SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

		For the quarterly period ended June 30, 2002

		OR

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

For the transition period from _____ to _____

Commission file number 000-28473

TRUETIME, INC.


DELAWARE (State of Incorporation)		94-3343279 (I.R.S. Employer Identification No.)

3750 Westwind Blvd.

SANTA ROSA, CALIFORNIA 95403

(707) 528-1230

(Address of principal executive offices)

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. Yes [X ] No [ ]

There were 5,950,000 shares of the Registrant’s Common Stock outstanding as of the close of business on August 12, 2002.

TABLE OF CONTENTS


PART I: FINANCIAL INFORMATION
	ITEM 1: Financial Statements and Notes
	ITEM 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations
	ITEM 3: Quantitative and Qualitative Disclosures About Market Risk.
PART II: OTHER INFORMATION
	ITEM 1. Legal Proceedings.
	ITEM 2. Changes in Securities and Use of Proceeds.
	ITEM 3. Defaults upon Senior Securities.
	ITEM 4. Submission of Matters to a Vote of Security Holders.
	ITEM 5. Other Information.
	ITEM 6. Exhibits and Reports on Form 8-K.
SIGNATURES

TRUETIME, INC.


		PAGE
		NUMBER


PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements and Notes		3

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		10

Item 3.	Quantitative and Qualitative Disclosure about Market Risk		20

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings		21

Item 2.	Changes in Securities and Use of Proceeds		21

Item 3.	Defaults Upon Senior Securities		21

Item 4.	Submission of Matters to a Vote of Security Holders		21

Item 5.	Other Information		21

Item 6.	Exhibits and Reports on Form 8-K		21

PART I: FINANCIAL
INFORMATION

ITEM 1: Financial Statements and Notes

TrueTime, Inc.
BALANCE SHEETS
(in thousands except share and per share amounts)


					September 30, 2001		June 30, 2002
							(unaudited)
ASSETS
	Current assets:
		Cash and cash equivalents			$	7,809	$	6,702
		Trade accounts receivable, net of allowance of $49 and $7				3,450		3,495
		Inventories				5,396		4,623
		Prepaid expenses and other assets				569		532
		Income taxes receivable				635		438
		Deferred income tax				1,252		—

			Total current assets			19,111		15,790
	Property and equipment, net					4,094		3,781
	Prepaid expenses, non-current					53		—
	Goodwill, net of accumulated amortization of $266 and $286					765		745

				Total assets	$	24,023	$	20,316

LIABILITIES AND STOCKHOLDERS’ EQUITY
	Current liabilities:
		Trade accounts payable			$	724	$	888
		Accrued expenses				1,165		871
		Capital lease, current				172		182
		Deferred revenue				122		118
		Lease loss accrual				578		618

			Total current liabilities			2,761		2,677
	Non-Current liabilities:
		Deferred income taxes				105		—
		Capital lease				512		374
		Deferred revenue				66		106
		Lease loss accrual				421		—

			Total liabilities			3,865		3,157

	Commitments and contingencies
	Stockholders’ equity:
		Preferred stock, $.01 par value, 1,000,000 shares authorized , no shares issued and outstanding				—		—
		Common stock, $.01 par value, 20,000,000 authorized; 5,950,000 shares issued and outstanding				60		60
		Additional paid-in capital				12,907		12,912
		Additional paid-in capital — warrants				455		455
		Retained earnings				6,736		3,732

			Total stockholders’ equity			20,158		17,159

				Total liabilities and stockholders’ equity	$	24,023	$	20,316

The accompanying notes are an integral part of the financial statements.

TrueTime, Inc.
STATEMENTS OF OPERATIONS
(in thousands except share and per share amounts)
(unaudited)


	Three months ended						Nine months ended

	June 30, 2001			June 30, 2002			June 30, 2001			June 30, 2002

Net sales	$	4,531		$	5,793		$	14,034		$	14,095
Cost of sales		2,760			3,145			7,599			8,055

Gross profit		1,771			2,648			6,435			6,040
Selling, general and administrative expenses		1,870			1,691			5,788			4,954
Research & development		907			956			2,611			2,663
Acquisition expenses		—			175			—			325

Loss from operations		(1,006	)		(174	)		(1,964	)		(1,902	)
Interest income		69			28			259			102
Interest expense		10			12			10			36

Loss before taxes		(947	)		(158	)		(1,715	)		(1,836	)
Income taxes (Benefit)		(422	)		1,763			(729	)		1,168

Net loss	$	(525	)		($1,921	)	$	(986	)		($3,004	)

Weighted average shares outstanding — Basic		5,950,000			5,950,000			5,950,000			5,950,000
Basic loss per share		($0.09	)		($0.32	)		($0.17	)		($0.50	)
Diluted loss per share		($0.09	)		($0.32	)		($0.17	)		($0.50	)

The accompanying notes are an integral part of the financial statements.

TrueTime, Inc.
STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)


				Nine months ended			Nine months ended
				June 30, 2001			June 30, 2002

Cash flows from operating activities:
	Net loss			$	(986	)	$	(3,004	)
	Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
		Deferred income taxes			(194	)		1,147
		Depreciation and amortization			504			683
		Loss on disposal of property and equipment			5			10
		Compensation expense related to options granted			6			5
		Effects of changes in operating assets and liabilities
			Trade accounts receivables, net		1,507			(45	)
			Inventories		522			773
			Prepaid expenses and other assets		(689	)		90
			Income taxes		—			197
			Trade accounts payable		(412	)		164
			Accrued expenses		(245	)		(294	)
			Lease loss accrual		—			(381	)
			Deferred revenue		120			36

	Net cash provided by (used in) operating activities				138			(619	)

Cash flows from investing activities:
	Proceeds from sale of equipment				752			—
	Capital expenditures				(1,774	)		(360	)

	Net cash used in investing activities				(1,022	)		(360	)

Cash flows from financing activities:
	Principal payments on capital lease				(27	)		(128	)

	Net cash used in financing activities				(27	)		(128	)

Decrease in cash and cash equivalents					(911	)		(1,107	)
Cash and cash equivalents, beginning of period					7,884			7,809

Cash and cash equivalents, end of period				$	6,973		$	6,702

Non-cash financing activities:
	Assets acquired under capital lease:			$	752		$	—

The accompanying notes are an integral part of the financial statements.

TRUETIME, INC. NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

1. BASIS OF PRESENTATION

The balance sheet of TrueTime, Inc. at September 30, 2001 has been derived from the Company’s audited financial statements at that date. The balance sheet at June 30, 2002, the statements of operations for the three months and nine months ended June 30, 2001 and 2002, and the statements of cash flows for the nine months ended June 30, 2001 and 2002 have been prepared by the Company, unaudited. In the opinion of management, all adjustments consisting of normal recurring adjustments, necessary to present fairly the financial position, results of operations and cash flows have been made. The results of operations for the three months and nine months ended June 30, 2001 and 2002 are not necessarily indicative of the operating results for a full year or for future operations.

Certain information and footnote disclosures normally included in financial statements presented in accordance with accounting principles generally accepted in the United States of America have been omitted. The accompanying financial statements should be read in conjunction with the financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended September 30, 2001.

Certain prior year amounts have been reclassified to conform to the 2002 financial statement presentation. The reclassifications have no impact on previously reported 2001 net loss, total cash flows or stockholders’ equity.

2. LOSS PER COMMON SHARE

The following table summarizes the calculation of net loss and weighted average common shares and common equivalent shares outstanding for purposes of the computation of losses per share:

TrueTime, Inc.
LOSS PER COMMON SHARE


	Three months						Nine months

	June 30, 2001			June 30, 2002			June 30, 2001			June 30, 2002

Net loss available to common stockholders (in thousands)	$	(525	)	$	(1,921	)	$	(986	)	$	(3,004	)

Weighted average common shares outstanding		5,950,000			5,950,000			5,950,000			5,950,000
Weighted average common share equivalents outstanding*		—			—			—			—

Weighted average common shares and common share equivalents outstanding		5,950,000			5,950,000			5,950,000			5,950,000

Basic loss per common share	$	(0.09	)	$	(0.32	)	$	(0.17	)	$	(0.50	)

Diluted loss per common share	$	(0.09	)	$	(0.32	)	$	(0.17	)	$	(0.50	)

•

Due to their anti-dilutive effect, additional warrants and options totaling 1,034,700 shares equivalent for both the three and nine months ended June 30, 2001 and additional warrants and options totaling 828,000 and 911,409 shares equivalent for the three and nine months ended June 30, 2002, respectively, are excluded from the calculation above.

3. INVENTORIES

Inventories consisted of the following (in thousands), net of reserves of $805 at September 30, 2001 and $357 at June 30, 2002:


	September 30, 2001		June 30, 2002

Finished goods	$	820	$	682
Work in process		737		647
Raw material		3,839		3,294

	$	5,396	$	4,623

4. RECENT ACCOUNTING PRONOUNCEMENTS

Business Combinations and Goodwill and Other Intangible Assets

On June 29, 2001, the Financial Accounting Standards Board (“FASB”) announced the issuance of Statement of Financial Accounting Standards (“SFAS”) No. 142 (“SFAS 142”), “Goodwill and Other Intangible Assets.” The Company has goodwill for which amortization has been recorded against in prior periods. Amortization of goodwill per quarter is $6,444; amortization of goodwill for the year would be $25,776. Under the current guidelines, the Company will adopt the provisions of SFAS 142 on October 1, 2002. Currently, the Company is evaluating the impact of adopting SFAS 142. Goodwill is carried at $745,668, the net book value.

Accounting for the Impairment or Disposal of Long-Lived Assets

On October 3, 2001, the FASB issued SFAS No. 144 (“SFAS 144”), “Accounting for the Impairment or Disposal of Long-Lived Assets”. SFAS 144 is effective for financial statements issued for fiscal years beginning after December 15, 2001 and interim periods within those fiscal years. Early application is encouraged.

This statement supercedes:

	•		SFAS No.121 (“SFAS 121”) — “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of”; and

	•		Accounting Principles Board (“APB”) No. 30 — “Reporting the Results of Operations — Reporting the Effects of Disposal of a Segment of a Business”.

SFAS No.144 (“SFAS 144”) sets forth that if the expected undiscounted cash flows from an asset are insufficient to recover its carrying cost and if the carrying cost exceeds its estimated market value, then an impairment must be recognized.

SFAS 144 also develops one accounting model for long-lived assets that are to be disposed of by sale, as well as addressing the principal implementation issues.

SFAS 144 requires that long-lived assets that are to be disposed of by sale be measured at the lower of book value or fair value less cost to sell. Additionally, SFAS 144 expands the scope of discontinued operations that can be distinguished from the rest of the entity and will be eliminated from the ongoing operations of the entity in a disposal transaction.

The Company is in the process of evaluating the effect of SFAS 142 and 144 on its financial statements. The impact of adopting these standards is not known at this time.

This Statement amends FASB Statement No. 13, “Accounting for Leases”, to eliminate an inconsistency between the required accounting for sale-leaseback transactions and the required accounting for certain lease modifications that have economic effects that are similar to sale-leaseback transactions. This Statement also amends other existing authoritative pronouncements to make various technical corrections, clarify meanings, or describe their applicability under changed conditions. The Company has reviewed this pronouncement and will consider its impact on any relevant transactions.

SFAS N6. 146, “Accounting for Costs Associated with Exit or Disposal Activities.” This Statement addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring).”

This Statement applies to costs associated with an exit activity that does not involve an entity newly acquired in a business combination or with a disposal activity covered by FASB Statement No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”. Those costs include, but are not limited to, the following:

	a.		Termination benefits provided to current employees that are involuntarily terminated under the terms of a benefit arrangement that, in substance, is not an ongoing benefit arrangement or an individual deferred compensation contract (hereinafter referred to as one-time termination benefits)

	b.		Costs to terminate a contract that is not a capital lease

	c.		Costs to consolidate facilities or relocate employees.

This Statement does not apply to costs associated with the retirement of a long-lived asset covered by FASB Statement No. 143, “Accounting for Asset Retirement Obligations”. The impact of this pronouncement on the Company’s financial statements is not known at this time.

5. RESTRUCTURING COSTS

In July 2001, the Company adopted a restructuring plan which included the abandonment and physical move from approximately 34,500 square feet of its existing leased facility at Westwind Blvd. and as a result the Company recorded a lease loss accrual of approximately $998,000 on September 30, 2001. The accrual represents costs recognized pursuant to Emerging Issues Task Force (“EITF”) No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (Including Certain Costs Incurred in a Restructuring)” and SAB No. 100, “Restructuring and Impairment Charges”. The Company committed to a sufficiently detailed plan that identified significant actions to be taken and the activities that would not be continued (including the method of disposition and location of such activities). The expected date of completion of the plan was December 15, 2001; the Company completed the plan on December 13, 2001. During the three months ended June 30, 2002, leasehold expenses in the amount of $173,382, which were associated with the abandoned facility space were charged against the lease loss accrual. Approximately $93,765 and $206,759 of this charge would have been recognized in cost of goods sold and $79,617 and $173,563 would have been recognized in operating expenses for the three months and nine months ended June 30, 2002, respectively.

The following table summarizes the activity in the lease loss accrual (in thousands) :


Lease loss accrual at September 30, 2001		$	999
Less:
	Lease payments		343
	Building utilities, maintenance		38

Lease loss accrual at June 30, 2002		$	618

6. ACCOUNTING FOR INCOME TAXES

The difference between the effective tax rate reflected in the total provision for income taxes and the statutory federal rate of 34% relate primarily to permanent differences, limitations on state net operating loss carryforwards, tax credits, other adjustments, and recording a valuation allowance against our net deferred tax asset.

Deferred income taxes under the liability method reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred income tax liabilities and assets were as follows:


				(in thousands)
				September 30, 2001			June 30, 2002

Deferred income tax assets (current liabilities):
	Allowance for doubtful accounts			$	21		$	3
	Accrued product warranty				16			15
	Inventories				381			152
	Accrued compensated absences				102			103
	NOL carryforward				439			1,435
	Lease loss accrual				428			264
	Other				(135	)		(105	)

					1,252			1,867
Deferred income tax liability:
		Other			(105	)		(117	)

Less valuation allowance					—			(1,750	)
			Net deferred income tax asset	$	1,147		$	0

At June 30, 2002, the Company had available net operating loss (NOL) carryforwards of approximately $3.5 million and $2.7 million for federal and state income tax purposes, respectively, expiring beginning in 2020 (federal) and 2010 (state). Under the liability method, a valuation allowance is provided when it is more likely than not that some portion or all of the deferred tax assets will not be realized. Realization is dependent on generating sufficient taxable income prior to expiration of the loss carryforwards or the possibility of carrying back current Federal losses to prior profitable years. While operating results have improved significantly over the previous quarter, net operating losses continued to increase this quarter as they have over the past six quarters. These growing net operating losses, coupled with the Company’s inability to meet short term projected profit levels has prompted management to record a 100% valuation allowance against its net deferred tax asset because it is more likely than not that some portion or all of this deferred tax asset will not be realized.

7. OTHER EVENTS

On March 27, 2002, the Company publicly announced that it had entered into a definitive merger agreement with Symmetricom, Inc. (“Symmetricom”) pursuant to which Symmetricom will exchange 2.6 million shares of Symmetricom common stock and $5 million in cash, subject to certain possible downward adjustments relating to costs associated with the transaction, for all the outstanding shares of TrueTime. The Company will become a wholly owned subsidiary of Symmetricom under the outline of the definitive agreement. The consummation of the merger is subject to customary conditions, including approval of the stockholders of the Company. The proposed merger will be a taxable transaction. The Company expensed fees related to the merger in the amount of $0.175 million and $0.325 million during the three months ended June 30, 2002 and nine months ended June 30, 2002, respectively.

ITEM 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following analysis of the financial condition and results of operations of TrueTime, Inc. should be read in conjunction with the Financial Statements and Notes related thereto included elsewhere in this Form 10-Q.

General

TrueTime designs, develops, manufactures, markets, sells and services precision time and precision frequency products that are essential components used in telecommunications, computer networking, e-commerce, aerospace and various other commercial markets. Our products use a variety of external timing references, including most importantly the Global Positioning System, or GPS, together with advanced electronic circuitry and software to provide high quality signals and precise time. We offer a wide variety of products, which can be divided into the following broad categories:

	•		precise time and frequency products

	•		computer plug-in cards with precise timing capabilities

	•		computer network time servers

	•		time code products

	•		time displays

TrueTime, Inc. began trading on the Nasdaq National Market on December 17, 1999, under the symbol “TRUE”.

Critical Accounting Policies

TrueTime’s discussion and analysis of its financial condition and results of operations are based upon TrueTime’s financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires the use of estimates that affect the reported amounts of assets, liabilities, revenues and expenses. TrueTime evaluates its estimates on an on-going basis, including estimates for bad debts, inventories and warranties. TrueTime bases its estimates on historical experience and on various other actual information and assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. TrueTime believes the following critical accounting policies affect its more significant estimates used in the preparations of its financial statements.

Inventory. TrueTime writes down its inventory for obsolete or unmarketable inventory equal to the difference between the cost of inventory and its estimated market value. These write-downs are based on assumptions about future demand and market conditions. If actual market conditions change from those projected by management, additional inventory write-downs may be required

Lease Related Impairment Loss. As discussed in Note 5 of TrueTime’s condensed financial statements, in the fourth quarter of 2001 we recorded a significant restructuring charge in connection with our abandonment of an operating lease as part of a program to restructure our operations and related facilities. Lease abandonment costs were estimated to include the impairment of leasehold improvements and remaining lease liabilities and brokerage fees, offset by estimated sublease income. Estimates related to sublease costs and income are based on assumptions about the time period required to locate and contract with suitable sub-lessees as well as the sublease rates that can be achieved, as determined by using market trend information provided by a commercial real estate brokerage we retained. We review these estimates each reporting period; to the extent that these assumptions change due to market conditions, the ultimate restructuring expenses for abandonment of this facility could vary by material amounts.

Bad Debts. TrueTime records allowances for doubtful accounts for estimated losses resulting from the inability to collect on certain customer accounts. We analyze specific accounts receivable, historical bad debts, customer concentrations, customer credit-worthiness, current economic trends and changes in our customer payment history when evaluating the adequacy of the allowance for doubtful accounts. Changes in the above factors can have a material impact on actual bad debts incurred. If the financial condition of TrueTime’s customers deteriorated, resulting in their inability to make further payments on their accounts, additional allowances may be required.

Accounting for Income Taxes. In conjunction with preparing our condensed financial statements, we must estimate our income taxes in each of the jurisdictions in which we operate. This process involves estimating our actual current tax expense together with assessing temporary differences resulting from differing treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included in our condensed balance sheets. We must then assess the likelihood that our deferred tax assets will be recovered from future taxable income and to the extent we believe that recovery is not likely, we must establish a valuation allowance. To the extent we establish a valuation allowance or increase this allowance in a period, we must include an expense within the tax provision in the statement of operations. Significant management judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities and any valuation allowance recorded against our net deferred tax assets. On June 30, 2002, a 100% valuation allowance was booked against our deferred tax assets of $1.98 million and deferred tax liabilities of $0.23 million. While operating results have improved over the previous quarters, net operating losses continued to increase this quarter as they have over the past six quarters. These growing net operating losses, coupled with the Company’s inability to meet short term projected profit levels has prompted management to record a 100% valuation allowance against our net deferred tax asset because it is more likely than not that some portion or all of this deferred tax asset will not be realized. A discussion of our income tax provision and the components of our deferred tax assets and liabilities can be found in Note 6 to our condensed financial statements.

Warranties. TrueTime records a provision for the estimated cost of product warranties at the time the revenue is recognized. Although TrueTime engages in product quality programs and processes and is ISO Certified, TrueTime’s product warranty obligation can be affected by failure rates, material usage and service delivery costs incurred in correcting a product failure. Should product failure rates change, revisions to the estimated warranty liability would be required.

Long lived Assets. TrueTime is required to regularly review all of it’s long-lived assets, including goodwill and other intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors we consider important which could trigger an impairment review include, but are not limited to, significant under-performance relative to historical or projected future operating results, significant changes in the manner of use of the acquired assets or the strategy for our overall business, significant negative industry or economic trends, a significant decline in our stock price for a sustained period, and our market capitalization relative to net book value. When we determine that an impairment review is necessary based upon the existence of one or more of the above indicators of impairment, we measure any impairment based on a projected undiscounted cash flow method. Significant judgment is required in the development of projected cash flows for these purposes including assumptions regarding the appropriate level of aggregation of cash flows, their term as well as the underlying forecasts of expected future revenue and expense. We have not recorded significant impairment charges for goodwill and intangible assets in the past. However, to the extent that events or circumstances cause our assumptions to change, we may be required to record a charge which could be material.

Results of Operations

The following table sets forth for the three months and nine months ended June 30, 2001 and 2002, the percentage of income statement items to total sales:


			Three Months Ended						Nine Months Ended
			June 30,						June 30,

			2001			2002			2001			2002

Sales				100.0	%		100.0	%		100.0	%		100.0	%
Cost of sales				60.9			54.3			54.1			57.1
Gross profit				39.1			45.7			45.9			42.9
Operating expenses:
	Selling, general and administrative			41.3			29.2			41.2			35.1
	Research and development			20.0			16.5			18.6			18.9
	Acquisition expenses			—			3.0			—			2.3
		Total operating expenses		61.3			48.7			59.8			56.3
Loss from operations				(22.2	)		(3.0	)		(14.0	)		(13.5	)
Interest income				1.5			0.5			1.8			0.7
Interest expense				0.2			0.2			0.1			0.3
Loss before income taxes				(20.9	)		(2.7	)		(12.2	)		(13.0	)
Income taxes				(9.3	)		(30.4	)		(5.2	)		(8.3	)
Net loss				(11.6	)%		(33.2	)%		(7.0	)%		(21.3	)%

Three Months and Nine Months Ended June 30, 2002 compared to Three Months and Nine Months Ended June 30, 2001

Sales. Sales for the quarter ended June 30, 2002 were $5.8 million, an increase of $1.3 million, or 28.9%, from $4.5 million for the quarter ended June 30, 2001. The increase in sales from the comparable period of the prior year is attributed to the timing of our shipments to our government customer base, as well as an increase in orders as evidenced by our increased backlog during the quarter. Sales to government and indirect government customers totaled 63.5% of total sales for the quarter ended June 30, 2002 compared with 51.2% for the comparable period in 2001. International shipments for the three months ended June 30, 2002, represented 9.8% of total sales compared with 14.1% for the comparable period in 2001.

For the nine months ended June 30, 2002, sales were $14.1 million, an increase of $0.1 million, or 0.7%, from $14.0 million for the nine months ended June 30, 2001. Higher sales were the result of the timing of shipments. Actual backlog increased by $2.5 million from the period ending June 30, 2001. Sales to government and indirect government customers totaled 55% of total sales for the nine months ended June 30, 2002 compared with 47.3% for the comparable period in 2001. International shipments for the nine months ended June 30, 2002 represented 15% of total sales compared with 16.3% for the comparable period in 2001.

Cost of Sales. Cost of sales for the three months ended June 30, 2002 was $3.1 million, an increase of $0.3 million, or 10.7%, from $2.8 million for the three months ended June 30, 2001. Cost of sales decreased as a percentage of total sales to 54.3% in the three months ended June 30, 2002 from 60.9% in the three months ended June 30, 2001. This percentage decrease is primarily related to the following:

	•		increased sales over the prior year resulted in lower volume and labor variances. ($0.1 million or 33.3% of total decrease)

	•		lower wages and benefits due to a planned reduction in workforce in the manufacturing and procurement areas ($0.08 million or 26.7% of decrease)

	•		lower facility costs in manufacturing due to the abandonment of the 2nd floor of our building in December 2001 and recognition of the lease loss accrual ($0.06 million or 20% of decrease)

• lower outside engineering consultant costs for product modifications ($0.05 million or 16% of decrease).

Cost of sales for the nine months ended June 30, 2002 was $8.0 million, an increase of $0.4 million or 5.3% from $7.6 million in the nine months ended June 30, 2001. Cost of sales as a percentage of total sales increased to 57.1% of sales in the nine months ended June 30, 2002 from 54.1% in the nine months ended June 30, 2001. This percentage increase is primarily related to the following:

	•		decreasing inventories and lower than planned sales resulted in lower production volumes, hence labor and overhead were applied to inventory at a rate lower than planned. This resulted in unabsorbed manufacturing overhead expenses ($0.65 million )

	•		increase in inventory obsolescence over prior year period ($0.04 million )

	•		offset by lower wages and benefit costs due to a planned reduction in force ($0.2 million )

	•		offset by decrease in facility costs in manufacturing for the nine month period due abandonment of a portion of the building in December, 2001 ($0.17 million)

Operating Expenses. There was minimal change in operating expenses for the three months ended June 30, 2002 from expenses of $2.8 million for the three months ended June 30, 2001. Operating expenses decreased as a percentage of total sales to 48.7% in the three months ended June 30, 2002 from 61.3% in the three months ended June 30, 2001. Changes in the components of the total operating expense amount compared to the prior year are primarily related to the following:

	•		lower wages and benefits due to a planned reduction in workforce ($0.3 million),

	•		decreased facility costs due to the abandonment of a portion of the building in December, 2001 ($0.12 million) and

	•		lower administrative costs of being a public company due to increased in-house efficiencies ($0.05 million),

	•		Offset by costs associated with our pending merger with a subsidiary of Symmetricom Inc. ($0.175 million),

	•		Increased consulting and advertising costs due to new product development ($0.25 million), and

	•		higher commissions due to increased sales over the same period last year ($0.08 million).

Operating expenses for the nine months ended June 30, 2002 were $7.9 million, a decrease of $0.5 million, or 6.0% from $8.4 million for the nine months ended June 30, 2001. Operating expenses decreased to 56.3% of sales in the nine months ended June 30, 2002 from 59.8% in the nine months ended June 30, 2001. Decreases in operating expenses compared to the same nine-month period last year are primarily related to the following:

	•		lower wages and benefits due to a planned reduction in workforce ($0.55 million)

	•		decreased facility costs due to the abandonment of a portion of the building in December, 2001 and reallocation of floor space ($0.28 million)

	•		lower administrative costs of being a public company due to increased in-house efficiencies ($0.14 million)

	•		lower sales commissions for the year due to sales channel and geographic mix ($0.1 million)

	•		Off setting these decreases were costs associated with our pending merger with a subsidiary of Symmetricom Inc. ($0.325 million), and

• Increased consulting and advertising costs due to new product development ($0.36 million)

Interest Income. Interest income for the three months ended June 30, 2002 was $0.03 million, a decrease of $0.04 million, or 57.1%, from $0.07 million for the three months ended June 30, 2001. Interest income for the nine months ended June 30, 2002 was $0.10 million, a decrease of $0.16 million, or 61.5%, from $0.26 million for the nine months ended June 30, 2001. Such decreases are the result of lower interest rates and a decrease in cash from the same periods in the prior year.

Interest Expense. Interest expense for the three months and nine months ended June 30, 2002 was $0.01 million and $0.04 million, respectively. Interest expense for the three months and nine months ended June 30, 2001 was $0.1 million. Interest expense was the result of the Company entering into a $0.75 million sale leaseback transaction in April 2001.

Income Taxes. Income taxes for the three and nine months ended June 30, 2002 were impacted by $1.75 million, the result of booking of a 100% valuation allowance against our net deferred tax asset.. The taxes include federal and state income taxes and are included on an estimated basis for the current year.

On June 30, 2002, TrueTime has a gross deferred tax asset of $1.7 million for which a full valuation allowance has been recorded against it. The ultimate realization of this deferred tax asset depends on our ability to generate sufficient taxable income in the future. For a number of years prior to the second quarter of fiscal 2001, TrueTime had consistently generated profits on both a quarterly and annual basis. In light of our recent unprofitable quarters, we have decided to recognize a 100% allowance against this asset.

Currently, future pretax net income required to realize our net deferred tax asset approximates $4.2 million in total during the net operating loss carryforward period. Historically, our pretax net income has not materially differed from our taxable income. Our effective tax rate has historically approximated 40%, with reductions in recent quarters due to limitations in utilization of state net operating losses, tax credits, permanent differences, and the Company recording a full valuation allowance against it’s net deferred tax asset.

At June 30, 2002, TrueTime had available net operating loss (NOL) carryforwards of approximately $3.5 million and $2.7 million for federal and state income tax purposes, respectively, expiring as follows:


	Federal	State
2010		$1.3 million
2011		1.4 million
2020	$1.3 million
2021	$2.2 million

Liquidity and Sources of Capital

At June 30, 2002, our cash and cash equivalents were $6.7 million compared to $7.8 million on September 30, 2001.

For the nine month period ended June 30, 2002, operating activities used $0.62 million. Net loss for the nine month period was $3.0 million which includes a full valuation allowance against our net deferred tax asset of $1.75 million. Cash used by operating activities include $0.29 million in decreased accrued expenses which included lower accrued sales commissions and lower payroll accruals due to timing of payments, $0.38 million in decreased lease loss accrual. The largest

contributors of cash include $0.77 million provided by a reduction in inventories, $0.20 million provided by the reduction of income taxes receivable, and $0.16 provided by decreased trade accounts payable.

For the nine month period ended June 30, 2002, investing activities used $0.36 million, all for capital expenditures. These investments were primarily used for the purchase of electronic test equipment. Anticipated capital expenditures for the next three months are $0.15 million, primarily in the area of electronic test equipment and enterprise software.

For the nine month period ended June 30, 2002, financing activities used $0.13 million. The decrease was the result of the principal payments on the sale leaseback transaction made in fiscal 2001.

Mergers and Acquisitions

On March 27, 2002, we publicly announced that we had entered into a definitive merger agreement with Symmetricom, Inc. (“Symmetricom”) pursuant to which Symmetricom will exchange 2.6 million shares of Symmetricom common stock and $5 million in cash, subject to certain possible downward adjustments relating to costs associated with the transaction, for all the outstanding shares of TrueTime. TrueTime will become a wholly owned subsidiary of Symmetricom under the outline of the definitive agreement. The consummation of the merger is subject to customary conditions, including approval of the stockholders of TrueTime. The proposed merger will be a taxable transaction. Consummation of the merger is expected to take place in the latter part of the fourth quarter of fiscal year 2002 or early in the first quarter of fiscal year 2003.

Recent Accounting Pronouncements

On June 29, 2001, the Financial Accounting Standards Board (“FASB” or the “Board”) unanimously voted in favor of issuing Statement No. 142 (SFAS 142), “Goodwill and Other Intangible Assets”.

SFAS 142 primarily addresses the accounting for goodwill and intangible assets subsequent to their acquisition (i.e., the post-acquisition accounting). SFAS 142 supercedes APB No.17, “Intangible Assets”.

The most significant changes made by SFAS 142 are:


	- Goodwill and indefinite lived intangible assets will no longer be amortized and will be tested for impairment at least annually.

	- Goodwill will be tested at least annually at the reporting unit level.

	- The amortization period of intangible assets with finite lives is no longer limited to forty years

SFAS 142 is effective for fiscal years beginning after December 15, 2001 to all goodwill and other intangible assets recognized in an entity’s statement of financial position at that date, regardless of when those assets were initially recognized. Early application is permitted for entities with fiscal years beginning after March 15, 2001 provided that the first interim period financial statements have not been issued previously. In all cases, the provisions of SFAS 142 should be applied at the beginning of a fiscal year. Retroactive application is not permitted.

The Company has goodwill for which amortization has been recorded against in prior periods. Amortization of goodwill per quarter is $6,444; amortization of goodwill for the year would be $25,776. Under the current guidelines, the Company will adopt the provisions of SFAS 142 on October 1, 2002. At this time the Company’s management is evaluating the impact of adopting SFAS 142. The impact of adopting this standard is not known at this time. Currently, goodwill is carried at $745,668, the net book value.

On October 3, 2001, the FASB issued SFAS 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”. SFAS 144 is effective for financial statements issued for fiscal years beginning after December 15, 2001 and interim periods within those fiscal years. Early application is encouraged.

This statement supercedes:

	•		SFAS No. 121 — “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of”; and

	•		APB No. 30 — “Reporting the Results of Operations — Reporting the Effects of Disposal of a Segment of a Business”.

SFAS 144 sets forth that if the expected undiscounted cash flows from an asset are insufficient to recover its carrying cost and if the carrying cost exceeds its estimated market value, then an impairment must be recognized.

SFAS 144 also develops one accounting model for long-lived assets that are to be disposed of by sale, as well as addressing the principal implementation issues.

SFAS No. 145, Rescission of SFAS Nos. 4, 44, and 64, Amendment of SFAS No. 13, and Technical Corrections as of April 2002 This Statement rescinds FASB Statement No. 4, “Reporting Gains and Losses from Extinguishment of Debt”, and an amendment of that Statement, FASB Statement No. 64, “Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements”. This Statement also rescinds FASB Statement No. 44, “Accounting for Intangible Assets of Motor Carriers”. This Statement amends FASB Statement No. 13, “Accounting for Leases”, to eliminate an inconsistency between the required accounting for sale-leaseback transactions and the required accounting for certain lease modifications that have economic effects that are similar to sale-leaseback transactions. This Statement also amends other existing authoritative pronouncements to make various technical corrections, clarify meanings, or describe their applicability under changed conditions. The Company has reviewed this pronouncement and will consider it’s impact on any relevant transactions.

	a.		Termination benefits provided to current employees that are involuntarily terminated under the terms of a benefit arrangement that, in substance, is not an ongoing benefit arrangement or an individual deferred compensation contract (hereinafter referred to as one-time termination benefits)

	b.		Costs to terminate a contract that is not a capital lease

	c.		Costs to consolidate facilities or relocate employees.

Forward Looking Statements

Certain of the statements contained in this document and in documents incorporated by reference herein, including those made under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” are “forward-looking” statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the

Securities Exchange Act of 1934. All statements other than statements of historical fact included herein, including statements regarding potential future products and markets, the Company’s future financial position, business strategy and other plans, objectives for future operations, and assessments of our ability to realize in the future our tax deferred assets are forward-looking statements. We can give no assurance that such expectations will prove to have been correct. These statements are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to differ materially from the future results, performance or achievements expressed or implied by such forward-looking statements. Important factors that could cause actual results performance or achievements to differ materially from the Company’s expectations are disclosed below and in our Annual Report on Form 10-K for the fiscal year ended September 30, 2001 filed with the Securities and Exchange Commission, under the headings “Forward Looking Statements” and “Risk Factors” and elsewhere. Further, all written and verbal forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by such factors.

Risk Factors

The following risks could impact our business and operations and should be considered by investors.

Our business will suffer if we continue to experience a general economic slowdown in the U.S., particularly as that slowdown affects technology markets.

Our commercial operations are cyclical and dependent for success on the general economic well-being of the United States and certain other world markets. If the United States or world economies were to continue to decline or the demand for technology continues its recent downward trends, we may continue to experience adverse impacts on our revenues and income. Further, other general market conditions such as increased inflation and higher interest rates, were they to occur, could also adversely impact our revenue, profitability, cash-flow, and appropriate levels of inventory.

Our business will suffer if we are unable to keep up with rapid technological change and product obsolescence.

If we fail to maintain our technological leadership and good reputation with our customers in the areas of GPS, real-time operating systems and network technologies, the value of your investment in TrueTime will decrease. The markets for timing and frequency products are characterized by continual and rapid technological developments that have resulted in, and will likely continue to result in, substantial improvements in product function and performance. Our success will depend on our ability to anticipate changes in technology and industry requirements and to respond to technological developments on a timely basis, either internally or through strategic alliances.

We will likely be constantly threatened by current competitors or new market entrants who may develop new technologies or products or establish new standards that could render our products obsolete and unmarketable. Thus, we can offer no assurances that we will be successful in developing and marketing, on a timely and cost effective basis, product enhancements or new products that respond to technological developments, that are accepted in the marketplace or that comply with industry standards.

We rely on a limited number of suppliers for certain critical components, and we use a single supplier for most of our GPS-based components, making us subject to supply and quality control problems.

Most of our products incorporate certain components or technology supplied in part by third parties. From time to time, we experience delays and disruptions in our supply chain. To date, these delays and disruptions have not materially adversely affected our business, but they could do so in the future. Wherever possible, we try to develop multiple sources of supply, but we do not always succeed. To the extent that we experience significant supply or quality control problems with our vendors, these problems can cause us to have difficulty in controlling our quality and can have a significant adverse effect on our ability to meet future production and delivery commitments to our customers.

Currently, Trimble Navigation Limited provides most of our GPS receivers, a key component for our older GPS-based products. In addition, Trimble has begun competing in markets similar to our own. While there can be no assurances that we can ensure continuous supply of these components, we have partially mitigated this risk by developing and integrating our own proprietary GPS receiver technology that is based upon widely available GPS chip sets. Further, this technology has

been integrated into several of our newer products. If we are unable to obtain adequate supplies of Trimble’s component for any reason or to successfully integrate our own substitute technology, we will likely experience delays or reductions in production and increased expenses. Our operations will be negatively affected if we experience inadequate supplies of any key components.

Our trade secrets, trademarks and patents may not be adequate or enforceable and others may use our proprietary technology.

Historically, we have not generally filed patents to protect our intellectual property. While we believe our intellectual property is adequately protected by our confidential trade-secret protection plans and programs, we cannot be sure that our competitors will be prevented from gaining access to our proprietary and confidential technologies. Furthermore, although we have applied for a patent related to a computer network timing product, we can offer no assurances that a patent will be issued for this patent application or other future applications and, if issued, that any patent will be enforceable. If the protection of our intellectual property proves to be inadequate or unenforceable, others may use our proprietary developments without compensation to us and in competition against us.

We face the risk of litigation alleging our infringement of other people’s intellectual property rights.

We do not know of any instances where our products violate the intellectual property rights of others or inappropriately use their technology. However, technology-based companies are often very litigious. Therefore, we face the risk of adverse claims and litigation alleging infringement of other people’s intellectual property rights. These claims could result in costly litigation and divert management’s attention from other matters. Alternatively, these claims could practically require us to obtain licenses in order to use, manufacture, and sell certain of our products, regardless of the merits of the infringement claims, in order to maintain business levels, or we could otherwise be excluded from participation in certain markets. We cannot be certain that any necessary licenses will be available or that, if available, they can be obtained on reasonable terms acceptable to us.

Our competitors may use their greater resources and broader product offerings to increase competition and reduce our sales and profitability.

Many of our existing and potential competitors have substantially greater marketing, financial and technical resources than we have. In addition, some of our competitors have broader product offerings and manufacture internally certain critical components of time and frequency products. Currently, we do not have a complete offering of precise time and frequency products nor do we manufacture internally certain critical components, placing us at a disadvantage to some of our competitors. In addition, we believe that some of our competitors have obtained and maintained business that loses money — “loss leading” — in order to maintain a competitive advantage with regard to specific customers or products. If our competitors were to use such tactics in the future, we would be unable to maintain our market position without incurring a negative impact on our profitability.

The race for a leading position in new technological advances is always very competitive. Advances in technology may reduce the cost for potential competitors to gain market entry, particularly for less expensive time and frequency products. We cannot assure you that sales of our products will continue at current volumes or prices in any event, but especially if our current competitors or new market entrants introduce new products with better features, better performance or lower prices or having other characteristics that are more attractive than our own. Competitive pressures or other factors also may result in significant price competition that could have a material adverse effect on our results of operations.

Our industry may not grow as forecasted and our revenues and operating results may be diminished.

Our future successful performance is inextricably tied to the growth of our industry. However, even if our industry grows, there can be no assurance that we will be able to grow consistently with our industry.

Our relationships with our sales representatives could be impaired and cause us to lose orders.

More than 95% of our orders come through our 31 domestic and worldwide sales representative offices. Many of these representatives act as relationship brokers and the loss of any key representatives could have a negative effect on our revenue.

We may be unable to attract and retain key employees, delaying product development and manufacturing.

Our success depends upon attracting and retaining highly skilled professionals. A number of our employees are highly skilled engineers and other technical professionals, and our failure to continue to attract and retain such individuals could adversely affect our ability to compete in the industry. In addition, our success will depend to a significant extent upon the abilities and efforts of several members of our senior management.

Many of our key customers are units of the U.S. government and entities that are dependent upon U.S. government funding for purchases, therefore, decreased government spending could adversely affect our business.

Our defense, military and aerospace based business depends largely on U.S. government expenditures, whether directly with us or indirectly with our customers who contract with the U.S. government. Sales to U.S. government units and indirect government customers have accounted for approximately 28%, 36% and 53% of our annual revenues for fiscal years ended 1999, 2000 and 2001, respectively. There can be no assurances as to whether future governmental spending will adequately support our business in those areas, and substantial decreases in government spending or loss of U.S. governmental customers could materially and adversely affect our operations.

Our market is segmented into a limited number of customer groups, the loss or change of which could significantly decrease our sales.

While we sell our products to a large number of individual customers, the number of customer groups is limited. These groups include telecommunications, computer networking, aerospace, military, satellite, U.S. government and power utility customers. The loss, or changes in the purchasing behavior, of one or more of these groups of customers could cause a material decrease in the sale of our products.

The failure of GPS and other time and frequency references would cause our products to fail to perform to specification.

The time and frequency products that we manufacture rely upon the availability of highly accurate timing references, primarily GPS operated by the U.S. Department of Defense, and to a lesser degree, other timing references operated by the U.S. National Institute of Science and Technology and other outside signal sources. The failure of these timing references, particularly GPS, would create many problems for our products and our customers and seriously disrupt the sale of our products.

Our products could fail to perform according to specification or prove to be unreliable, causing damage to our customer relationships and industry reputation and resulting in loss of sales.

Our customers require demanding specifications for product performance and reliability. Because our precision time and frequency products are complex and often use state-of-the-art components, processes and techniques, undetected errors and design flaws may occur. Product defects result in higher product service and warranty and replacement costs and may cause serious damage to our customer relationships and industry reputation, all of which will negatively impact our sales and business.

Fluctuations in quarterly performance can result in increases in our inventory and related carrying costs, can diminish our operating results and cash flow and can result in a lower TrueTime stock price.

Historically, the rate of incoming orders for our products has varied substantially from quarter to quarter. In past fiscal years, our highest sales quarter has been as much as 250% of our lowest sales quarter. This quarter to quarter variation is not seasonal or predictable. We attempt to accurately forecast orders for our products and commence purchasing and manufacturing prior to the receipt of such orders. However, it is highly unlikely that we will consistently accurately forecast the timing and rate of orders. The flow of orders (or lack thereof) from governmental agencies has been particularly difficult to forecast in recent periods. This aspect of our business makes our planning inexact and, in turn, affects our shipments, costs, inventories, operating results and cash flow for any given quarter. In addition, our quarterly operating results are affected by competitive pricing, announcements regarding new product developments and cyclical conditions in the industry. Accordingly, we may experience wide quarterly fluctuations in our operating performance and profitability, which may adversely affect our stock price even if our year to year performance is more stable, which it also may not be. In addition,

many of our products require significant manufacturing time, making it difficult to increase production on short notice. If we are unable to satisfy unexpected customer orders, our business and customer relationships could suffer.

Carrying values of inventories of our products and components therefore may be subject to periodic write-down, adversely affecting our operations.

To be competitive in some of our markets, particularly our commercial markets, we will be required to build up inventories of certain products and services in anticipation of future orders. There can be no assurance that we will not experience problems of obsolete, excess or slow-moving inventory if we are not able to properly balance inventories against the prospect of future orders, and our operations may be adversely affected by inventory write-downs..

Carrying values of intangible assets may be subject to periodic write-down, adversely affecting our operations.

Goodwill and other intangible assets are reviewed for impairment whenever an event or change in circumstances indicates that the carrying amount may not be recoverable. If the carrying value of our intangible assets exceeds the expected undiscounted future cash flows, a loss would be recognized to the extent the carrying amount of assets exceeds their fair values. This loss may negatively impact our results of operation. While the Company would not experience a loss under current accounting standards, the Company may experience an impairment write down upon the adoption of SFAS 142.

Failure to consummate the pending merger with a subsidiary of Symmetricom Inc. could cause our stock price to decline.

In the event that our pending merger is not consummated, TrueTime’s stock would uncouple from the exchange ratio established in the merger agreement. This uncoupling may negatively affect TrueTime’s current market valuation and stock price.

ITEM 3: Quantitative and Qualitative Disclosures About Market Risk.

We are exposed to market risks related to changes in interest rates in the future. Our cash is invested in short-term financial instruments, the value of which is subject to interest rate risk and could fall if interest rates rise. These short-term instruments are in low-yield, high quality investments. The decline in interest rates during the past year resulted in a decrease in interest income on these investments of approximately $20,000 and $80,000 for the three months and nine months ended June 30, 2002, respectively. Additionally, while we have no plans for future borrowings, any future borrowings will likely have a variable rate component that will fluctuate as interest rates change. If market interest rates were to increase immediately and uniformly by 10%, there would not be a material effect on the results of operations or on our balance sheet.

PART II: OTHER INFORMATION

ITEM 1. Legal Proceedings.

From time to time, the Company is a party to legal proceedings arising in the ordinary course of business. The Company is not currently a party to any litigation that it believes could have a material adverse effect on the results of operations, financial condition, or cash flows of the Company.

ITEM 2. Changes in Securities and Use of Proceeds.

None.

ITEM 3. Defaults upon Senior Securities.

None.

ITEM 4. Submission of Matters to a Vote of Security Holders.

None

ITEM 5. Other Information.

None.

ITEM 6. Exhibits and Reports on Form 8-K.

(a) Exhibits filed with this Quarterly Report.


Exhibit
Number		Description of Documents

2.1		First Amendment, dated as of June 26, 2002, to the Agreement and Plan of Merger by and among Symmetricom, Inc., TrueTime, Inc. and SCO-TRT Acquisition, Inc.

SIGNATURES

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


TRUETIME, INC.

	By:	/s/ Elizabeth A. Withers

		Elizabeth A. Withers President and Chief Executive Officer (Principal Executive Officer)

	By:	/s/ John E. Dutil

		John E. Dutil Chief Financial Officer (Principal Financial and Accounting Officer)

Date: August 13, 2002

Informational Addendum to Report on Form 10-Q
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Not Filed Pursuant to the Securities Exchange Act of 1934

The undersigned Chief Executive Officer and Chief Financial Officer of TrueTime, Inc. do hereby certify as follows: Solely for the purpose of meeting the apparent requirements of Section 906 of the Sarbanes-Oxley Act of 2002, and solely to the extent this certification may be applicable to this Report on Form 10-Q, the undersigned hereby certify that this Report on Form 10-Q fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and the information contained in this Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of TrueTime, Inc.


		/s/ Elizabeth A. Withers

		Name: Elizabeth A. Withers Title: Chief Executive Officer

Informational Addendum to Report on Form 10-Q
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Not Filed Pursuant to the Securities Exchange Act of 1934


		/s/ John E. Dutil

		Name: John E. Dutil
		Title: Chief Financial Officer

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TRUETIME INC 10-Q