial Instruments The carrying amount of cash and cash equivalents approximates fair value. The carrying amounts of borrowings under short-term revolving credit agreements, and variable rate long-term debt instruments approximate their fair value as the floating rates applicable to the financial instruments reflect changes in overall market interest rates. The fair value of other long-term debt is estimated using discounted cash flow analysis, based on the Company's current incremental borrowing rates for similar types of borrowing arrangements. The fair value of the Company's long-term debt is estimated based on the quoted market prices for the same or similar issues. At April 27, 2002, the carrying amount and estimated fair value of long-term debt and foreign receivables facilities were $242,036 and $144,085, respectively. The carrying value of the redeemable put warrants approximates the fair value based on an estimate by management. The fair value of the Company's redeemable preferred stock at April 27, 2002, is estimated based on the quoted market prices for the same or similar issues. At April 27, 2002, the carrying amount and estimated fair value of redeemable preferred stock were $53,847 and $1,615, respectively. F-13 HIGH VOLTAGE ENGINEERING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Dollars in Thousands, Except Per Share Data) NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) The estimate fair value of forward currency exchange contracts calculated using the exchange rate at April 27, 2002, as quoted by the respective brokers was approximately $4,646. Fair value estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect these estimates. New Accounting Pronouncements Effective April 29, 2001, the Company adopted SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended, which requires that all derivative instruments be reported on the balance sheet at fair value and that changes in a derivative's fair value be recognized currently in earnings unless specific hedge criteria are met. If the derivative is designated as a fair value hedge, the changes in the fair value of the derivative and of the hedged item attributable to the hedged risk are recognized as a charge or credit to earnings. Adoption did not have a material impact on the Company's financial statements. The Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) 141, Business Combinations, and SFAS 142, Goodwill and Intangible Assets. SFAS 141 is effective for all business combinations completed after June 30, 2001. SFAS 142 is effective for fiscal years beginning after December 15, 2001; however, certain provisions of this Statement apply to goodwill and other intangible assets acquired between July 1, 2001 and the effective date of SFAS 142. Major provisions of these statements and their effective dates for the Company are as follows: (i) all business combinations initiated after June 30, 2001 must use the purchase method of accounting; (ii) intangible assets acquired in a business combination must be recorded separately from goodwill if they arise from contractual or other legal rights or are separable from the acquired entity and can be sold, transferred, licensed, rented or exchanged, either individually or as part of a related contract, asset or liability; (iii) goodwill and intangible assets with indefinite lives acquired after June 30, 2001, will not be amortized. Effective January 1, 2002, all previously recognized goodwill and intangible assets with indefinite lives will no longer be subject to amortization. Effective January 1, 2002, goodwill and intangible assets with indefinite lives will be tested for impairment annually and whenever there is an impairment indicator and all acquired goodwill must be assigned to reporting units for purposes of impairment testing and segment reporting. Effective April 28, 2002, the Company adopted the provisions of SFAS No. 141 and SFAS No. 142. Adoption is not expected to have a material impact on the Company's financial statements. F-14 HIGH VOLTAGE ENGINEERING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Dollars in Thousands, Except Per Share Data) NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) The Company completed the first step of the transitional goodwill impairment test during the three months ended July 27, 2002 based on the amount of goodwill as of the beginning of the fiscal year ending April 26, 2003, as required by SFAS No. 142. The Company utilized a third party independent valuation to determine the fair value of each of the reporting units based on a discounted cash flow income approach. Based on the results of the first step of the transitional goodwill impairment test, the Company has determined that the fair value of each of the reporting units exceeded their carrying amounts and, therefore, no goodwill impairment existed as of July 27, 2002. As a result, the second step of the transitional goodwill impairment test is not required to be completed. The Company will be required to continue to perform a goodwill impairment test on an annual basis. In August 2001, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS No. 144"), Accounting for the Impairment or Disposal of Long-Lived Assets, which supersedes SFAS No. 121. SFAS No. 144 addresses financial accounting and reporting for the impairment or disposal of long-lived assets and is effective for fiscal years beginning after December 15, 2001. The Company is currently evaluating the impact of SFAS No. 144. Reclassifications Certain reclassifications have been made to the fiscal 2001 and fiscal 2000, respectively, consolidated financial statements in order to conform with the current year's presentation. NOTE B--DIVESTITURES AND OTHER TRANSACTIONS On March 7, 2001, the Company completed the sale of substantially all the net assets of its Anderson Power division and all the capital stock of Anderson Power Products Ireland B.V. (together "Anderson") to Ideal Industries, Inc. for $78,722 in cash. The Company recorded a gain on the disposal in fiscal 2001 of $34,270, net of income taxes and transaction related expenses. Revenues attributable to Anderson discontinued operations were approximately $21,862 for the first nine months of fiscal 2001. As a result of this sale, the Company's consolidated results of operations have been restated to reclassify the results of operations of Anderson to discontinued operations. The Asset Sale Proceeds, as defined, received by the Company in connection with the disposition of Anderson was subject to a covenant of the Senior Notes Indenture, which requires the Company to apply the net cash received to (i), repay debt ranking PARI PASSU to the Senior Notes within 180 days, (ii) contractually commit to acquisitions, capital expenditures or investments relating to the Company's presently conducted business within 180 days and paid within 360 days or (iii) offer to repurchase the Senior Notes pursuant to an Excess Proceeds Offer, as defined. The Company has invested a portion of the Asset Sale Proceeds through the purchase of certain receivables from High Voltage Funding Corporation ("HV-FC") a limited purpose subsidiary of the Company, in connection with the termination of the Refinanced Receivables Purchase Facility and invested in certain capital expenditures. The Asset Sale Proceeds included in restricted cash was $25,040 at April 28, 2001. From time to time, the Company achieves liquidity through receivables purchase arrangements with HV-FC a limited purpose subsidiary of the Company. Under these arrangements, the domestic subsidiaries of the Company sell a defined pool of trade accounts receivables, and the related rights inherited from the Company and its domestic subsidiaries to HV-FC. HV-FC then sells participating interest in such assets to one or more third parties which, in turn, purchases and receives ownership and security interests in those assets. Under the Company's Senior Notes Indenture, the Company is limited to making investments in HV-FC of up to $25.0 million. While the Company is not currently utilizing these receivables purchase arrangements, the Company has retained the right to reinitiate these arrangements with HV-FC or another limited purpose subsidiary at any time. F-15 HIGH VOLTAGE ENGINEERING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Dollars in Thousands, Except Per Share Data) NOTE C--INVENTORIES Inventories consisted of the following as of:

~~APRIL~~April 2827, ~~APRIL~~April 2928, 2002 2001 ~~2000~~ --------- --------- Raw materials............................................. $3230,~~267~~642 $2532,~~354~~267 Work in process........................................... 22,982 24,776 ~~19,862~~ Finished goods............................................ 6,918 4,588 ~~5,240~~ ------- ------- Total..................................................... $6160,~~631~~542 $5061,~~456~~631 ======= =======

NOTE D--COSTS AND EARNINGS EXCESS OF BILLINGS--BILLINGS IN EXCESS OF COSTS Contract costs and related billings consisted of the following as of:

~~APRIL~~April 2827, ~~APRIL~~April 2928, 2002 2001 ~~2000~~ --------- --------- Cost incurred and income recognized on uncompleted contracts................................................. $3841,~~202~~074 $3538,~~656~~202 Related billings............................................ 29,731 25,170 ~~28,242~~ -------- ------- Total costs in excess of billings........................... $1311,~~032~~343 $ 713,~~414~~032 ======== ======= Billings on uncompleted contracts........................... $5256,~~250~~767 $4452,~~299~~250 Related costs incurred and income recognized................ 51,255 47,954 ~~38,511~~ -------- ------- Total billings in excess of costs........................... $ 45,~~296~~512 $ 54,~~788~~296 ======== =======

Accounts receivable include retainages of approximately $3,264 and $4,680 as of April 27, 2002 and April 28, 2001, respectively. Bill and hold receivables were immaterial as of April 27, 2002 and April 28, 2001, respectively. Unbilled receivables were immaterial as a result of the Company's receivable securitization program as of April 28, 2001 (note B). NOTE E--PREPAIDS AND OTHER CURRENT ASSETS Prepaid and other current assets consisted of the following as of:

~~APRIL~~April 2827, ~~APRIL~~April 2928, 2002 2001 ~~2000~~ --------- --------- Value added tax receivable................................ $~~2,516~~ $387 $2,~~911~~516 ~~ASI good faith deposit.................................... -- 2,734~~ Prepayments and deposits.................................. 3,~~100~~349 23,~~726~~100 Prepaid insurance......................................... 682 311 ~~525~~ Employee advances and other receivables................... 1,~~130~~108 1,~~236~~130 Other..................................................... 1,490 1,637 ~~962~~ ------ ------- Total................................................... $87,~~694~~016 $118,~~094~~694 ====== =======

F-16 HIGH VOLTAGE ENGINEERING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Dollars in Thousands, Except Per Share Data) NOTE F--PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consisted of the following as of:

APRIL 2827, APRIL ~~29,~~28 2002 2001 ~~2000~~ --------- --------- Land and buildings.......................................... $ 4346,~~854~~275 $ 4543,~~510~~854 Machinery and equipment..................................... 89,302 77,975 ~~78,218~~ Construction in progress.................................... 3,176 2,819 ~~1,166~~ -------- -------- Total..................................................... ~~124~~138,~~648~~753 124,~~894~~648 Less accumulated depreciation and amortization.............. (4153,~~668~~264) (3041,~~359~~668) -------- -------- Total..................................................... $ 8285,~~980~~489 $ 9482,~~535~~980 ======== ========

Property under capital leases is included in these amounts (note P). NOTE G--COST IN EXCESS OF NET ASSETS ACQUIRED AND OTHER NON-CURRENT ASSETS Investment in Joint Venture A subsidiary of the Company owns a 50% interest in a joint venture which is being accounted for under the equity method. The Company recorded income of $1,717 and $472 in fiscal 2002 and fiscal 2001, respectively, and a loss of $239 in fiscal 2000, related to this investment. Assets Held For Sale At April 27, 2002, assets held for sale consisted of a former manufacturing facility. This property was sold by the Company on June 14, 2002 (note T). Other Assets Other assets and costs in excess of net assets acquired consisted of the following as of:

~~APRIL~~April 2928, ~~APRIL~~April 2827, 2002 2001 ~~2000~~ ---------------------------------- --------- ~~NET~~Net ~~NET~~Net ~~GROSS~~Gross ~~ACCUMULATED~~Accumulated ~~CARRYING~~Carrying ~~CARRYING~~Carrying ~~AMOUNT~~Amount ~~AMORTIZATION~~Amortization ~~AMOUNT~~Amount ~~AMOUNT~~Amount -------- ------------ -------- --------- Cost in excess of net assets acquired (note B)....... $42,828 $ (922,~~796~~804) $33 20,~~032~~024 $3433,~~957~~032 ======= ============ ========= ======= Deferred financing costs (note H).................... $ 9,~~897~~580 $ (46,~~703~~163) $ 53,~~194~~417 $ 5,~~585~~194 Prepaid pension cost (note L)........................ ~~3,248~~-- -- -- 3,248 ~~2,833~~ Prepaid taxes on severance indemnities............... 7,~~271~~961 -- 7,~~271~~961 27,~~589~~271 Investment in HV-FC (note B)......................... ~~39,935~~-- -- -- 39,935 ~~20,563~~ Investment in affiliates............................. 3,~~286~~393 -- 3,~~286~~393 3,286 Non-compete and other intangible assets.............. 7,159 (3,~~082~~930) 3,229 4,077 ~~5,050~~ Patents.............................................. 7,~~065~~342 (2,~~248~~837) 4,505 4,817 5Cash collateral for outstanding letters of credit.... 2,~~655~~402 -- 2,402 -- Other................................................ 16,~~638~~123 (195,118) 1,005 1,619 ~~716~~ ------- ------------ --------- ------- Total.............................................. $7943,~~499~~960 $ (1018,~~052~~048) $69 25,~~447~~912 $4669,~~277~~447 ======= ============ ========= =======

F-17 HIGH VOLTAGE ENGINEERING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Dollars in Thousands, Except Per Share Data) NOTE G--COST IN EXCESS OF NET ASSETS ACQUIRED AND OTHER NON-CURRENT ASSETS (Continued) Amortization expense was $15,933, $7,849 and $4,316 for fiscal 2002, 2001 and 2000, respectively. During the fourth quarter of fiscal 2002, the Company determined that the continued worldwide economic slowdown in semiconductor markets has lessened the demand for certain of it products. This caused the Company to determine that the goodwill in the amount of $8,108 associated with the Advanced Surface Analysis segment no longer held future value to the Company and consequently was charged to amortization expense which is included in administrative and selling expenses. In addition, the Company determined that goodwill in the amount of $618 in the Industrial Power Control segment no longer held future value to the Company based on new product strategies arising from the ASI acquisition integration. The Company recognized the adjustment to goodwill based upon its estimate of expected undiscounted future operating cash flows from product revenue which has not materialized as contemplated at the date of acquisition. In fiscal 2000, the Company recorded $1,236 for the writedown of long lived assets and assets held for sale to net realizable value. Letters of credit as of April 27, 2002 and April 28, 2001 were $3,776 and $2,131 respectively which include $1,520, respectively relating to environmental matters (see note Q). NOTE H--LONG-TERM OBLIGATIONS, REDEEMABLE PUT WARRANTS AND FOREIGN RECEIVABLES FACILITIES Long-term obligations consisted of the following as of:

APRIL 2827, APRIL 2928, 2002 2001 ~~2000~~ --------- --------- 1998 Senior Notes........................................... $155,000 $155,000 1998 Senior Notes Premium................................... 37 51 66New ~~Secured~~Revolving ~~revolving~~Credit ~~credit facility~~Facility............................... 25,000 20,130 ~~8,374~~ Term loan................................................... 18,~~435~~551 18,~~776~~435 Foreign loans and bank facilities...........................~~..........~~ 13,994 12,574 ~~1,416~~ Capital lease obligations (note P).......................... 11,237 7,046 ~~9,062~~ Mortgage notes payable...................................... 5,932 6,446 ~~7,381~~ Notes payable............................................... ~~711~~ -- 711 -------- -------- Total..................................................... 229,751 220,393 ~~200,075~~ Less current maturities................................... (814,~~805~~573) (98,~~836~~805) -------- -------- Long-term obligations, net of current maturities.......... $~~211~~215,~~588~~178 $~~190~~211,~~239~~588 ======== ========

1998 SENIOR NOTES On December 22, 1999, the Company received the consent of the holders of the outstanding $155,000, 10 1/2% Senior Notes due 2004, for the waiver of, and amendment to, certain provisions of the Indenture governing the Notes as more fully described in the Consent Solicitation. F-18 HIGH VOLTAGE ENGINEERING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) NOTE H--LONG-TERM OBLIGATIONS, REDEEMABLE PUT WARRANTS AND FOREIGN RECEIVABLES FACILITIES (Continued) The 1998 Senior Notes are general unsecured obligations of the Company and rank Senior to any subordinated indebtedness and subordinated to all existing and future secured indebtedness, including the New Revolving Credit Facility. Interest is payable semiannually on February 15 and August 15. The Notes may be redeemed in whole or in part at any time on or after August 15, 2001 at redemption prices expressed as a percentage of the face value of the Senior Notes plus accrued and unpaid interest.

YEAR PERCENTAGE ---- ----------- 2001........................................................ 105.250% 2002........................................................ 102.625% 2003........................................................ 100.000%

The Company is obligated in certain instances to make an offer to purchase the Senior Notes at a purchase price in cash equal to 100% of the principal amount thereof, plus accrued and unpaid interest to the purchase date, with portions of the Available Asset Sale Proceeds, as defined, of certain asset sales. Upon occurrence of a Change of Control, as defined, each holder of the Notes will be entitled to require the Company to purchase such holder's Notes at a purchase price equal to 101% of the principal amount thereof, plus accrued and unpaid interest to the purchase date. New Revolving Credit Facility On November 30, 2000, the Company simultaneously entered into the Financing Agreement and Receivables Purchase Agreement ("Refinanced Receivables Purchase Agreement") for the purpose of refinancing the existing Revolving Credit Facility and Receivable Purchase Facility. In connection with the above the Company recorded an extraordinary loss of $530, net of taxes, to write off deferred financing costs and prepayment penalties. On June 19, 2001, the Company signed an amendment to the Financing Agreement ("Amended and Restated Financing Agreement"). The Amended and Restated Financing Agreement amends certain financial ratios and restates the Refinanced Revolving Credit Facility, Term Loan A, and Term Loan B to a combined $25,000 revolving credit facility ("New Revolving Credit Facility") with a sub-facility of $5,000 for the issuance of letters of credit. Availability under the facility is limited to the sum of (i) 85% of eligible receivables, (ii) 50% of eligible joint venture receivables, (iii) 125% of the appraised orderly liquidation value of the eligible inventory less certain reserves as is considered reasonable and customary by the lenders and (iv) $5,000. Interest under the facility is computed and payable monthly at the greater of the lender's reference rate (4.75% at April 27, 2002) or 7.0% plus 2.5%. The interest rate on this facility was 9.5% at April 27, 2002. At April 27, 2002, $25,000 was outstanding under the New Revolving Credit Facility. The Company is required to pay monthly in arrears an unused facility fee of 0.5% of the available funds of the New Revolving Credit Facility. The facility provides for liens on substantially all domestic property and assets of the Company. Term Loan On January 18, 2000, in connection with the acquisition of ASI, the Company entered in to the Term Loan with a syndicate of Italian Banks. The amount outstanding at April 27, 2002 was $18,551. Interest under the Term Loan is computed and payable quarterly or semiannually, at the Euribor rate plus 1.75% (5.13% at April 27, 2002). The loan is collateralized by certain real property located in Italy and by pledged shares of ASI. The Term Loan is payable in five installments beginning in fiscal 2003. The Term Loan contains certain restrictions, including the prohibition of ASI from paying fees and dividends to the Company and the requirement that ASI meet certain financial ratios. F-19 HIGH VOLTAGE ENGINEERING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) NOTE H--LONG-TERM OBLIGATIONS, REDEEMABLE PUT WARRANTS AND FOREIGN RECEIVABLES FACILITIES (Continued) Foreign Receivables Facilities Certain foreign subsidiaries are parties to facilities in which receivables are sold with recourse. Amounts outstanding at April 27, 2002 and April 28, 2001, under the foreign receivables facilities were $12,285 and $6,075, respectively. The borrowing bears interest from 0.25% to 10% per annum, and matures at the earlier of the collection of the receivables securing the credit line or 180 days. Mortgage Notes Payable The mortgage notes generally are due June 2004, September 2009, July 2011 and January 2016, and bear interest between 2% and 9.75% (weighted average interest rate of 7.5% at April 27, 2002). The notes are collateralized by land and buildings with a net book value of approximately $10,863 as of April 27, 2002. Certain of these mortgages were issued through the Pennsylvania Economic Development Financing Authority ("PEDFA") and the Pennsylvania Industrial Development Authority in conjunction with the construction of a facility for a subsidiary of the Company in 1995. The subsidiary may prepay the mortgage before maturity, subject to a prepayment premium ranging from 101% to 105% of the principal amount thereof. As of April 27, 2002, the Company was not in compliance of certain financial covenants contained in the Loan Agreement with PEDFA governing a $2,267 mortgage with a subsidiary of the Company. The Company has received a waiver with respect to such non-compliance. The waiver does not extend to any future periods, however, the Company believes it will be able to obtain additional waivers and intends to negotiate an amendment. RESTRICTIVE COVENANTS The New Revolving Credit Facility, the Notes, Term Loan and Mortgage Notes Payable contain restrictive provisions relating to the maintenance of certain financial ratios, as defined in the respective agreements, restrictions on the payment of common stock dividends, leases, capital expenditures, borrowings, the acquisition or disposition of material subsidiaries and other matters. ANNUAL MATURITIES Aggregate maturities of long-term obligations are as follows:

FISCAL ------ ~~2002~~2003........................................................ $ 814,~~805~~573 ~~2003~~2004........................................................ 635,~~302~~842 ~~2004~~2005........................................................ 26165,~~223~~775 ~~2005~~2006........................................................ ~~160~~2,~~751~~790 ~~2006~~2007........................................................ 52,~~841~~771 Thereafter.................................................. 128,~~471~~000 -------- $~~220~~229,~~393~~751 ========

F-20 HIGH VOLTAGE ENGINEERING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) NOTE H--LONG-TERM OBLIGATIONS, REDEEMABLE PUT WARRANTS AND FOREIGN RECEIVABLES FACILITIES (Continued) Redeemable Put Warrants As of April 27, 2002, the Company has issued and issuable 79.6688 warrants to purchase shares of common stock at $.01 per share, subject to a dilution adjustment, under certain circumstances, as defined. For financial reporting purposes, the Company has assigned an estimated fair value of $2,900 to the warrants. The warrants expire on May 9, 2004. As of May 1, 2000, the holders of the warrants may present, subject to conditions specified in the warrant, the warrants for payment to the Company for amounts which are the greater of the then appraised value or by a formula as described in the warrant. The Company does not believe these matters will have a material change to its financial statements. Foreign Loans and Bank Facilities At April 27, 2002, the Company had outstanding $6,846, under certain foreign bank facilities. These facilities are short-term revolving overdraft accounts. These facilities bear interest at rates between 7.25% and 8.70%, and are generally payable monthly. At April 27, 2002, the Company had outstanding $6,706, under certain foreign bank and government loans. These loans generally mature between 2007 and 2014. Interest under these loans are computed and payable at rates between 2.82% and 9.00%, and are generally payable quarterly. F-21 HIGH VOLTAGE ENGINEERING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Dollars in Thousands, Except Per Share Data) NOTE I--ACCRUED LIABILITIES AND OTHER LIABILITIES Accrued liabilities consisted of the following:

~~APRIL~~April 2827, ~~APRIL~~April 2928, 2002 2001 ~~2000~~ --------- --------- Employee compensation and related expenses, including current portion of long term compensation (note L)........ $19,~~924~~118 $1619,~~678~~924 Product warranty costs...................................... 45,~~511~~251 4,~~520~~511 Deferred maintenance revenue................................ 3,696 4,218 ~~3,999~~ Commissions................................................. 2,~~625~~261 2,~~499~~625 Restructuring costs......................................... 757 201 ~~3,809~~ Sales, use tax and property tax............................. 1,~~128~~490 1,~~359~~128 Customer product installation and training.................. 1,~~239~~125 1,~~608~~239 Legal and audit............................................. 443 513 ~~560~~Current ~~Utility~~portion ~~expense~~of environmental cleanup.................... 942 989 Accrued liabilities on divestitures......................... ~~239~~-- ~~295~~623 ~~Accrued~~Other....................................................... ~~liabilities~~5,182 on7,558 ~~divestitures~~------- ------- Total..................................................... ~~623~~$40,265 $43,529 ======= ======= Other liabilities consisted of the following: April 27, April 28, 2002 2001 --------- ~~Other~~--------- Environmental cleanup and related litigation costs (note Q)........................................................ 8$ 3,~~308~~065 7$ 4,~~623~~147 Long term severance and long term incentive compensation (note L).................................................. 22,286 24,526 Other....................................................... 836 565 ------- ------- Total..................................................... 26,187 29,238 Less current portion of environmental cleanup included in accrued liabilities.................................. (942) (989) ------- ------- $4325,~~529~~245 $4228,~~950~~249 ======= =======

In fiscal 2002, the Company recorded a restructuring charge of $859 in the Advanced Surface Analysis segment. Of the amount recorded, $127 related to certain headcount reductions and $732 related to the closure of a manufacturing facility in Billerica, Massachusetts. All amounts are expected to be paid out by April 26, 2003. In fiscal 2001, the Company recorded a restructuring charge in the Industrial Power Control segment of $143 which was relating to the reduction of some engineering and administrative headcount. In connection with these charges, the Company paid $63 and $80, respectively, in fiscal 2002 and 2001. In fiscal 2000, the Company recorded a restructuring charge in the Industrial Power Control segment of $3,986. Restructuring charges related to the acquisition of ASI were $806 for headcount reductions and $2,360 for the closing of a facility. Robicon recorded a charge of $820 for severance relating to the reduction of engineering and administrative headcount. The Company also recorded $975 in the Advanced Surface Analysis segment at PHI for severance related to certain headcount reductions. In connection with these charges, the Company paid $3,858 and $849, respectively, in fiscal 2001 and 2000. F-22 HIGH VOLTAGE ENGINEERING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) NOTE J--REDEEMABLE PREFERRED STOCK Redeemable Preferred Stock consisted of the following:

~~APRIL~~Shares ~~28,~~Issued ~~APRIL~~and ~~29,~~Issuable ~~2001 2000~~ --------- ------------------------------------ ~~Environmental~~Par ~~cleanup~~Shares ~~and~~April ~~related litigation costs (note Q)........................................................ $ 4~~27,~~147~~ $April 428,~~697~~ ~~Long~~Value ~~term~~Authorized ~~severance~~2002 ~~and~~2001 ~~long~~-------- ~~term~~---------- ~~incentive compensation (note L).................................................. 24,526 25,032 Other....................................................... 565 2,579~~ --------- --------- ~~Total~~Series A Exchange Redeemable Preferred Stock..............~~.......................................~~ ~~29,238~~$ 321 110,~~308~~000 ~~Less current portion included in accrued liabilities...... (989) (989) ------- -------~~ $28 55,~~249~~934 $31 48,~~319~~892 ======== ========== ========= =========

Changes in Redeemable Preferred Stock (issued and issuable) were as follows:

~~YEARS~~Series ~~ENDED~~A ---------~~------------~~ ~~APRIL~~Balance ~~28,~~at ~~APRIL~~April 29, ~~2001~~ 2000 ~~--------- --------- Balance at beginning of period~~................................... $40,642 ~~812~~Preferred $stock ~~-- Provisions~~dividends................................... 6,101 Accretion of redeemable preferred stock.............. ~~143 820 Restructuring accrual associated with the acquisition of ASI~~....... 605 Incremental discount (note K)............................... (1,226) ------- Balance at April 28, 2001................ ~~-- 806 Charges~~................... 46,122 Preferred stock dividends................................... ~~(999)~~7,036 ~~(737)~~Accretion ~~Effect~~ of ~~foreign~~redeemable ~~currency~~preferred ~~translation~~stock..................... ~~107~~689 ~~(77)~~ ----- --~~---~~ Balance at ~~end~~April of27, ~~period~~2002................................... $53,847 ~~63 $ 812~~ ===== ==~~===~~

DIVIDENDS AND REDEMPTIONS Dividends on Series A Exchange Redeemable Preferred Stock are cumulative and accrue at a rate of 12 1/2% per annum on the liquidation preference of $1 per share and are paid semiannually on February 15 and August 15. Dividends are payable in cash or additional shares at the Company's option, on any dividend payment date, occurring on or prior to August 15, 2002, except to the extent restricted by other agreements of the Company. If any dividend payable on any dividend payment date subsequent to August 15, 2000 is not paid in full in cash, the per annum dividend rate will be increased by 0.50% from such dividend payment date, and following two such non-cash payments, the per annum dividend rate will be increased by 1.00% for each additional semiannual period in which such non-cash payment occurs, up to a maximum of 2.0%. After the date on which such dividend default is cured, the dividend rate will revert to the original rate. After August 15, 2002, dividends must be paid in cash. The dividend rate at April 27, 2002 was 14.5%. Holders of Series A Exchange Redeemable Preferred Stock have preference as to payments of dividends over holders of common stock. REDEMPTION PROVISIONS Except to the extent restricted by other agreements, the Series A Exchange Redeemable Preferred Stock has the following redemption preferences. The Company may redeem the Series A Exchange Redeemable Preferred Stock in whole or in part at any time on or after August 15, 2002 at redemption prices expressed as a percentage of the liquidation preference plus accrued and unpaid dividends. The Series A Exchange Redeemable Preferred Stock has a mandatory redemption date of August 15, 2005, at a redemption price equal to the liquidation preference together with all accumulated and unpaid dividends. F-23 HIGH VOLTAGE ENGINEERING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Dollars in Thousands, Except Per Share Data) NOTE J--REDEEMABLE PREFERRED STOCK (Continued) VOTING RIGHTS The holders of Series A Exchange Redeemable Preferred Stock have no voting rights except as provided by law or if: the Company after August 15, 2002 is in arrears in the payment of dividends in an amount equal to or exceeding two quarterly dividend payments; the Company fails to redeem the Series A Exchange Redeemable Preferred Stock on or before August 15, 2005 or fails to discharge any redemption obligation; the Company fails to make an offer to redeem the Series A Exchange Redeemable Preferred Stock in the event of a change of control or fails to purchase shares pursuant to a change of control offer; or the Company is in default of any covenants as defined in the Exchange Description or fails to pay the stated maturity of any indebtedness in excess of $3,000. In each event, the holders of the Series A Exchange Redeemable Preferred Stock have the right to elect directors to the board of the Company. NOTE K--COMMON STOCK AND COMMON STOCK WARRANTS At April 27, 2002 and April 28, 2001, the Company had 4,000 shares of $.01 Par value common stock authorized, and 1,083 shares issued and outstanding. The declaration or payment of dividends is restricted as discussed in note H and J. On August 8, 1997, the Company issued common stock warrants. Each Common Stock Warrant entitles the holder thereof to purchase .0025 shares of the Company's common stock at an exercise price of $.01 per .0025 shares subject, under certain circumstances, to adjustment or exchange for warrants to purchase shares of common stock of certain of the Company's subsidiaries. The Common Stock Warrants are exercisable through August 15, 2005 and represent 7.7% of the Company's common stock on a fully diluted basis. In addition, pursuant to the Warrant Agreement, as of August 15, 2000, neither a Qualified Subsidiary IPO nor an initial public offering of HVE Common Stock, as defined, had occurred therefore, the Company is obligated to issue and sell to the then existing holders of certain Common Shares and Common Stock Warrants, as defined, additional Common Shares and Common Stock Warrants representing 2.5% of the HVE Common Stock on a fully-diluted basis. In connection with the above, the Company has recorded the fair value of the additional common shares issuable and additional warrants issuable of $613 and $613, respectively offset by an incremental discount to the redeemable preferred stock of $1,226. NOTE L--BENEFIT PLANS Defined Benefit Plans The Company and certain subsidiaries have a frozen defined benefit pension plan (a U.S. Pension Plan). Pension costs are determined in accordance with SFAS No. 87, Employers' Accounting for Pensions. Service cost is determined using the projected unit credit actuarial cost method. It is the Company's policy to make annual contributions to the plan in amounts at least equal to the amounts required by law. The plan did not require contributions from the Company for the years ended April 27, 2002 and April 28, 2001, respectively. F-24 HIGH VOLTAGE ENGINEERING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Dollars in Thousands, Except Per Share Data) NOTE L--BENEFIT PLANS (Continued) The change in the vested and accumulated benefit obligation is summarized as follows:

~~YEARS~~Years ~~ENDED~~Ended --------------------- ~~APRIL~~April 2827, ~~APRIL~~April 2928, 2002 2001 ~~2000~~ --------- --------- ~~Balance~~Vested and accumulated benefit obligation at the beginning of ~~period~~the year............................................. $ 218,~~134~~301 $18,939 --Service ~~Restructuring accrual associated with the acquisition of ASI~~cost.............................................. 131 -- Interest cost........ ~~-- 2,360 Charges~~..................................... 1,342 1,378 Actuarial (gain) loss............... ~~(2,134) -- Effect of foreign currency translation~~...................... --910 (~~226~~204) ~~-------~~Benefits ~~------ Balance at end of period~~paid............................................. $(1,809) (1,812) -------- -------- $218,~~134~~875 $18,301 ======== ========

The change in the plan assets is summarized as follows:

~~YEARS~~Years ~~ENDED~~Ended ---------------------~~------------~~ ~~APRIL~~April 2827, ~~APRIL~~April 2928, ~~APRIL~~2002 ~~24,~~ 2001 ~~2000 1999~~ --------- --------- ~~---------~~Fair ~~Balance~~value of plan assets at the beginning of ~~period~~the year.... $18,334 $20,907 Actual return on plan assets.............................. $606 ~~863~~(761) $Benefits ~~-- $ 186 Provisions~~paid............................................. (1,809) (1,812) --------- ~~975~~--------- ~~190~~$17,131 ~~Charges~~$18,334 ========= ========= Funded status............................................. $ (~~725~~1,744) $ 33 Unrecognized net actuarial loss........................... 4,996 3,215 Additional liability included in other comprehensive income (~~112~~note A)........................................ (~~376~~4,996) -- --- ------ --------- ~~Balance~~Net atprepaid ~~end~~(accrued) ofbenefit ~~period~~cost.......................... $ ~~138~~(1,744) $ ~~863~~3,248 ~~$ --~~ ===== ===== =========

Weighted-average assumptions: ~~Discount rate............................................. 7.25% 7.75% Expected rate of return................................... 9.00% 9.00%~~

The components of net periodic benefit are summarized as follows:

~~SHARES~~Years ~~ISSUED~~Ended ~~AND ISSUABLE~~ ---------------------------------~~------------~~ ~~PAR~~April ~~SHARES~~27, ~~APRIL~~April 28, ~~APRIL~~April 29, ~~VALUE~~2002 ~~AUTHORIZED~~ 2001 2000 --------- ---------- --------- Interest cost..................................... $1,342 $1,378 $1,410 Service cost...................................... 131 -- -- Expected return on plan assets.................... (1,561) (1,793) (1,680) Net amortization and deferral..................... 83 -- 43 ------- ~~Series~~------- A------- ~~Exchange~~Net ~~Redeemable~~periodic ~~Preferred Stock~~benefit.............................. $1 ~~110,000~~(5) ~~48,892~~$ ~~43,137~~(415) ==$ (227) ======= ======= ========

F-25 HIGH VOLTAGE ENGINEERING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Dollars in Thousands, Except Per Share Data) NOTE L--BENEFIT PLANS (Continued) No compensation increases have been assumed due to the plan being frozen. The plan assets as of April 27, 2002 and April 28, 2001, consisted primarily of equity securities, guaranteed interest contracts, fixed income securities and cash equivalents. A foreign subsidiary of the Company sponsors a defined benefit pension plan which is covered by a group insurance policy. The plan covers 20 employees. The benefits are based upon the number of years of service and the employees' past compensation. The change in the vested and accumulated benefit obligation is summarized as follows:

~~SERIES~~Years AEnded --------------------- ~~Balance~~April at27, April 2428, ~~1999...................................~~2002 ~~$35,229~~2001 ~~Preferred~~--------- ~~stock~~--------- ~~dividends~~Vested and accumulated benefit obligation at the beginning of the year................................... ~~4,965 Accretion of redeemable preferred stock~~..........~~...........~~ ~~448~~$ ~~-------~~914 ~~Balance~~$ at876 ~~April~~Net ~~29,~~periodic ~~2000~~benefit cost................................... ~~40,642~~144 ~~Preferred~~141 ~~stock~~Actuarial ~~dividends~~gain................................... ~~6,101 Accretion of redeemable preferred stock~~.........~~............~~ ~~605~~7 ~~Incremental~~-- ~~discount~~Currency ~~(note~~translation K)adjustment...........................~~....~~ (~~1,226~~104) (103) --------- ~~Balance~~--------- at$ ~~April~~961 ~~28,~~$ ~~2001...................................~~914 ~~$46,122~~========= =========

The change in the plan assets is summarized as follows: Fair value of plan assets at the beginning of the year.... $ 571 $ 489 Premiums paid............................................. 123 106 Interest income........................................... 12 11 Currency translation adjustment........................... 51 (35) --------- --------- 757 571 --------- --------- Pension liability......................................... $ 204 $ 343 ========= =========

Weighted-average assumptions: Discount rate............................................. 7.0% 7.0% Annual compensation increase.............................. 4.0% 4.0% Social security contribution ceiling...................... $ 48 $ 48 Annual pension increase................................... 3.0% 3.0%

The components of net periodic benefit cost are summarized as follows:

~~YEARS~~Years ~~ENDED~~Ended --------------------------------- ~~APRIL~~April 27, April 28, ~~APRIL~~April 29, 2002 2001 2000 --------- --------- ~~Vested~~--------- ~~and~~Service ~~accumulated benefit obligation at the beginning of the year~~cost.....................................~~........~~ $~~18,939~~ 69 $~~19,287~~ 68 $ 76 Interest cost....................................~~.........~~ ~~1,378~~67 ~~1,410~~65 ~~Actuarial~~66 ~~(gain)~~Amortization ~~loss~~of transition asset.................~~....................~~ ~~(204)~~8 ~~(68)~~8 ~~Benefits~~9 ~~paid~~--------- --------- --------- Net periodic benefit cost........................~~.....................~~ ~~(1,812)~~$ ~~(1,690)~~144 ~~-------~~$ ~~-------~~141 $~~18,301~~ ~~$18,939~~151 ========= ========= =========

F-26 HIGH VOLTAGE ENGINEERING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Dollars in Thousands, Except Per Share Data) NOTE L--BENEFIT PLANS (Continued) A subsidiary of the Company sponsors a defined benefit pension plan (a non-U.S. Pension Plan). The plan is non-contributory. The accrual rate for this plan is 1/60th of the Final Pensionable Salary (as defined) for each year of Pensionable Service. The policy is for the Company to contribute actuarially determined amounts into a trust fund at a rate that is intended to remain at a pre-determined percentage of total Pensionable payroll. The change in the vested and accumulated benefit obligation is summarized as follows:

~~YEARS~~Years ~~ENDED~~Ended --------------------- ~~APRIL~~April 2827, ~~APRIL~~April 2928, 2002 2001 ~~2000~~ --------- --------- ~~Fair~~Vested ~~value~~and ofaccumulated ~~plan~~benefit ~~assets~~obligation at the beginning of the year.... ~~$20,907 $19,578 Actual return on plan assets~~......................................... ~~(761)~~$ 35,~~019~~087 ~~Benefits~~$ ~~paid~~4,147 Service cost.............................................. ~~(1,812)~~299 ~~(1,690)~~232 ~~-------~~Interest ~~------- $18,334 $20,907 ======= ======= Funded status~~cost............................................. $291 33249 $Actuarial ~~1,968~~(gains) ~~Unrecognized~~losses.................................. ~~net~~(243) ~~actuarial~~750 ~~loss~~Benefits paid............................................. ~~3,215 864~~ --~~-----~~ ~~-------~~(62) ~~Prepaid~~Currency ~~benefit~~translation ~~cost (note G)~~adjustment............................. 70 (229) --------- --------- $ 35,~~248~~504 $ 25,~~832~~087 ~~=======~~--------- ~~=======~~---------

The change in the plan assets is summarized as follows:

~~YEARS~~Years ~~ENDED~~Ended --------------------- April 27, April 28, 2002 2001 --------- --------- ~~APRIL~~Fair ~~28,~~value ~~APRIL~~of 29plan assets at the beginning of the year.... $ 4,769 ~~APRIL~~$ 245,126 ~~2001~~Actual ~~2000~~return ~~1999~~on plan assets.............................. (631) (43) Employer contributions.................................... 321 242 Benefits paid............................................. --~~-------~~ (62) Currency translation adjustment........................... 56 (494) --------- --------- ~~Interest~~$ ~~cost~~4,515 $ 4,769 ======== ========= Funded status............................................. $ ~~1,378~~(989) $ ~~1,410~~(318) $Unrecognized ~~1,417~~net ~~Expected~~actuarial ~~return~~loss........................... on3,272 ~~plan~~1,792 ~~assets~~Unrecognized transition asset............................. (~~1,793~~877) (~~1,680~~952) Currency translation adjustment........................... (~~1,764~~305) ~~Net~~(464) ~~amortization~~Additional ~~and~~liability ~~deferral~~included in other comprehensive income (note A)........................................ --(2,090) 43(376) -- ------- ------- --~~-----~~ Net ~~periodic~~prepaid (accrued) benefit cost........................~~......~~ $ (~~415~~989) $ (~~227~~318) ~~$ (347)~~ ======== ======= ==~~=====~~

F-27 HIGH VOLTAGE ENGINEERING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Dollars in Thousands, Except Per Share Data) NOTE L--BENEFIT PLANS (CONTINUED) The components of net periodic benefit cost are summarized as follows:

~~YEARS~~Years ~~ENDED~~Ended --------------------- ~~APRIL~~April 2827, ~~APRIL~~April 2928, 2002 2001 ~~2000~~ --------- --------- ~~Vested~~Service ~~and accumulated benefit obligation at the beginning of the year~~cost.............................................. $~~876~~ 299 $~~863~~ ~~Net~~232 ~~periodic~~Interest ~~benefit~~ cost.................................. ~~141 151 Actuarial gain~~........... 291 249 Actual return on plan assets..............................~~....~~ --632 (9396) ~~Exchange~~Net ~~rate~~amortization ~~adjustment~~and deferral.............................~~......~~ (~~103~~946) ~~(129)~~-- --------- --------- Net periodic benefit cost................................. $~~914~~ 276 $~~876~~ 85 ========= ========= Weighted-average assumptions: Discount rate............................................. 5.50% 6.25% Annual compensation increase.............................. 5.00% 5.00% Expected rate of return................................... 7.50% 8.00%

Multi-Employer Plan Certain foreign employees participate in a multi-employer pension plan. Foreign pension expense totaled $220, $192 and $191 in fiscal 2002, 2001 and 2000, respectively. Employee Benefit Obligations A subsidiary of the Company has a post-employment benefit plan (an "Italian Plan"). In accordance with Italian Law, the Company has an unfunded severance plan under which all employees are entitled to receive severance indemnities upon termination of their employment. The amount payable is based on the salary paid and increases in cost of living. The severance indemnities accrue at a rate of approximately 7.4% of the gross salaries paid during the year, and are revalued applying a cost of living factor established by the Italian Government. The amounts accrued become payable upon termination of the individual employee, for any reason, e.g., retirement, dismissal or reduction in work force. Employees are fully vested in the plan benefits after their first year of service. Employee benefit obligations were $16,711 and $19,605 at April 27, 2002 and April 28, 2001, respectively (note I). Payments by the Company were $4,650 and $3,186 in fiscal 2002 and 2001, respectively. F-28 HIGH VOLTAGE ENGINEERING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Dollars in Thousands, Except Per share Data) NOTE L--BENEFIT PLANS (Continued) Defined Contribution Plans The Company maintains the High Voltage Engineering Corporation 401(k) Retirement Plan, a Section 401(k) savings plan covering substantially all U.S. Employees. The Company matches fixed employee contributions up to $1,800 and currently contributes an annual profit-sharing amount equal to 2.5% of the employee's annual salary and bonus. Contributions to the Plans were $2,654, $2,456 and $1,954 in fiscal 2002, 2001 and 2000, respectively. Long-Term Compensation Plans PHI maintains a Phantom Stock Appreciation Rights Plan which has two variations, an Appreciation Rights Plan, under the terms of which Phantom Stock Appreciation Rights ("PSARs") are offered at the fair market value ("FMV"), as defined, of PHI and specified subsidiaries including, CE&A and a Discounted Appreciation Rights Plan, under the terms of which PSARs are offered at a discounted FMV. The authorized amount of PSARs which can be issued under these Plans equals 12% of the valuation of PHI. The Plans are designed to provide incentives for employees of PHI and CE&A, by tracking increases in the FMV, of the combined PHI and CE&A subsidiaries. The exercise rights under the Plans are subject to vesting schedules ranging from 4 to 5 years from date of award. The Plans have a ten year termination date. Participants in the Plans are key employees, including officers. Discounted PSARs were issued to certain employees of CE&A who at the time of the acquisition of CE&A by PHI in July 1999 had an "in the money" value of their unvested CE&A options. The discount amount equaled 75% of the then combined FMV. Additionally, PHI created a Deferred Value Plan, which is a deferred compensation plan and does not include the issuance of PSARs. The Plan was created for the benefit of certain CE&A employees. ASIRobicon also maintains a PSAR plan. The authorized amount of PSARs which can be issued under this plan equals 10% of the authorized capital of ASIRobicon. This plan is designed to provide an incentive for certain key employees by tracking increases in the FMV of ASIRobicon. The exercise rights under the plan are subject to a vesting schedule of 5 years from date of award. The plan has a ten year termination date. F-29 HIGH VOLTAGE ENGINEERING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Dollars in Thousands, Except Per Share Data) NOTE L--BENEFIT PLANS (Continued) Awards earn interest at the prime rate at July 1st of each year, plus 1%. Exercise rights are subject to a four or five year vesting schedule from date of award. At the time employees exercise their vested rights under any of these three plans, they must execute a Protection Agreement which, among other items, stipulates that for a period of 18 months after termination of a Participant's employment by PHI, or any of its subsidiaries (the "PHI Group") the employee cannot participate in any business which is then in competition with the PHI Group. Appreciation Rights PSARs are awarded at their FMV to certain employees as they are hired or promoted. All three Plans are non-qualified and non-funded. As of April 27, 2002 and April 28, 2001, the Company has recorded an accrued liability of $2,046 and $2,046 under these Plans. The Company recorded a charge of $368 in fiscal 2001, with respect to these Plans. An officer of the Company is the beneficiary of an incentive compensation plan pursuant to which such officer shall be entitled to receive twenty-two Shadow Stock Units, as defined. Such units vest in yearly increments over a period of five years beginning on April 30, 1998, and each vested stock unit represents the right to receive, following the fifth anniversary after the vesting thereof, an amount of cash equal to the market value of Letitia Common Stock determined as of the end of the most recent prior fiscal quarter. The plan further provides for a stock appreciation arrangement whereby the officer is entitled to receive additional Shadow Stock Units for each year during the term of the plan. The Company has accrued the estimated vested balance. The Company maintains a Valuation Creation Plan which provides long-term compensation for key individuals. Upon joining the VCP, benefits vest at twenty percent a year and participants can "cash out", as defined, up to fifty percent of their vested value anytime with the remainder paid at retirement or termination. All payments under the VCP are subject to the availability of general funds of the Company. The VCP is a nonqualified and non-funded plan. The Company has accrued $273 and $827 as of fiscal 2002 and 2001, respectively. administrative and selling expenses include $(232) and $177 for fiscal 2002 and 2001, respectively related to VCP. In the event of the sale of certain other changes in ownership of a subsidiary or division, impacted key individuals would become 100% vested. Benefits, if any, would be calculated up to that date based upon fair values as established by the transaction. Such benefits would be charged to operations immediately and may be greater than that which would have been calculated under the original terms of the VCP. NOTE M--INCOME TAXES The foreign and domestic components of (loss) income from continuing operations before income taxes, discontinued operation and extraordinary item were as follows:

~~YEARS~~Years ~~ENDED~~Ended --------------------------------- ~~APRIL~~April 2827, ~~APRIL~~April 2928, ~~APRIL~~April 2429, 2002 2001 2000 ~~1999~~ --------- --------- --------- ~~Service cost~~Domestic................................................. $(33,952) 68 $(24,863) 76 $(25,145) ~~78 Interest cost~~Foreign.................................... ~~65 66 55 Amortization of transition asset~~..............~~...~~ 8(127) 92,108 10(5,311) -------- -------- -------- ~~Net periodic benefit cost~~Total.................................................... $~~141~~(34,079) $~~151~~(22,755) $~~143~~(30,456) ======== ======== ========

F-30 HIGH VOLTAGE ENGINEERING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Dollars in Thousands, Except Per Share Data) NOTE M--INCOME TAXES (CONTINUED) The components of income taxes expense (credit) are:

~~APRIL~~Years Ended --------------------------------- April 27, April 28, ~~APRIL~~April 29, 2002 2001 2000 --------- --------- ~~Vested~~--------- ~~and~~Continuing ~~accumulated~~operations: ~~benefit~~Current: ~~obligation~~Federal.............................................. at$ ~~the~~176 ~~beginning~~$(10,645) $(1,289) State................................................ 127 (992) (109) Foreign.............................................. -- -- 1,664 -------- -------- ------- 303 (11,637) 266 -------- -------- ------- Deferred (net of ~~the~~impact ~~year~~of valuation allowance): Federal.............................................. $4(115) 3,~~147~~925 $4(897) State................................................ 76 -- -- Foreign.............................................. 2,~~584~~684 ~~Service~~5,421 ~~cost~~-- -------- -------- ------- 2,645 9,346 (897) -------- -------- ------- Total continuing operations.............................. 2,948 (2,291) (631) -------- -------- ------- Discontinued operations: Current: Federal.............................................. ~~232~~-- 19,378 1,662 State................................................ -- ~~Interest~~4,424 ~~cost~~181 Foreign.............................................. ~~249~~-- 76 48 -------- ~~Actuarial~~-------- ~~losses~~------- Total discontinued operations............................ -- 23,878 1,891 -------- -------- ------- Income from discontinued operations...................... ~~750~~-- 1,031 1,518 Gain on disposal of discontinued operations.............. -- ~~Benefits~~22,847 ~~paid~~373 -------- -------- ------- -- 23,878 1,891 -------- -------- ------- Extraordinary item: Current: Federal.............................................. (62176) (301) -- ~~Exchange rate adjustment~~State................................................ (~~229~~42) (~~437~~28) -- -------- -------- $5------- Total extraordinary item............................... (218) (329) -- -------- -------- ------- Total discontinued operations and extraordinary item... (218) 23,~~087~~549 $41,~~147~~891 -------- -------- ------- Income taxes............................................. $ 2,730 $ 21,258 $ 1,260 ======== ======== =======

F-31 HIGH VOLTAGE ENGINEERING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Dollars in Thousands, Except Per Share Data) NOTE M--INCOME TAXES (Continued) Total income taxes (benefit) from continuing operations differed from "expected" income tax expense, computed by applying the U.S. Federal statutory tax rate of 35 percent to income before income tax, as follows:

~~APRIL~~Years Ended --------------------------------- April 27, April 28, ~~APRIL~~April 29, 2002 2001 2000 --------- --------- ~~Fair~~--------- ~~value~~Federal ofstatutory ~~plan~~rate ~~assets--beginning~~applied ofto ~~period.............~~income ~~$5,126~~before ~~$ 5~~income,~~667~~ ~~Actual~~discontinued ~~return~~operations onand ~~plan~~extraordinary ~~assets~~item............~~...................~~ $(4311,928) --$ ~~Employer~~(7,804) $(10,975) State and ~~plan~~local ~~participant~~taxes, ~~contributions~~net of Federal tax benefit...........~~.....~~ ~~242~~132 --(645) ~~Benefits~~47 ~~paid~~Effect of foreign operations................................ 2,728 4,355 3,487 Nondeductible costs in excess of net assets acquired........~~......~~ ~~(62)~~3,580 --845 ~~Foreign~~693 ~~exchange~~Change ~~impact~~in valuation reserve.................................~~...~~ ~~(494)~~3,676 ~~(541)~~6,919 ~~------~~12,199 ~~-------~~Tax ~~Fair~~loss ~~value of plan assets~~benefit.................................. ~~$4,769 $ 5,126 ------ ------- Plan assets in excess of benefit obligation~~..........~~......~~ $-- ~~147~~(3,419) $(5,215) ~~979~~Fixed ~~Unrecognized: Net variation (~~asset) ~~liability~~valuation increase--foreign.....................~~.....~~ -- (~~952~~3,283) ~~200~~-- ~~Plan~~Reserve ~~net~~for ~~losses~~carryback ~~(gains)~~refund request........................ 5,168 -- -- Other items.......... ~~2,767 (1,032) Foreign exchange impact~~....................................... (~~464~~408) 741 (867) --------- --------- --------- ~~Funded~~Income ~~status~~tax expense (benefit)--continuing operations.........~~.....................................~~ $1 2,~~498~~948 $ ~~147~~(2,291) $ (631) ========= ========= =========

A deferred income tax (expense) benefit results from temporary differences in the recognition of income and expense for income tax and financial reporting purposes. The temporary differences which gave rise to the following deferred income tax assets and liabilities are:

~~APRIL~~April 27, April 28, 2002 2001 --------- ~~Service~~--------- ~~cost~~Deferred income tax assets: Accounts receivable....................................... $ 621 $ 1,390 Inventory................................................. $2,068 ~~232~~1,705 ~~Interest~~Accrued ~~cost~~liabilities....................................... 7,474 9,852 Net operating losses...................................... ~~249~~14,483 ~~Expected~~11,096 ~~return~~Fixed onasset ~~plan~~valuation ~~assets~~increase--foreign................... 2,243 3,283 Tax credits............................................... ~~(396)~~1,336 ~~Amortization~~-- ofAssets ~~prior~~held ~~service~~for ~~cost~~sale...................................... ~~(88)~~275 ~~Recognized~~254 ~~actual losses~~Other..................................................... 88857 1,282 -------- ~~Net~~-------- ~~periodic~~Total ~~benefit~~gross ~~cost~~deferred income tax assets.................. 29,357 28,862 Valuation allowance....................................... $(29,357) 85(25,681) ~~=====~~-------- ~~Weighted~~-~~average~~------- ~~assumptions:~~Total ~~Discount~~net ~~rate~~deferred income tax assets.................... -- 3,181 Deferred income tax liabilities: Depreciation.......................... 6.~~25%~~................... 6(5,850) (7,151) Cost in excess of net assets acquired.~~30%~~.................... ~~Annual~~(1,608) ~~compensation~~(2,022) ~~increase~~Reserve for IRS examination............................... ~~5.00%~~(411) 5(411) Foreign items.~~00%~~............................................ ~~Expected~~(484) ~~rate~~(231) ofForeign ~~return~~asset revaluation................................. (9,103) (9,526) Other..................................................... 8(615) (695) -------- -------- Total gross deferred income tax liabilities.~~00%~~............ 8(18,071) (20,036) -------- -------- Net deferred income tax liability.~~50%~~...................... $(18,071) $(16,855) ======== ========

F-32 HIGH VOLTAGE ENGINEERING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Dollars in Thousands, Except Per Share Data) NOTE M--INCOME TAXES (Continued) These deferred income tax assets and liabilities are presented as follows in the consolidated balance sheets:

~~APRIL~~April 2827, ~~APRIL~~April 2928, 2002 2001 ~~2000~~ --------- --------- ~~Severance~~Current ~~indemnity~~deferred ~~(note~~tax I)liability............................ $ 4,018 $ 3,336 Noncurrent deferred tax liability......................... 14,053 13,519 ------- ------- $1918,~~605~~071 $2016,~~470~~855 ======= =======

A valuation allowance against the recoverability of deferred tax assets has been established because more likely than not the Company will not be able to utilize certain credits in future years. The Company has offset certain deferred tax liabilities, with deferred tax assets which are expected to generate offsetting deductions within the same periods. A summary of the activity in the allowance for deferred tax assets is as follows:

~~APRIL~~Years 28Ended --------------------------------- April 27, ~~APRIL~~April 28, April 29, 2002 2001 2000 --------- --------- ~~Severance~~--------- ~~indemnity~~Balance ~~expense~~at beginning of period...................~~............~~ $25,681 2$18,~~796~~762 $ 16,~~014~~563 ~~Indemnities~~Net ~~paid~~change.......................................~~...~~ (3,~~186)~~676 (16,~~657)~~919 ~~Exchange~~12,199 ~~rate~~------- ~~adjustment~~------- ------- Balance at end of period.........................~~.........~~ ~~(475)~~$29,357 ~~-- ------- -------~~ $25,681 ~~(865)~~ $18,762 ~~(643)~~======= ======= =======

At April 27, 2002, the Company has available domestic net operating loss carryforwards of approximately $14,960 which generally begin to expire in the fiscal 2018. These carryforwards are substantially limited upon an "ownership change" as defined in the Internal Revenue Code. In addition, the Company has foreign net operating loss carryforwards of approximately $22,800 which generally expire in fiscal 2006. The Company has been audited by the IRS through the 1995 tax year and maintains reserves for subsequent IRS examinations. The Company intends to apply for a loss carryback refund. It is the Company's policy to reserve for such refunds due to the Company's experience with the inherent uncertainties involved in the realization of the expected refund. F-33 HIGH VOLTAGE ENGINEERING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (dollars in Thousands, Except Per Share Data) NOTE N--OTHER, NET Other, net includes the following:

~~APRIL~~Years 28Ended --------------------------------- April 27, ~~APRIL~~April 2928, ~~APRIL~~April 2429, 2002 2001 2000 ~~1999~~ --------- --------- --------- ~~Domestic~~Write down of notes receivable, deposits and impaired capital equipment......................................... $ 159 $ 457 $ 628 Net loss (gain) on disposition of miscellaneous assets...... 313 (256) 608 Facilities (income) expense, net (note G)................... $(~~24,863~~329) $(~~25,145~~383) $(4357) Recoveries of aborted acquisition,~~108~~ offering costs and related litigation, net (note Q).......................... ~~Foreign~~221 350 28 Patent defense costs and related litigation, net of recoveries................................................ 6 390 901 Equity in earnings of joint venture and other affiliates.... 2(1,~~108~~584) (~~5,311~~876) 239 Bondholders' consent and finance agreement amendment fees and related expenses..... ................................ 265 -- 3,451 Discount on sale of receivables............................. 356 2,~~714~~519 857 Facility relocation costs................................... 1,197 1,145 413 Workforce reorganization costs.............................. 4,326 1,708 -- Reimbursed environmental and litigation costs, net (note Q). 839 52 404 ASI acquisition integration costs........................... 545 -- -- --------- --------- --------- Total..................................................... $~~(22~~6,~~755)~~314 $~~(30~~5,~~456)~~106 $(17,~~394)~~172 ========= ========= =========

NOTE O--RELATED-PARTY TRANSACTIONS MANAGEMENT FEES Management fees were incurred with respect to services rendered in connection with financing, mergers and acquisitions and various operational and strategic matters. Management fees were $572 for fiscal 2002 and $750 for fiscal 2001 and 2000, respectively. NOTE P--LEASES Capital and Operating Leases The Company conducts a portion of its operations in facilities under capital and operating leases and also has capital and operating leases covering certain machinery and equipment. Certain of the leases contain renewal and purchase options. Rental expenses charged to operations in fiscal 2002, 2001 and 2000 were approximately $3,525, $4,779 and $2,633 and respectively. Property under capital leases consisted of the following:

APRIL 2827, APRIL 2928, ~~APRIL~~2002 ~~24,~~ 2001 ~~2000 1999~~ --------- --------- ~~---------~~Land, ~~Continuing~~buildings ~~operations:~~and ~~Current: Federal~~improvements..........................~~....................~~ $~~(10~~7,~~645)~~803 $(14,~~289)~~990 ~~$(6,827)~~Machinery ~~State................................................~~and ~~(992) (109) 85 Foreign~~equipment...................................~~...........~~ ~~-- 1~~9,~~664~~530 ~~933 -------- ------- ------- (11~~6,~~637)~~478 ~~266~~Less ~~(5,809)~~accumulated ~~-------- ------- ------- Deferred (net of impact of valuation allowance): Federal~~amortization.............................~~.................~~ ~~3,925~~ (~~897) 1,712 Foreign.............................................. 5,421 -- 491 -------- ------- -------~~ 9,~~346 (897~~058) ~~2,203 -------- ------- ------- Total continuing operations..............................~~ (25,~~291~~810) ~~(631) (3,606)~~ -------- ------- ------- Discontinued operations: Current: Federal.............................................. 19,378 1,662 7,772 State................................................ 4,424 181 1,574 Foreign.............................................. 76 48 54 -------- ------- ------- Total ~~discontinued operations~~............................ ~~23,878 1,891 9,400 -------- ------- ------- Income from discontinued operations~~...................... 1,031 1,518 2,278 Gain on disposal of discontinued operations.............. 22,847 373 7,122 -------- ------- ------- 23,878 1,891 9,400 -------- ------- ------- Extraordinary item: Current: Federal.............................................. (301) -- -- State................................................ (28) -- -- -------- ------- ------- Total extraordinary item............................... (329) -- -- -------- ------- ------- Total discontinued operations and extraordinary item... 23,549 1,891 9,400 -------- ------- ------- Income taxes............................................. $ 218,~~258~~275 $ ~~1,260 $~~ 5,~~794~~658 ======== ======= ~~=======~~

F-34 HIGH VOLTAGE ENGINEERING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Dollars in Thousands, Except Per Share Data) NOTE P--LEASES (Continued) At April 27, 2002, the minimum rental commitments for noncancelable leases that have initial or remaining terms of more than one year are as follows:

~~APRIL~~CAPITAL ~~28,~~OPERATING ~~APRIL~~LEASES ~~29,~~LEASES ~~APRIL 24, 2001 2000 1999~~ --------- --------- ~~--------- Federal statutory rate applied to income before income, discontinued operations and extraordinary item~~2003..................................................... $~~(7,804)~~ ~~$(10~~2,~~975)~~909 $ ~~(722) State and local taxes~~3,470 ~~net of Federal tax benefit~~2004........... ~~(645) 47 84 Effect of foreign operations~~.......................................... 42,~~355~~670 3,~~487~~523 ~~451 Nondeductible costs in excess of net assets acquired~~2005........ ~~845 693 475 Change in valuation reserve~~............................................. 62,~~919~~489 122,~~199~~967 ~~(3,800) Tax loss benefit~~2006..................................................... (31,~~419)~~870 (53,~~215)~~080 ~~-- Fixed asset valuation increase--foreign~~2007..................... ~~(3,283) -- -- (Benefit) provision for Internal Revenue Service ("IRS") examination~~................................ 1,777 2,949 Thereafter through 2015.................................. 5,358 781 ------- ------- ~~(225)~~Minimum ~~Other items~~commitments...................................... $17,073 $16,770 ======= Less amount representing interest........................ ~~741~~ (~~867~~5,836) ~~131~~ ------- ~~--------~~Capital ~~-------~~lease ~~Income~~obligations ~~tax~~ (~~benefit)~~included ~~expense~~in long-~~-continuing~~term ~~operations~~obligations) (note H).................................. $(211,~~291)~~237 ~~$ (631) $(3,606)~~ ======= ~~======== =======~~

NOTE Q--LITIGATION, CLAIMS AND ENVIRONMENTAL MATTERS The Company is obligated to clean up two sites relating to former manufacturing facilities and has accrued the estimated costs of remediation (note I). Estimated costs are determined by external and internal environmental remediation experts. The estimated costs of remediation of one site is based on its estimated present value. The discount rate used was 6%. The gross undiscounted amount differs from the estimated present value by approximately $857 as of April 27, 2002. There are no assurances that additional costs will not be incurred or that significant changes in estimates or changes in environmental laws will not require additional amounts to be accrued. The Company believes that it can continue to meet these environmental standards without material adverse effect on its financial condition. The expected future payments for the environmental liabilities is $557 in fiscal 2003, $534 in fiscal 2004, $501 in fiscal 2005, $280 in fiscal 2006 and $2,193 thereafter. The Company is under agreement with the owner of a property adjacent to one remediation sites. The settlement terms principally include a mutual release of claims for past costs and an undertaking by the Company to perform certain future remediation work on the site, for which the Company will pay up to the first $500 in costs and two thirds of any cost over this threshold. At April 27, 2002, the Company has accrued the estimated remediation cost with respect to this matter. There are no assurances that additional costs will not be incurred or that significant changes in estimates or changes in environmental laws will not require additional amounts to be accrued. F-35 HIGH VOLTAGE ENGINEERING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Dollars in Thousands, Except Per Share Data) NOTE Q--LITIGATION, CLAIMS AND ENVIRONMENTAL MATTERS (Continued) In March 1998, the Company's Robicon Corporation subsidiary initiated litigation against Toshiba International Corporation ("Toshiba") in the United States District Court for the Western District of Pennsylvania alleging infringement of one of Robicon's Perfect Harmony patents. In June 1998, Toshiba filed suit against Robicon and several other defendants in the United States District Court for the Southern District of Texas alleging, among other things, false and disparaging comments concerning Toshiba, interference with contract, violation of the Texas Competition and Trade Practices Statute and civil conspiracy to restrict Toshiba's business and cause the wrongful termination of a purchase order of one of its customers. Damages under each section are claimed to be in excess of $75, the federal statutory minimum, in addition to a claim for punitive damages. In its suit, Toshiba has also claimed that Robicon is infringing a patent held by Toshiba and requested a declaratory judgment that Robicon's patent, which is the subject of the Pennsylvania action, is invalid. In March 1999, the Texas District Court dismissed without prejudice all claims except the alleged patent infringement by Robicon and the request for declaratory judgment. These claims were then transferred to the Western District of Pennsylvania. Also in March 1999, Toshiba filed a petition in Harris County, Texas in which it realleged the claims dismissed by the Texas district court, citing the additional costs by Toshiba to reinstate its purchase order and damages to its reputation not exceeding $5,000. On November 29, 1999, the Pennsylvania district court granted Robicon's Motion to dismiss Toshiba's patent infringement claim against Robicon. The only remaining transferred claim is Toshiba's request for declaratory judgment. In November 1999, Toshiba filed a motion to dismiss without prejudice all of the claims pending in Harris County, Texas pursuant to a Tolling Agreement which permitted Toshiba one (1) year to re-file its claims. In December 1999, the Texas state court granted Toshiba's motion. Toshiba did not re-file its claims prior to the expiration of the Tolling Agreement. There has been no substantive change in the status of this litigation. Certain other claims, suits and complaints have been filed or are pending against the Company. In the opinion of the Company, all such matters are without merit or are of such kind, or involve such amounts, as would not have a material effect on the consolidated financial position or the results of operations of the Company if disposed of unfavorably. If estimates change, there is no assurances these items will not require additional accruals by the Company. F-36 HIGH VOLTAGE ENGINEERING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Dollars in Thousands, Except Per Share Data) NOTE R--FOREIGN SALES International sales represented 60%, 55% and 41% of the Company's net sales in fiscal 2002, 2001 and 2000, respectively. The 60% of international sales in fiscal 2002 included 25% of sales in Italy and 5% of sales in Japan. These sales represented the combined total of export sales made by United States of America operations and all sales made by foreign operations outside of the United States of America. Export sales made by domestic operations were approximately 18% of the Company's net sales for fiscal 2002, 15% for fiscal 2001 and 19% for fiscal 2000. The following table summarizes the Company's sales and selected operating data in different geographic areas:

~~APRIL~~Adjustments ~~28,~~United ~~APRIL~~and ~~29,~~States ~~2001~~Foreign ~~2000~~Eliminations Consolidated -------- -------- ------------ ~~Deferred~~------------ ~~income~~Fiscal ~~tax~~2000 ~~assets:~~Sales ~~Accounts~~to ~~receivable~~unaffiliated customers..................~~.....................~~ $ 1203,~~390~~306 $ ~~104 Inventory................................................. 1~~68,~~705~~179 ~~2,007~~$ ~~Accrued~~-- ~~liabilities....................................... 9~~$271,~~852~~485 ~~8,122~~Transfers ~~Net~~between ~~operating~~geographic ~~losses~~locations...........~~...........................~~ 115,~~096~~045 65,~~556~~718 ~~Fixed~~(10,763) ~~asset~~-- ~~valuation~~-------- ~~increase~~--~~foreign...................~~------ ~~(3,283)~~-------- -------- ~~Tax~~Net ~~credits~~sales........................................~~.......~~ --208,351 ~~961~~73,897 ~~Assets~~(10,763) ~~held~~271,485 ~~for~~(Loss) ~~sale~~from operations...........................~~...........~~ ~~254~~(6,395) ~~566~~(5,860) ~~Other~~(12,255) Identifiable assets..............................~~.......................~~ 1217,~~282~~514 ~~875~~140,298 ~~--------~~357,812 ~~-------~~Fiscal ~~Total~~2001 ~~gross~~Sales ~~deferred~~to ~~income~~unaffiliated ~~tax assets~~customers.................. 28$225,~~862~~613 19$190,~~191~~934 ~~Valuation~~$ ~~allowance~~-- $416,547 Transfers between geographic locations...........~~............................~~ ~~(25~~8,~~681)~~456 11,083 (1819,~~762~~539) -- -------- -------- ~~Total~~-------- ~~net~~-------- ~~deferred~~Net ~~income tax assets~~sales.................... ~~3,181 429 Deferred income tax liabilities: Depreciation~~....................~~..........................~~ (7234,~~151)~~069 202,017 (319,~~470~~539) ~~Cost~~416,547 in(Loss) ~~excess~~income offrom ~~net assets acquired~~operations..................... (27,~~022~~162) 5,698 -- (21,~~162~~464) ~~Reserve~~Identifiable ~~for IRS examination~~assets............................... ~~(411)~~272,197 (139,426 -- 411),623 ~~Foreign~~Fiscal ~~items~~2002 Sales to unaffiliated customers..................~~...........................~~ ~~(231)~~$210,568 (1$192,~~326)~~444 ~~Foreign~~$ ~~asset~~-- ~~revaluation~~$403,012 Transfers between geographic locations...........~~......................~~ 6,878 16,431 (923,~~526~~309) -- ~~Other~~-------- -------- -------- -------- Net sales........................................~~.............~~ 217,446 208,875 (~~695~~23,309) 403,012 (~~569~~Loss) ~~-------- ------- Total gross deferred~~ income ~~tax~~from ~~liabilities~~operations.................... (2012,~~036~~951) (72,~~938)~~225 --~~------~~ ~~-------~~(10,726) ~~Net~~Identifiable ~~deferred income tax liability~~assets.............................. ~~$(16~~222,~~855)~~259 ~~$(7~~150,~~509)~~130 ~~========~~-- ~~=======~~372,389

Identifiable assets by geographic area are those assets used in the Company's operations in each area. F-37 HIGH VOLTAGE ENGINEERING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Dollars in Thousands, Except Per Share Data) NOTE R--FOREIGN SALES (Continued) Net assets for European operations amounted to approximately $28,591 as of April 27, 2002. Included in net assets of European operations were intercompany receivables from affiliated companies amounting to approximately $8,404 as of April 27, 2002. Insofar as can be reasonably determined, there is no foreign exchange restrictions that materially affect the financial position or the operating results of the Company and its subsidiaries. NOTE S--SEGMENT DATA The Company operates in three industry segments. Each segment operates independently with its own management team and manufacturing facilities and maintains its own independent market identity. The Industrial Power Control segment includes Ansaldo Sistemi Industriali S.p.A. ("ASI") and Robicon Corporation and subsidiaries ("Robicon"), together operated as "ASIRobicon". The Advanced Surface Analysis segment has two main components, equipment sales and analytical services. The segment consists of PHI and High Voltage Engineering Europa, B.V. ("HVE Europa") together operated as "Phymetrics". The results of operations of VHV have been included with the results of operations of HVE Europa. The third industry segment, Customized Monitoring Instrumentation, reflect the results of operations of Maxima Technologies, Inc. and subsidiaries ("Maxima"). The Company evaluates the performance of each segment on its ability to generate cash. Information concerning operations in these businesses is as follows:

~~APRIL~~Operating ~~28,~~Depreciation ~~APRIL~~Net Income Identifiable and Capital Sales (Loss) Assets Amortization Expenditures -------- --------- ------------ ------------ ------------ Year End April 29, ~~2001~~ 2000 Restricted subsidiary (Robicon)........ $ 74,913 $ (834) $ 38,222 $ 2,077 $ 1,540 Unrestricted subsidiary (ASI).......... 53,960 (8,001) 131,862 1,631 432 -------- -------- -------- ------- ~~Current~~------- ~~deferred~~Industrial ~~tax~~power ~~liability~~control............... 128,873 (8,835) 170,084 3,708 1,972 Advanced surface analysis.............. 81,418 (3,617) 108,571 9,968 9,192 Customized monitoring instrumentation...................... 61,194 6,048 42,173 2,472 1,637 Corporate.............................. -- (5,851) 36,984 338 97 -------- -------- -------- ------- ------- Consolidated........................... $271,485 $(12,255) $357,812 $16,486 $12,898 ======== ======== ======== ======= ======= Year End April 28, 2001 Restricted subsidiary (Robicon)........ $ 85,986 $ (865) $ 33,358 $ 3,~~336~~991 $ 1,~~024~~978 ~~Noncurrent~~Unrestricted ~~deferred~~subsidiary ~~tax~~(ASI).......... ~~liability~~178,283 1,869 140,595 3,643 2,291 -------- -------- -------- ------- ------- Industrial power control............... 264,269 1,004 173,953 7,634 4,269 Advanced surface analysis.............. 1396,~~519~~319 6(3,~~485~~287) 109,682 10,550 4,696 Customized monitoring instrumentation...................... 55,959 4,326 38,792 2,386 573 Corporate.............................. -- (3,507) 89,196 196 25 -------- -------- -------- ------- ------- Consolidated........................... $416,547 $ (1,464) $411,623 $20,766 $ 9,563 ======== ======== ======== ======= ======= Year End April 27, 2002 Industrial power control............... $275,335 $ 6,518 $207,985 $ 6,024 $12,774 Advanced surface analysis.............. 81,340 (16,~~855~~124) 112,090 20,215 5,676 Customized monitoring instrumentation...................... 46,337 2,744 42,685 2,335 1,634 Corporate.............................. -- (3,864) 9,629 181 107 -------- -------- -------- ------- ------- Consolidated........................... $7403,~~509~~012 $(10,726) $372,389 $28,755 $20,191 ======== ======== ======== ======= =======

F-38 HIGH VOLTAGE ENGINEERING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Dollars in Thousands, Except Per Share Data) NOTE S--SEGMENT DATA (CONTINUED) The following represents the supplemental consolidating balance sheet for the Company's restricted and unrestricted subsidiaries at April 27, 2002.

~~YEARS~~Restricted ~~ENDED~~Unrestricted Eliminations Subsidiaries Subsidiaries Adjustments Total ------------- ------------ ------------ ~~APRIL~~--------- 28ASSETS CURRENT ASSETS Cash and cash equivalents................................ $ 11,336 ~~APRIL~~$ 293,797 ~~APRIL~~$ 24-- $ 15,133 ~~2001~~Restricted ~~2000~~cash.......................................... ~~1999~~4,749 142 -- 4,891 Accounts receivable, net of allowance for doubtful accounts............................................... 60,148 75,969 -- 136,117 Refundable income taxes.................................. 6 260 -- 266 Inventories.............................................. 43,685 16,857 -- 60,542 Costs and earnings in excess of billings................. 1,857 9,486 -- 11,343 Prepaid expenses and other current assets................ 3,710 3,306 -- 7,016 -------- -------- ------- ~~Balance~~-------- atTotal ~~beginning~~current ofassets................................... ~~period~~125,491 109,817 -- 235,308 PROPERTY, PLANT AND EQUIPMENT, NET......................... $54,667 30,822 -- 85,489 INVESTMENT IN JOINT VENTURE................................ 3,263 -- -- 3,263 ASSETS HELD FOR SALE....................................... 2,393 -- -- 2,393 OTHER ASSETS, NET.......................................... 18,~~762~~597 7,315 -- 25,912 COST IN EXCESS OF NET ASSETS ACQUIRED...................... 20,024 -- -- 20,024 Intercompany Accounts, Net................................. 21,543 (21,311) (232) -- -------- -------- --------- -------- $245,978 6$126,~~563~~643 $ (232) $372,389 ======== ======== ========= ======== LIABILITIES AND STOCKHOLDERS' DEFICIENCY CURRENT LIABILITIES Current maturities of long-term debt obligations......... $ 1,695 $ 12,878 $ -- $ 14,573 Foreign receivables facilities........................... 1,303 10,~~363~~982 ~~Net~~-- ~~change~~12,285 Accounts payable and accrued expense..................... 51,744 68,063 -- 119,807 Billings in excess of costs.............................. 64,~~919~~016 1,496 -- 5,512 Advance payments by customers............................ 12,~~199~~878 (39,~~800)~~278 -- 22,156 Federal, foreign and state income taxes payable.......... 310 247 -- 557 Deferred income taxes.................................... 2,896 1,122 -- 4,018 Redeemable put warrants.................................. 2,900 -- -- 2,900 -------- -------- ~~Balance~~------ at-------- ~~end~~Total current liabilities.............................. 77,742 104,066 -- 181,808 LONG-TERM OBLIGATIONS, LESS CURRENT MATURITIES............. 191,134 24,044 -- 215,178 DEFERRED INCOME TAXES...................................... 13,498 555 -- 14,053 OTHER LIABILITIES.......................................... 6,750 18,495 -- 25,245 REDEEMABLE PREFERRED STOCK (aggregate liquidation preference of ~~period~~$55,934 as of April 27, 2002).............. 53,847 -- -- 53,847 MINORITY INTEREST.......................................... 93 -- -- 93 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' DEFICIENCY, NET.............................. (97,086) (20,517) (232) (117,835) -------- -------- ------ -------- $25245,~~681~~978 $18126,~~762~~643 $ 6(232) $372,~~563~~389 ======== ======== ====== ========

F-39 HIGH VOLTAGE ENGINEERING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Dollars in Thousands, Except Per Share Data) NOTE S--SEGMENT DATA (CONTINUED) The following represents the supplemental consolidating statement of operation for the Company's restricted and unrestricted subsidiaries as of April 27, 2002.

~~YEARS~~Restricted ~~ENDED~~Unrestricted Eliminations Subsidiaries Subsidiaries Adjustments Total ------------ ------------ ------------ ~~APRIL~~-------- 28Net sales.......................................... $232,920 ~~APRIL~~$175,758 29$ (5,666) ~~APRIL~~$403,012 24Cost of sales...................................... 169,392 ~~2001~~142,807 ~~2000~~(5,666) ~~1999~~306,533 --------- --------- -------- -------- ~~Write~~Gross ~~down of notes receivable, deposits and impaired capital equipment~~profit.....................................~~....~~ $63,528 ~~457~~32,951 $-- ~~628~~96,479 $Administrative ~~250~~and ~~Net~~selling ~~(gain) loss on disposition of miscellaneous assets~~expenses................ ~~(256)~~58,100 ~~608~~25,447 ~~507~~-- ~~Facilities (income) expense~~83,547 ~~net~~Research ~~(note~~and G)development expenses................... ~~(383)~~13,421 ~~(357) (219) Recoveries of aborted acquisition~~3,064 ~~offering~~-- ~~costs and related litigation~~16,485 ~~net~~Restructuring ~~(note Q)~~charge............................... ~~350~~859 28-- ~~(1,809)~~-- ~~Patent~~859 ~~defense costs and related litigation~~Other, net ~~of recoveries~~.........................................~~.......~~ ~~390~~3,763 ~~901~~2,551 35-- ~~Equity~~6,314 in-------- ~~earnings~~-------- of-------- ~~joint~~-------- ~~venture~~(Loss) ~~and~~income ~~other~~from ~~affiliates~~operations.... ~~(876) 239 (188) Bondholders' consent fees and related costs~~................. --(12,615) 31,~~451~~889 -- ~~Discount~~(10,726) onInterest ~~sale of receivables~~expense................................... 2(20,~~519~~964) ~~857~~(4,079) -- ~~Facility~~(25,043) ~~relocation~~Interest ~~costs~~income.................................... 562 1,~~145~~128 ~~413~~-- 1,690 -------- ~~Workforce~~-------- ~~reduction~~-------- ~~costs~~-------- Loss from continuing operations before income taxes, and extraordinary item.................. (33,017) (1,062) -- (34,079) Income taxes (credit).............................. 1,~~708~~164 1,784 -- 2,948 -------- -------- -------- -------- ~~Total~~Loss from continuing operations before extraordinary item............................. (34,181) (2,846) -- (37,027) Extraordinary loss, net of income taxes............ (327) -- -- (327) -------- -------- -------- -------- Net loss........................................... $5(34,~~054~~508) $6 (2,~~768~~846) $ -- $(137,~~424~~354) ======== ======== ======== ======== Supplemental Data: Depreciation..................................... $ 11,191 $ 3,041 $ -- $ 14,232 Amortization..................................... 14,425 98 -- 14,523 Capital expenditures............................. 9,319 10,872 -- 20,191

F-40 HIGH VOLTAGE ENGINEERING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (Dollars in Thousands, Except Per Share Data) NOTE S--SEGMENT DATA (CONTINUED) The following represents the supplemental consolidating balance sheet for the Company's restricted and unrestricted subsidiaries at April 28, 2001.

~~APRIL~~Restricted ~~28,~~Unrestricted ~~APRIL~~Eliminations ~~29,~~Subsidiaries ~~2001~~Subsidiaries ~~2000~~Adjustments Total ------------ ------------ ~~Land,~~------------ ~~buildings~~------- ASSETS CURRENT ASSETS Cash and ~~improvements~~cash equivalents................................ $ 424,~~990~~189 $ 52,~~056~~743 ~~Machinery~~$ ~~and~~-- ~~equipment~~$ 26,932 Restricted cash.......................................... 29,143 329 -- 29,472 Accounts receivable, net of allowance for doubtful accounts............................................... 11,399 70,454 -- 81,853 Inventories.............................................. 43,238 18,393 -- 61,631 Costs and earnings in excess of billings................. 3,379 9,653 -- 13,032 Prepaid expenses and other current assets................ 2,386 6,~~478~~308 -- 8,694 -------- -------- ------ -------- Total current assets................................... 113,734 107,880 -- 221,614 PROPERTY, PLANT AND EQUIPMENT, NET......................... 57,715 25,265 -- 82,980 INVESTMENT IN JOINT VENTURE................................ 2,040 -- -- 2,040 ASSETS HELD FOR SALE....................................... 2,510 -- -- 2,510 OTHER ASSETS, NET.......................................... 61,997 7,~~127~~450 ~~Less~~-- ~~accumulated~~69,447 ~~amortization~~COST IN EXCESS OF NET ASSETS ACQUIRED...................... 33,032 -- -- 33,032 Intercompany Accounts, Net................................. 16,523 (416,~~282~~408) (5115) -- -------- -------- ------ -------- $287,~~487~~551 $124,187 $ (115) $411,623 ======== ======== ====== ======== LIABILITIES AND STOCKHOLDERS' DEFICIENCY CURRENT LIABILITIES Current maturities of long-term debt obligations......... $ 2,279 $ 6,526 $ -- $ 8,805 Foreign receivables facilities........................... 1,675 4,400 -- 6,075 Accounts payable and accrued expense..................... 55,190 65,600 -- 120,790 Billings in excess of costs.............................. 1,113 3,183 -- 4,296 Advance payments by customers............................ 9,479 9,407 -- 18,886 Federal, foreign and state income taxes payable.......... 9,302 3,217 -- 12,519 Deferred income taxes.................................... 1,346 1,990 -- 3,336 Redeemable put warrants.................................. 2,900 -- -- 2,900 -------- -------- ------ -------- Total current liabilities.............................. 83,284 94,323 -- 177,607 LONG-TERM OBLIGATIONS, LESS CURRENT MATURITIES............. 186,104 25,484 -- 211,588 DEFERRED INCOME TAXES...................................... $13,519 -- -- 13,519 OTHER LIABILITIES.......................................... 7,~~186~~947 20,302 -- 28,249 REDEEMABLE PREFERRED STOCK (aggregate liquidation preference of $48,892 6as of April 28,~~696~~ 2001).............. 46,122 -- -- 46,122 MINORITY INTEREST.......................................... 59 -- -- 59 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' DEFICIENCY, NET.............................. (49,484) (15,922) (115) (65,521) -------- -------- ------ -------- $287,551 $124,187 $ (115) $411,623 ======== ======== ====== ========

F-41 HIGH VOLTAGE ENGINEERING CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) NOTE S--SEGMENT DATA (CONTINUED) The following represents the supplemental consolidating statement of operation for the Company's restricted and unrestricted subsidiaries as of April 28, 2001.

~~CAPITAL~~Restricted ~~OPERATING~~Unrestricted ~~LEASES~~Eliminations ~~LEASES~~Subsidiaries Subsidiaries Adjustments Total ------------ ------------ ~~2002~~------------ -------- Net sales.......................................... $241,636 $178,283 $ (3,372) $416,547 Cost of sales (Includes subassembly exit costs of $2,661).......................................... $177,458 2148,~~467~~507 $(3,372) 4322,~~684~~593 ~~2003~~-------- -------- -------- -------- Gross profit..................................... 64,178 29,776 -- 93,954 Administrative and selling expenses................ 49,818 23,818 -- 73,636 Research and development expenses.................. 14,152 2,~~010~~381 4-- 16,~~182~~533 ~~2004~~Restructuring charge............................... 143 -- -- 143 Other, net......................................... 3,398 1,~~702~~708 3-- 5,~~464~~106 ~~2005~~-------- -------- -------- -------- (Loss) income from operations.................... (3,333) 1,869 -- (1,464) Interest expense................................... 1(19,~~160~~281) (2,~~473~~763) ~~2006~~-- (22,044) Interest income.................................... 557 196 -- 753 -------- -------- -------- -------- Loss from continuing operations before income taxes, discontinued operations and extraordinary item............................. ~~852~~(22,057) 2(698) -- (22,~~313~~755) ~~Thereafter~~Income ~~through~~taxes ~~2015~~(credit)..............................~~....~~ 3(8,~~617~~004) 95,~~241~~713 -- (2,291) -------- -------- ~~Minimum~~-------- ~~commitments~~-------- Loss from continuing operations before discontinued operations and extraordinary item........................................... ~~$11~~(14,~~808~~053) ~~$26~~(6,~~357~~411) ~~=======~~-- ~~Less~~(20,464) ~~amount~~Discontinued ~~representing~~operations: ~~interest~~Income from discontinued operations, net of income taxes................................... (42,~~762)~~078 -- -- 2,078 Gain on disposal of discontinued operations, net of income taxes................................ 34,270 -- -- ~~Capital~~34,270 ~~lease~~-------- ~~obligations~~-------- ~~(included~~-------- in-------- ~~long~~22,295 (6,411) -~~term~~- ~~obligations~~15,884 Extraordinary loss, net of income taxes............ (530) -- -- (~~note~~530) H-------- -------- -------- -------- Net income (loss).................................. $ 721,~~046~~765 $ (6,411) $ -- $ 15,354 ======== ======== ======== ======== Supplemental Data: Depreciation..................................... $ 11,159 $ 3,028 $ -- $ 14,187 Amortization..................................... 5,964 615 -- 6,579 Capital expenditures............................. 7,272 2,291 -- 9,563

NOTE T--SUBSEQUENT EVENTS On June 14, 2002, the Company sold a property reflected in the accompanying balance sheets as assets held for sale for $9,180 of gross proceeds. Net proceeds of $8,000 from the asset sale were deposited in a restricted account pursuant to the New Revolving Credit Facility agreement. F-42 SIGNATURES The Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. HIGH VOLTAGE ENGINEERING CORPORATION By: /s/ RUSSELL L. SHADE, JR. ------------------------------- Russell L. Shade, Jr. CHIEF EXECUTIVE OFFICER AND VICE PRESIDENT POWER OF ATTORNEY Each person whose signature appears below hereby appoints Clifford Press, Laurence S. Levy, Joseph W. McHugh, Jr. and Ronald R. Fortier, and each of them severally, acting alone and without the other, his true and lawful attorney-in-fact with the authority to execute in the name of each such person, including exhibits thereto and other documents therewith, any and all amendments to this Report on Form 10-K necessary or advisable to enable the Form 10-K to comply with the Securities Act of 1933, as amended, and any rules, regulations and requirements of the Securities and Exchange Commission in respect thereof which amendments may make such other changes in the Form 10-K as the aforesaid attorney-in-fact executing the same deems appropriate. Pursuant to the requirements of the Securities Act of 1934, this report has been signed below by the following persons on behalf of the Registrant in the capacities and on the dates indicated:

~~ADJUSTMENTS~~SIGNATURE ~~UNITED~~TITLE ~~AND~~DATE ~~STATES~~--------- ~~EUROPE~~----- ~~ELIMINATIONS~~---- ~~CONSOLIDATED~~/s/ CLIFFORD PRESS -------- -------- ------------ ------------ ~~FISCAL~~Chairman ~~1999~~of ~~Sales~~the toBoard, ~~unaffiliated~~President ~~customers..................~~July ~~$180~~30,~~744~~ $2002 ~~39,939~~Clifford ~~$220,683~~Press ~~Transfers~~/s/ ~~between~~LAURENCE ~~geographic locations~~S.~~..........~~ ~~9,336~~LEVY ~~151 $ (9,487)~~ -- -------- -------- -------- -------------- ~~Net~~Vice ~~sales........................................~~President ~~190,080~~July 4030,~~090~~ ~~(9,487)~~2002 ~~220,683~~Laurence ~~Income~~S. ~~from~~Levy ~~operations~~/s/ CHRISTOPHER F.~~..........................~~ ~~9,706~~CARMEL ~~3,986~~---------------------------------------- 13Director July 30,~~692~~ ~~Identifiable~~2002 ~~assets~~Christopher F.~~.............................~~ ~~220,368~~Carmel ~~23,087~~/s/ ~~243,455~~H. ~~FISCAL~~CABOT ~~2000~~LODGE ~~Sales~~III to---------------------------------------- ~~unaffiliated~~Director ~~customers..................~~July ~~$203~~30,~~306~~ $2002 ~~68,179~~H. ~~$271,485~~Cabot ~~Transfers~~Lodge ~~between~~III ~~geographic~~/s/ ~~locations~~RUSSELL L.~~..........~~ 5SHADE,~~045~~ ~~5,718~~JR. ~~$(10,763)~~ -- -------- -------- -------- -------------- ~~Net~~Chief ~~sales........................................~~Executive ~~208~~Officer,~~351~~ ~~73,897~~Vice ~~(10,763)~~July ~~271~~30,~~485~~ ~~(Loss)~~2002 ~~from~~Russell ~~operations~~L.~~..........................~~ (6Shade,~~395)~~ ~~(5,860) (12,255) Identifiable assets~~Jr.~~.............................~~ ~~217,514~~President ~~140,298~~Vice ~~357,812~~President ~~FISCAL~~and ~~2001~~Chief ~~Sales~~/s/ toJOSEPH ~~unaffiliated customers~~W.~~.................~~ ~~$225~~MCHUGH,~~613~~ ~~$190,934 $416,547 Transfers between geographic locations~~JR.~~..........~~ ~~8,456~~Financial ~~11,083~~Officer $(~~19,539)~~principal -- -------- -------- -------- -------------- ~~Net~~financial ~~sales........................................~~and ~~234,069~~accounting ~~202,017~~July ~~(19~~30,~~539)~~ ~~416,547~~2002 ~~(Loss)~~Joseph ~~income from operations~~W.~~...................~~ (7McHugh,~~162)~~ ~~5,698 (1,464) Identifiable assets~~Jr.~~.............................~~ ~~272,197 139,426 411,623~~officer)

EXHIBIT INDEX

~~OPERATING~~EXHIBIT ~~DEPRECIATION~~NUMBER ~~NET~~DESCRIPTION ~~INCOME IDENTIFIABLE AND CAPITAL SALES (LOSS) ASSETS AMORTIZATION EXPENDITURES~~ -------- -------------- ------------ ------------ ------------------------------ ~~YEAR~~3.1 ~~END~~Restated ~~APRIL~~Articles ~~24,~~of ~~1999~~Organization ~~Industrial~~of ~~power~~the ~~control~~Registrant.* 3.~~.............~~2 $Amended ~~84,299~~and $Restated ~~3,739~~By-laws $of ~~52,712~~the $Registrant.* 4.1~~,484~~ ~~$ 4~~Indenture,~~280~~ ~~Advanced~~dated ~~surface~~as ~~analysis..............~~of ~~75,453~~August 48,~~888~~ 811997,~~733~~ ~~4,453~~by ~~4,914~~and ~~Customized~~between ~~monitoring~~Registrant ~~instrumentation......................~~and ~~60,931~~State ~~6,248~~Street ~~47,125~~Bank ~~2,813~~and ~~1,231~~Trust ~~Corporate~~Company as Trustee.* 4.~~............................~~2 --First ~~(913)~~Supplemental 61Indenture,~~885~~ ~~325~~dated ~~139~~as ~~--------~~of ~~--------~~March ~~--------~~19, ~~-------~~1998 ~~-------~~to ~~Consolidated........................... $220~~Indenture,~~683~~ $dated ~~13,962~~as ~~$243,455~~of $August 98,~~075~~ ~~$10~~1997,~~564~~ ~~========~~by ~~========~~and ~~========~~between ~~=======~~the ~~=======~~Registrant ~~YEAR~~and ~~END~~State ~~APRIL~~Street ~~29,~~Bank ~~2000~~and ~~Restricted~~Trust ~~subsidiary~~Company, ~~(Robicon)~~as Trustee.** 4.~~......~~3 $Registration 74Rights Agreement,~~913~~ $dated ~~(834)~~as $of 38March 19,~~222~~ ~~$ 2~~1998,~~077~~ $by ~~1,540~~and ~~Unrestricted~~among ~~subsidiary~~the ~~(ASI)~~Registrant and CIBC Oppenheimer Corp.** 4.4 Form of Exchange Note.** 4.~~......~~5 ~~53,960~~Second ~~(8,001)~~Supplemental ~~131~~Indenture,~~862~~ ~~1,631~~dated ~~432~~as ~~--------~~of ~~--------~~December ~~--------~~22, ~~-------~~1999, ~~-------~~to ~~Industrial~~Indenture, ~~power~~dated ~~control...............~~as ~~128,873~~of (August 8,~~835)~~ ~~170~~1997,~~084~~ ~~3,708~~by ~~1,972~~and ~~Advanced~~between ~~surface~~the ~~analysis..............~~Registrant ~~81,418~~and ~~(3,617)~~State ~~108,571~~Street ~~8,732~~Bank 9and Trust Company,~~192~~ ~~Customized~~as ~~monitoring~~Trustee. ~~instrumentation~~10.~~.....................~~2 ~~61,194~~Lease 6Agreement,~~048~~ ~~42,173~~dated ~~2,472~~as ~~1,637~~of ~~Corporate..............................~~November ~~-- (5~~10,~~851)~~ 361988,~~984~~ ~~338~~by 97and ~~--------~~between ~~--------~~Corporate ~~--------~~Property ~~-------~~Associates ~~-------~~8, ~~Consolidated~~L.P.~~.........................~~ ~~$271,485~~and $Datcon Instrument Company (12Lancaster,~~255~~ PA).* ~~$357~~10.4 Installment Sale Agreement,~~812~~ ~~$15~~dated as of September 23,~~250~~ ~~$12~~1994,~~898~~ ~~========~~by ~~========~~and ~~========~~between ~~=======~~Monroeville ~~=======~~Area ~~YEAR~~Industrial ~~END~~Development ~~APRIL~~Corporation ~~28,~~and ~~2001~~Robicon ~~Restricted~~Corporation ~~subsidiary~~ (~~Robicon~~New Kensington, PA).* 10.7 Value Creation Plan of the Registrant.* 10.~~....~~8 $High ~~85,986~~Voltage $Engineering ~~(865)~~Corporation $Employment 33Agreement,~~358~~ $by ~~3,991~~and $between ~~1,978~~Registrant ~~Unrestricted~~and ~~subsidiary~~Russell ~~(ASI)~~L.~~.........~~ ~~178~~Shade,~~283~~ 1Jr.,~~869~~ ~~140,595~~dated ~~3,643~~as ~~2,291~~of ~~--------~~February ~~--------~~24, ~~--------~~1998.** ~~-------~~10.9 ~~-------~~Amended ~~Industrial~~and ~~power~~Restated ~~control...............~~Financing ~~264~~Agreement,~~269~~ ~~1,004~~dated ~~173,953~~as 7of June 19,~~634~~ 42001,~~269~~ ~~Advanced~~by ~~surface~~and ~~analysis..............~~among ~~96,319~~the ~~(3,287)~~Registrant ~~109,682~~and ~~10,550~~the 4other Borrowers named therein,~~696~~ ~~Customized~~Ableco ~~monitoring~~Finance ~~instrumentation......................~~LLC ~~55,959~~and ~~4,326~~the ~~38,792~~other 2Lenders named therein,~~386~~ ~~573~~and ~~Corporate..............................~~the --Guarantors ~~(3,507)~~named ~~89,196~~therein. ~~196~~12 25Statement ~~--------~~of ~~--------~~Computation ~~--------~~of ~~-------~~Financial ~~-------~~Ratios. ~~Consolidated~~21.~~..........................~~1 ~~$416,547~~List $of (Subsidiaries. 24.1~~,464)~~ ~~$411,623~~Power ~~$20,766~~of $Attorney ~~9,563~~(included ~~========~~in ~~========~~signature ~~========~~page ~~=======~~to ~~=======~~Form 10-K).

------------------------- * Incorporated by reference from the Registrant's Registration Statement No. 333-33969, on Form S-4, filed by the Registrant with respect to $135,000,000 aggregate principal amount of the Registrant's 10 1/2% Senior Notes due 2004. ** Incorporated by reference from the Registrant's Registration Statement No. 333-51643, on Form S-4, filed by the Registrant with respect to $20,000 aggregate principal amount of the Registrants 10 1/2% Senior Notes due 2004. (b) All schedules have been omitted because either they are not required, are not applicable, or the information is otherwise set forth in the Consolidated Financial Statements and notes thereto. or the Borrowers may have against any Lender as a result of any default by such Lender hereunder.

TOTAL ELIMINATION RESTRICTED ASI ADJUSTMENTS TOTAL ---------- -------- ----------- -------- ASSETS CURRENT ASSETS Cash and cash equivalents................................ $ 24,189 $ 2,743 $ -- $ 26,932 Restricted cash.......................................... 29,143 329 -- 29,472 Accounts receivable, net of allowance for doubtful accounts............................................... 11,399 70,454 -- 81,853 Inventories.............................................. 43,238 18,393 -- 61,631 Costs and earnings in excess of billings................. 3,379 9,653 -- 13,032 Prepaid expenses and other current assets................ 2,386 6,308 -- 8,694 -------- -------- ----- -------- Total current assets................................... 113,734 107,880 -- 221,614 PROPERTY, PLANT AND EQUIPMENT, NET......................... 57,715 25,265 -- 82,980 INVESTMENT IN JOINT VENTURE................................ 2,040 -- -- 2,040 ASSETS HELD FOR SALE....................................... 2,510 -- -- 2,510 OTHER ASSETS, NET.......................................... 61,997 7,450 -- 69,447 COST IN EXCESS OF NET ASSETS ACQUIRED...................... 33,032 -- -- 33,032 Intercompany Accounts, Net................................. 16,523 (16,408) (115) -- -------- -------- ----- -------- $287,551 $124,187 $(115) $411,623 ======== ======== ===== ======== LIABILITIES AND STOCKHOLDERS' DEFICIENCY CURRENT LIABILITIES Current maturities of long-term debt obligations......... $ 2,279 $ 6,526 $ -- $ 8,805 Foreign receivables facilities........................... 1,675 4,400 -- 6,075 Accounts payable and accrued expense..................... 55,190 65,600 -- 120,790 Billings in excess of costs.............................. 1,113 3,183 -- 4,296 Advance payments by customers............................ 9,479 9,407 -- 18,886 Federal, foreign and state income taxes payable.......... 9,302 3,217 -- 12,519 Deferred income taxes.................................... 1,346 1,990 -- 3,336 Redeemable put warrants.................................. 2,900 -- -- 2,900 -------- -------- ----- -------- Total current liabilities.............................. 83,284 94,323 -- 177,607 LONG-TERM OBLIGATIONS, LESS CURRENT MATURITIES............. 186,104 25,484 -- 211,588 DEFERRED INCOME TAXES...................................... 13,519 -- -- 13,519 OTHER LIABILITIES.......................................... 7,947 20,302 -- 28,249 REDEEMABLE PREFERRED STOCK (aggregate liquidation preference of $48,892 as of April 28, 2001).............. 46,122 -- -- 46,122 MINORITY INTEREST.......................................... 59 -- -- 59 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' DEFICIENCY, NET.............................. (49,484) (15,922) (115) (65,521) -------- -------- ----- -------- $287,551 $124,187 $(115) $411,623 ======== ======== ===== ========

TOTAL ELIMINATION RESTRICTED ASI ADJUSTMENTS TOTAL ---------- -------- ----------- -------- Net sales.......................................... $241,636 $178,283 $(3,372) $416,547 Cost of sales (Includes subassembly exit costs of $2,661).......................................... 174,782 148,507 (3,372) 319,917 -------- -------- ------- -------- Gross profit..................................... 66,854 29,776 -- 96,630 Administrative and selling expenses................ 49,818 23,818 -- 73,636 Research and development expenses.................. 16,828 2,381 -- 19,209 Restructuring charge............................... 143 -- -- 143 Reimbursed environmental and litigation costs, net.............................................. 52 -- -- 52 Other, net......................................... 3,346 1,708 -- 5,054 -------- -------- ------- -------- (Loss) income from operations.................... (3,333) 1,869 -- (1,464) Interest expense................................... (19,281) (2,763) -- (22,044) Interest income.................................... 557 196 -- 753 -------- -------- ------- -------- Loss from continuing operations before income taxes, discontinued operations and extraordinary item............................. (22,057) (698) -- (22,755) Income taxes (credit).............................. (8,004) 5,713 -- (2,291) -------- -------- ------- -------- Loss from continuing operations before discontinued operations and extraordinary item........................................... (14,053) (6,411) -- (20,464) Discontinued operations: Income from discontinued operations, net of income taxes................................... 2,078 -- -- 2,078 Gain on disposal of discontinued operations, net of income taxes................................ 34,270 -- -- 34,270 -------- -------- ------- -------- 22,295 (6,411) -- 15,884 Extraordinary loss, net of income taxes............ (530) -- -- (530) -------- -------- ------- -------- Net income (loss).................................. $ 21,765 $ (6,411) $ -- $ 15,354 ======== ======== ======= ======== Supplemental Data: Depreciation..................................... $ 11,159 $ 3,028 $ -- $ 14,187 Amortization..................................... 5,964 615 -- 6,579 Capital expenditures............................. 7,272 2,291 -- 9,563

TOTAL ELIMINATION RESTRICTED ASI ADJUSTMENTS TOTAL ---------- -------- ----------- -------- ASSETS CURRENT ASSETS Cash and cash equivalents................................ $ 2,266 $ 3,041 $ -- $ 5,307 Restricted cash.......................................... 3,890 171 -- 4,061 Accounts receivable, net of allowance for doubtful accounts............................................... 23,780 65,499 -- 89,279 Refundable income taxes.................................. 1,075 -- -- 1,075 Inventories.............................................. 37,345 13,111 -- 50,456 Costs and earnings in excess of billings................. -- 7,414 -- 7,414 Prepaid expenses and other current assets................ 4,849 6,463 (218) 11,094 -------- -------- -------- -------- Total current assets................................... 73,205 95,699 (218) 168,686 PROPERTY, PLANT AND EQUIPMENT, NET......................... 61,940 32,595 -- 94,535 INVESTMENT IN JOINT VENTURE................................ 1,829 -- -- 1,829 ASSETS HELD FOR SALE....................................... 10,331 1,197 -- 11,528 OTHER ASSETS, NET.......................................... 43,688 2,589 -- 46,277 COST IN EXCESS OF NET ASSETS ACQUIRED...................... 34,957 -- -- 34,957 Intercompany Accounts, Net................................. 11,209 6,376 (17,585) -- -------- -------- -------- -------- $237,159 $138,456 $(17,803) $357,812 ======== ======== ======== ======== LIABILITIES AND STOCKHOLDERS' DEFICIENCY CURRENT LIABILITIES Current maturities of long-term debt obligations......... $ 8,715 $ 1,121 $ -- $ 9,836 Foreign receivables facility............................. 1,937 -- -- 1,937 Accounts payable and accrued expense..................... 48,279 81,774 -- 130,053 Billings in excess of costs.............................. 2,778 3,010 -- 5,788 Advance payments by customers............................ 7,009 441 -- 7,450 Federal, foreign and state income taxes payable.......... 3,432 275 -- 3,707 Deferred income taxes.................................... 1,206 36 (218) 1,024 Redeemable put warrants.................................. 2,900 -- -- 2,900 -------- -------- -------- -------- Total current liabilities.............................. 76,256 86,657 (218) 162,695 LONG-TERM OBLIGATIONS, LESS CURRENT MATURITIES............. 169,936 20,303 -- 190,239 DEFERRED INCOME TAXES...................................... 6,485 -- -- 6,485 OTHER LIABILITIES.......................................... 8,491 22,828 -- 31,319 REDEEMABLE PREFERRED STOCK (aggregate liquidation preference of $43,137 as of April 29, 2000).............. 40,642 -- -- 40,642 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' DEFICIENCY, NET.............................. (64,651) 8,668 (17,585) (73,568) -------- -------- -------- -------- $237,159 $138,456 $(17,803) $357,812 ======== ======== ======== ========

TOTAL ELIMINATION RESTRICTED ASI ADJUSTMENTS TOTAL ---------- -------- ----------- -------- Net sales........................................... $218,506 $53,960 $(981) $271,485 Cost of sales (Includes subassembly exit costs of $405 and restructuring charge--inventory markdown of $855 in Total Restricted)...................... 151,668 46,655 (981) 197,342 -------- ------- ----- -------- Gross profit...................................... 66,838 7,305 -- 74,143 Administrative and selling expenses................. 43,580 12,528 -- 56,108 Research and development expenses................... 17,503 2,170 -- 19,673 Write off of purchased in-process research and development....................................... 1,650 -- -- 1,650 Restructuring charge................................ 1,795 -- -- 1,795 Reimbursed environmental and litigation costs, net............................................... 404 -- -- 404 Other, net.......................................... 6,160 608 -- 6,768 -------- ------- ----- -------- Loss from operations.............................. (4,254) (8,001) -- (12,255) Interest expense.................................... (18,029) (1,093) -- (19,122) Interest income..................................... 457 464 -- 921 -------- ------- ----- -------- Loss from continuing operations before income taxes, discontinued operations and extraordinary item............................................ (21,826) (8,630) -- (30,456) Income taxes (credit)............................... (1,189) 558 -- (631) -------- ------- ----- -------- Loss from continuing operations before discontinued operations and extraordinary item............................................ (20,637) (9,188) -- (29,825) Discontinued operations: Income from discontinued operations, net of income taxes........................................... 2,158 -- -- 2,158 Gain on disposal of discontinued operations, net of income taxes................................. 559 -- -- 559 -------- ------- ----- -------- Net loss............................................ $(17,920) $(9,188) $ -- $(27,108) ======== ======= ===== ======== Supplemental Data: Depreciation...................................... $ 10,418 $ 1,631 $ -- $ 12,049 Amortization...................................... 3,201 -- -- 3,201 Capital expenditures.............................. 12,466 432 -- 12,898

SIGNATURE TITLE DATE --------- ----- ---- /s/ CLIFFORD PRESS ---------------------------------------- Chairman of the Board, President August 2, 2001 Clifford Press /s/ LAURENCE S. LEVY ---------------------------------------- Vice President August 2, 2001 Laurence S. Levy /s/ CHRISTOPHER F. CARMEL ---------------------------------------- Director August 2, 2001 Christopher F. Carmel /s/ H. CABOT LODGE III ---------------------------------------- Director August 2, 2001 H. Cabot Lodge III /s/ RUSSELL L. SHADE, JR. ---------------------------------------- Chief Executive Officer, Vice August 2, 2001 Russell L. Shade, Jr. President Vice President and Chief /s/ JOSEPH W. MCHUGH, JR. Financial Officer (principal ---------------------------------------- financial and accounting August 2, 2001 Joseph W. McHugh, Jr. officer)

EXHIBIT NUMBER DESCRIPTION --------------------- ------------------------------------------------------------ 3.1 Restated Articles of Organization of the Registrant.* 3.2 Amended and Restated By-laws of the Registrant.* 4.1 Indenture, dated as of August 8, 1997, by and between Registrant and State Street Bank and Trust Company as Trustee.* 4.2 First Supplemental Indenture, dated as of March 19, 1998 to Indenture, dated as of August 8, 1997, by and between the Registrant and State Street Bank and Trust Company, as Trustee.** 4.3 Registration Rights Agreement, dated as of March 19, 1998, by and among the Registrant and CIBC Oppenheimer Corp.** 4.4 Form of Exchange Note.** 4.5 Second Supplemental Indenture, dated as of December 22, 1999, to Indenture, dated as of August 8, 1997, by and between the Registrant and State Street Bank and Trust Company, as Trustee. 10.2 Lease Agreement, dated as of November 10, 1988, by and between Corporate Property Associates 8, L.P. and Datcon Instrument Company (Lancaster, PA).* 10.4 Installment Sale Agreement, dated as of September 23, 1994, by and between Monroeville Area Industrial Development Corporation and Robicon Corporation (New Kensington, PA).* 10.7 Value Creation Plan of the Registrant.* 10.8 High Voltage Engineering Corporation Employment Agreement, by and between Registrant and Russell L. Shade, Jr., dated as of February 24, 1998.** 10.9 Amended and Restated Financing Agreement, dated as of June 19, 2001, by and among the Registrant and the other Borrowers named therein, Ableco Finance LLC and the other Lenders named therein, and the Guarantors named therein. 12 Statement of Computation of Financial Ratios. 21.1 List of Subsidiaries. 24.1 Power of Attorney (included in signature page to Form 10-K).

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