SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the quarterly period ended January 3, 2003
		or
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the transition period from to


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

		For the quarterly period ended July 4, 2003

Commission file number: 33-96858-01		Commission file number: 33-96858
COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION		COMMUNICATIONS & POWER INDUSTRIES, INC
(Exact Name of Registrant as Specified in Its Charter)		(Exact Name of Registrant as Specified in Its Charter)
Delaware (State or Other Jurisdiction of Incorporation or Organization)		Delaware (State or Other Jurisdiction of Incorporation or Organization)
77-0407395 (I.R.S. Employer Identification No.)		77-0405693 (I.R.S. Employer Identification No.)
811 Hansen Way Palo Alto, California 94303-1110 (650) 846-2900 (Address of Principal Executive Offices and Telephone Number, Including Area Code)		811 Hansen Way Palo Alto, California 94303-1110 (650) 846-2900 (Address of Principal Executive Offices and Telephone Number, Including Area Code)

~~Indicate~~o byTRANSITION ~~check~~REPORT ~~mark~~PURSUANT ~~whether~~TO ~~each~~SECTION ~~registrant (1) has filed all reports required to be filed by Section~~ 13 orOR 15 (d) ofOF ~~the~~THE ~~Securities~~SECURITIES ~~Exchange~~EXCHANGE ~~Act~~ACT of OF 1934 ~~during~~For the ~~preceding~~transition ~~12 months (or for such shorter~~ period ~~that~~from ~~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 o .~~ __________


Commission file number: 33-96858-01		Commission file number: 33-96858
COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION		COMMUNICATIONS & POWER INDUSTRIES, INC.
(Exact Name of Registrant as Specified in Its Charter)		(Exact Name of Registrant as Specified in Its Charter)
Delaware		Delaware
(State or Other Jurisdiction of Incorporation or Organization)		(State or Other Jurisdiction of Incorporation or Organization)
77-0407395		77-0405693
(I.R.S. Employer Identification No.)		(I.R.S. Employer Identification No.)
811 Hansen Way		811 Hansen Way
Palo Alto, California 94303-1110		Palo Alto, California 94303-1110
(650) 846-2900		(650) 846-2900
(Address of Principal Executive Offices and Telephone Number, Including Area Code)		(Address of Principal Executive Offices and Telephone Number, Including Area Code)

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

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes o No x

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding for each of the ~~Registrant~~registrant’s classes of Common Stock, as of the latest practicable date: Communications & Power Industries Holding Corporation: 45,~~908~~008,172 shares of Common Stock, $.01 par value, at ~~February~~August 34, 2003. Communications & Power Industries, Inc.: 1 share of of Common Stock, $.01 par value, at ~~February~~August 34, 2003.

TABLE OF CONTENTS

PART I: FINANCIAL INFORMATION
	ITEM 1: CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
		COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
		CONSOLIDATED CONDENSED BALANCE SHEETS
		CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
		CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
		CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
		COMMUNICATIONS & POWER INDUSTRIES, INC.
		CONSOLIDATED CONDENSED BALANCE SHEETS
		CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
		CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
		CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
		NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
	ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
	ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
	ITEM 4: CONTROLS AND PROCEDURES
PART II: OTHER INFORMATION
SIGNATURES AND CERTIFICATION
	ITEM 1. LEGAL PROCEEDINGS.
EXHIBIT INDEX
	ITEM 2: CHANGES IN SECURITIES
EXHIBIT 10.1
	ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
EXHIBIT 99.1
	ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
EXHIBIT 99.2
	ITEM 5. OTHER INFORMATION.
EXHIBIT 99.3
	ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
EXHIBIT 99.4
SIGNATURES
EXHIBITS INDEX
EXHIBIT 10.13
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 31.3
EXHIBIT 31.4
EXHIBIT 32.1
EXHIBIT 32.2
EXHIBIT 32.3
EXHIBIT 32.4

COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

PART I: FINANCIAL INFORMATION
ITEM 1: CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
	COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
		Consolidated Condensed Balance Sheets, January 3, 2003 and September 27, 2002	2
		Consolidated Condensed Balance Sheets, July 4, 2003 and September 27, 2002	2
		Consolidated Condensed Statements of Operations for the 14-week period ended January 3, 2003 and the 13-week period ended December 28, 2001	3
		Consolidated Condensed Statements of Operations for the 13-week periods ended July 4, 2003 and June 28, 2002	3
		Consolidated Condensed Statements of Cash Flows for the 14-week period ended January 3, 2003 and the 13-week period ended December 28, 2001	4
		Consolidated Condensed Statements of Operations for the 40-week period ended July 4, 2003 and the 39-week period ended June 28, 2002	4
		Notes to Consolidated Condensed Financial Statements	8
		Consolidated Condensed Statements of Cash Flows for the 40-week period ended July 4, 2003 and the 39-week period ended June 28, 2002	5
		Notes to Consolidated Condensed Financial Statements	10
	COMMUNICATIONS & POWER INDUSTRIES, INC.
		Consolidated Condensed Balance Sheets, January 3, 2003 and September 27, 2002	5
		Consolidated Condensed Balance Sheets, July 4, 2003 and September 27, 2002	6
		Consolidated Condensed Statements of Operations for the 14-week period ended January 3, 2003 and the 13-week period ended December 28, 2001	6
		Consolidated Condensed Statements of Operations for the 13-week periods ended July 4, 2003 and June 28, 2002	7
		Consolidated Condensed Statements of Cash Flows for the 14-week period ended January 3, 2003 and the 13-week period ended December 28, 2001	7
		Consolidated Condensed Statements of Operations for the 40-week period ended July 4, 2003 and the 39-week period ended June 28, 2002	8
		Notes to Consolidated Condensed Financial Statements	8
		Consolidated Condensed Statements of Cash Flows for the 40-week period ended July 4, 2003 and the 39-week period ended June 28, 2002	9
ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			13
		Notes to Consolidated Condensed Financial Statements	10
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			19
ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			19
ITEM 4: CONTROLS AND PROCEDURES			20
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK			29
PART II: OTHER INFORMATION			21
ITEM 4: CONTROLS AND PROCEDURES			29
SIGNATURES AND CERTIFICATIONS			22
PART II: OTHER INFORMATION			30
SIGNATURES			32

-1-

COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands-unaudited)

		January 3,			September 27,
		July 4,			September 27,
		2003			2002
ASSETS
Current Assets
	Cash and cash equivalents	$	1228,~~925~~447			2,724
	Accounts receivable, net		3137,~~122~~113			29,937
	Inventories		3534,~~818~~551			39,927
	Other current assets		32,~~580~~706			2,637
Total current assets			83102,~~445~~817			75,225
Property, plant, and equipment, net			5452,~~567~~584			55,846
Goodwill			19,149			19,149
Intangibles, net			1,~~425~~235			1,613
Debt issue costs, net			32,~~246~~632			3,329
Total assets		$	~~161~~178,~~832~~417			155,162
LIABILITIES, PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT
LIABILITIES, PREFERRED STOCK AND
Current Liabilities			1
STOCKHOLDERS’ DEFICIT
	Current portion of capital leases	$	18			45
Current Liabilities
	Current portion of capital leases	$	—			45
	Mortgage financing		17,500			17,750
	Accounts payable		1014,~~665~~507			14,111
	Accrued expenses		1921,~~147~~149			17,304
	Product warranty		5,~~081~~068			4,823
	Income taxes payable		43,~~363~~619			2,959
	Accrued dividends payable		1013,~~940~~894			9,538
	Advance payments from customers		1110,~~955~~986			7,594
Total current liabilities			7986,~~669~~723			74,124
Senior subordinated notes			100,000			100,000
Total liabilities			~~179~~186,~~669~~723			174,124
Senior Redeemable Preferred Stock of CPI			28,~~747~~854			28,693
Junior Preferred Stock of CPI			2628,~~363~~287			25,449
Commitments and contingencies
Stockholders’ Deficit
	Common stock		4950			49
	Additional paid-in capital		19,~~111~~220			19,111
	Accumulated deficit		(9083,~~875~~469	)		(91,041	)
	Stockholder loans		(1,~~232~~248	)		(1,223	)
Net stockholders’ deficit			(7265,~~947~~447	)		(73,104	)
Total liabilities, preferred stock and stockholders’ deficit		$	~~161~~178,~~832~~417			155,162

See accompanying notes to the unaudited consolidated condensed financial statements.

-2-

COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

CONSOLIDATED ~~CONDENSED STATEMENTS~~CONDENSEDSTATEMENTS OF OPERATIONS (in thousands — unaudited)

		14-Week			13-Week
		13-Week			13-Week
		period ended			period ended
		January 3,			December 28,
		July 4,			June 28,
		2003			~~2001~~2002
Sales		$	6170,~~626~~721			6664,~~228~~792
Cost of sales			4447,~~936~~273			5248,~~069~~128
Gross profit			1623,~~690~~448			1416,~~159~~664
Operating costs and expenses:
	Research and development		1,~~445~~695			1,~~255~~584
	Selling and marketing		3,~~924~~963			34,~~946~~097
	General and administrative		34,~~878~~455			4,~~587~~807
Total operating costs and expenses			910,~~247~~113			910,~~788~~488
Operating income			713,~~443~~335			46,~~371~~176
Other income			267			—
Interest expense			(3,591	)		(4,228	)
Interest expense			(3,670	)		(4,725	)
Income before taxes			9,744			1,948
Income (loss) before taxes			4,040			(354	)
Income tax expense			1,393			2,987
Income tax expense			1,504			680
Net income (loss)			8,351			(1,039	)
Net income (loss)			2,536			(1,034	)
Preferred dividends:
	Senior redeemable preferred stock		1,~~402~~502			1,~~194~~310
	Junior preferred stock		~~914~~979			~~796~~853
Net income (loss) attributable to common stock		$	~~220~~5,870			(3,~~024~~202	)

See accompanying notes to the unaudited consolidated condensed financial statements.

-3-

COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

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

		14-Week			13-Week
		40-Week			39-Week
		period ended			period ended
		January 3,			December 28,
		July 4,			June 28,
		2003			~~2001~~2002
OPERATING ACTIVITIES
Sales		$	200,244			191,632
	Net cash provided by operating activities	$	10,995			9,815
Cost of sales			139,422			147,863
INVESTING ACTIVITIES
Gross profit			60,822			43,769
	Purchase of property, plant and equipment, net		(263	)		(664	)
Operating costs and expenses:
	Net cash used in investing activities		(263	)		(664	)
	Research and development		4,714			4,356
FINANCING ACTIVITIES
	Selling and marketing		11,732			11,682
	Repayments on capital leases		(27	)		(257	)
	General and administrative		12,597			13,950
	Payment of debt issue costs		(254	)		—
Total operating costs and expenses			29,043			29,988
	Repayment of revolving credit facility		—			(8,307	)
Operating income			31,779			13,781
	Repayment of mortgage financing		(250	)		—
Other income			267			—
	Net cash used in financing activities		(531	)		(8,564	)
Interest expense			(10,837	)		(12,767	)
NET INCREASE IN CASH AND CASH EQUIVLENTS			10,201			587
Income before taxes			21,209			1,014
Cash and cash equivalents at beginning of period			2,724			2,903
Income tax expense			6,282			4,820
Cash and cash equivalents at end of period		$	12,925			3,490
Net income (loss)			14,927			(3,806	)
Preferred dividends:
	Senior redeemable preferred stock		4,356			3,796
	Junior preferred stock		2,838			2,473
Net income (loss) attributable to common stock		$	7,733			(10,075	)

See accompanying notes to the unaudited consolidated condensed financial statements.

-4-

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

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

		January 3,			September 27,
		40-Week			39-Week
		period ended			period ended
		July 4,			June 28,
		2003			2002
ASSETS
OPERATING ACTIVITIES
Current Assets
	Net cash provided by operating activities	$	27,572			36,517
	Cash and cash equivalents	$	12,925			2,724
INVESTING ACTIVITIES
	Accounts receivable, net		31,122			29,937
	Purchase of property, plant and equipment, net		(1,325	)		(2,144	)
	Inventories		35,818			39,927
	Net cash used in investing activities		(1,325	)		(2,144	)
	Other current assets		3,580			2,637
FINANCING ACTIVITIES
Total current assets			83,445			75,225
	Repayments on capital leases		(45	)		(858	)
Property, plant, and equipment, net			41,359			42,478
	Payment of debt issue costs		(339	)		(101	)
Goodwill			19,149			19,149
	Repayment of revolving credit facility		—			(13,608	)
Intangibles, net			1,425			1,613
	Repayment of senior term loan		—			(20,000	)
Debt issue costs, net			3,203			3,259
	Repayment of mortgage financing		(250	)		(250	)
Note receivable from parent			5,750			5,750
	Proceeds from the sale of common stock		110			—
Total assets		$	154,331			147,474
	Net cash used in financing activities		(524	)		(34,817	)
LIABILITIES, PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVLENTS			25,723			(444	)
Current Liabilities
Cash and cash equivalents at beginning of period			2,724			2,903
	Current portion of capital leases	$	18			45
Cash and cash equivalents at end of period		$	28,447			2,459
	Accounts payable		10,665			14,111
	Accrued expenses		19,997			18,313
	Product warranty		5,081			4,823
	Income taxes payable		4,445			2,964
	Accrued dividends payable		10,940			9,538
	Advance payments from customers		11,955			7,594
Total current liabilities			63,101			57,388
Senior subordinated notes			100,000			100,000
Deferred income on sale-leaseback			7,205			7,311
Total liabilities			170,306			164,699
Senior Redeemable Preferred Stock			28,747			28,693
Commitments and contingencies
Stockholders’ Deficit:
	Junior preferred stock		2			2
	Common stock		—			—
	Additional paid-in capital		45,522			44,608
	Accumulated deficit		(89,014	)		(89,305	)
	Stockholder loans		(1,232	)		(1,223	)
Net stockholders’ deficit			(44,722	)		(45,918	)
Total liabilities, senior redeemable preferred stock and stockholders’ deficit		$	154,331			147,474

See accompanying notes to the unaudited consolidated condensed financial statements.

-5-

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

CONSOLIDATED CONDENSED ~~STATEMENTS~~ OFBALANCE ~~OPERATIONS~~SHEETS (in thousands — unaudited)

		14-Week			13-Week
		July 4,			September 27,
		period ended			period ended
		2003			2002
		January 3,			December 28,
ASSETS
		2003			2001
Current Assets
Sales		$	61,626			66,228
	Cash and cash equivalents	$	28,447			2,724
Cost of sales			44,936			52,069
	Accounts receivable, net		37,113			29,937
Gross profit			16,690			14,159
	Inventories		34,551			39,927
Operating costs and expenses:
	Other current assets		2,706			2,637
	Research and development		1,445			1,255
Total current assets			102,817			75,225
	Selling and marketing		3,924			3,946
Property, plant, and equipment, net			39,643			42,478
	General and administrative		4,222			4,933
Goodwill			19,149			19,149
Total operating costs and expenses			9,591			10,134
Intangibles, net			1,235			1,613
Operating income			7,099			4,025
Debt issue costs, net			2,593			3,259
Other income			267			—
Note receivable from parent			5,750			5,750
Interest expense			(3,124	)		(4,197	)
Total assets		$	171,187			147,474
Income (loss) before taxes			4,242			(172	)
LIABILITIES, PREFERRED STOCK AND
Income tax expense			1,581			510
STOCKHOLDERS’ DEFICIT
Net income (loss)			2,661			(682	)
Current Liabilities
Preferred dividends:
	Current portion of capital leases	$	—			45
	Senior redeemable preferred stock		1,402			1,194
	Accounts payable		14,507			14,111
	Junior preferred stock		914			796
	Accrued expenses		22,340			18,313
Net income (loss) attributable to common stock		$	345			(2,672	)
	Product warranty		5,068			4,823
	Income taxes payable		3,615			2,964
	Accrued dividends payable		13,894			9,538
	Advance payments from customers		10,986			7,594
Total current liabilities			70,410			57,388
Senior subordinated notes			100,000			100,000
Deferred income on sale-leaseback			6,993			7,311
Total liabilities			177,403			164,699
Senior Redeemable Preferred Stock			28,854			28,693
Commitments and contingencies
Stockholders’ Deficit:
	Junior preferred stock		2			2
	Common stock		—			—
	Additional paid-in capital		47,446			44,608
	Accumulated deficit		(81,270	)		(89,305	)
	Stockholder loans		(1,248	)		(1,223	)
Net stockholders’ deficit			(35,070	)		(45,918	)
Total liabilities, senior redeemable preferred stock and stockholders’ deficit		$	171,187			147,474

See accompanying notes to the unaudited consolidated condensed financial statements.

-6-

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

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

		14-Week			13-Week
		13-Week			13-Week
		period ended			period ended
		January 3,			December 28,
		July 4,			June 28,
		2003			~~2001~~2002
OPERATING ACTIVITIES
Sales		$	70,721			64,792
	Net cash provided by operating activities	$	10,745			9,815
Cost of sales			47,273			48,128
INVESTING ACTIVITIES
Gross profit			23,448			16,664
	Purchase of property, plant and equipment, net		(263	)		(664	)
Operating costs and expenses:
	Net cash used in investing activities		(263	)		(664	)
	Research and development		1,695			1,584
FINANCING ACTIVITIES
	Selling and marketing		3,963			4,097
	Repayments on capital leases		(27	)		(257	)
	General and administrative		4,823			5,154
	Payment of debt issue costs		(254	)		—
Total operating costs and expenses			10,481			10,835
	Repayments on revolving credit facility		—			(8,307	)
Operating income			12,967			5,829
	Net cash used in financing activities		(281	)		(8,564	)
Interest expense			(3,093	)		(3,731	)
NET INCREASE IN CASH AND CASH EQUIVALENTS			10,201			587
Income before taxes			9,874			2,098
Cash and cash equivalents at beginning of period			2,724			2,903
Income tax expense			1,252			3,150
Cash and cash equivalents at end of period		$	12,925			3,490
Net income (loss)			8,622			(1,052	)
Preferred dividends:
	Senior redeemable preferred stock		1,502			1,310
	Junior preferred stock		979			853
Net income (loss) attributable to common stock		$	6,141			(3,215	)

See accompanying notes to the unaudited consolidated condensed financial statements.

-7-

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

CONSOLIDATED CONDENSED
STATEMENTS OF OPERATIONS
(in thousands — unaudited)


		40-Week			39-Week
		period ended			period ended
		July 4,			June 28,
		2003			2002

Sales		$	200,244			191,632
Cost of sales			139,422			147,863

Gross profit			60,822			43,769

Operating costs and expenses:
	Research and development		4,714			4,356
	Selling and marketing		11,732			11,682
	General and administrative		13,689			14,985

Total operating costs and expenses			30,135			31,023

Operating income			30,687			12,746
Other income			267			—
Interest expense			(9,291	)		(11,257	)

Income before taxes			21,663			1,489
Income tax expense			6,273			4,983

Net income (loss)			15,390			(3,494	)
Preferred dividends:
	Senior redeemable preferred stock		4,356			3,796
	Junior preferred stock		2,838			2,473

Net income (loss) attributable to common stock		$	8,196			(9,763	)

See accompanying notes to the unaudited consolidated condensed financial statements.

-8-

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

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


		40-Week			39-Week
		period ended			period ended
		July 4,			June 28,
		2003			2002

OPERATING ACTIVITIES
	Net cash provided by operating activities	$	27,388			36,166

INVESTING ACTIVITIES
	Purchase of property, plant and equipment, net		(1,325	)		(2,144	)

	Net cash used in investing activities		(1,325	)		(2,144	)

FINANCING ACTIVITIES
	Repayments on capital leases		(45	)		(858	)
	Payment of debt issue costs		(295	)		—
	Repayments from senior term loan		—			(20,000	)
	Repayments on revolving credit facility		—			(13,608	)

	Net cash used in financing activities		(340	)		(34,466	)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS			25,723			(444	)
Cash and cash equivalents at beginning of period			2,724			2,903

Cash and cash equivalents at end of period		$	28,447			2,459

See accompanying notes to the unaudited consolidated condensed financial statements.

-9-

COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

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

NOTES TO CONSOLIDATED
CONDENSED FINANCIAL STATEMENTS
(unaudited)

Basis of Presentation

The accompanying unaudited consolidated condensed financial statements of Communications & Power Industries Holding Corporation (“Holding”) and Communications & Power Industries, Inc. (“CPI”, both companies together referred to as the “Company”) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in annual financial statements have been condensed or omitted and, accordingly, these financial statements should be read in conjunction with the financial statements and the notes thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended September 27, 2002. Management believes that these unaudited interim condensed financial statements contain all adjustments, all of which are of a normal recurring nature, necessary to present fairly the financial position of the Company, and its results of operations and cash flows for the interim period presented. The results for the interim periods reported are not necessarily indicative of the results for the complete fiscal year 2003.

Inventories

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

		January 3,		September 27,
		July 4,		September 27,
(In thousands)		2003		2002
Raw materials and parts		$	2827,~~805~~852		30,638
Work in process			4,~~342~~285		6,507
Finished goods			2,~~671~~414		2,782
	Total inventories	$	3534,~~818~~551		39,927

3. ~~Supplemental~~Accrued ~~Cash Flow Information~~ Warranty

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

The Company’s products are generally warranted for a variety of periods, typically one to three years or a predetermined product usage life. The Company assesses the adequacy of its preexisting warranty liabilities and adjusts the balance based on actual experience and changes in future expectations. The following table reconciles the changes in the Company’s accrued warranty:

-8 10 -

COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

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

4. Segments and Related Information


		13-Week			13-Week			40-Week			39-Week
		Period Ended			Period Ended			Period Ended			Period Ended
		July 4,			June 28,			July 4,			June 28,
(In thousands)		2003			2002			2003			2002

Beginning accrued warranty		$	5,073			4,135		$	4,823			4,225
	Cost of warranty claims		(1,235	)		(1,344	)		(3,963	)		(4,738	)
	Accruals for product warranty		1,230			1,676			4,208			4,980

Ending accrued warranty		$	5,068			4,467		$	5,068			4,467

~~The Company has two reportable segments: vacuum electronic devices (“VEDs”) and satcom equipment~~4. ~~Management~~Supplemental ~~evaluates~~Cash ~~performance~~Flow ~~and allocates resources based on earnings before income taxes, interest, depreciation and amortization (“EBITDA”).~~ Information


	Holding				CPI

	40-Week		39-Week		40-Week		39-Week
	Period Ended		Period Ended		Period Ended		Period Ended
	July 4,		June 28,		July 4,		June 28,
(In millions)	2003		2002		2003		2002

Cash Payments
Interest payments	$	7.1	$	9.0	$	6.2	$	8.3
Tax payments	$	5.1	$	0.7	$	5.1	$	0.7
Non-cash Financing
Unpaid cash dividends on senior preferred stock	$	4.4	$	3.8	$	4.4	$	3.8

Segments and Related Information

The Company has two reportable segments: vacuum electronic devices (“VEDs”) and satcom equipment. Management evaluates performance and allocates resources based on earnings before income taxes, interest, depreciation and amortization (“EBITDA”), which the Company believes investors use as an important measure to analyze its performance.

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

			Satcom
(In thousands)	VED's		Equipment		Other			Total
For the 14-Week Period Ended January 3, 2003:
Revenues from external customers	$	50,956		10,586		84			61,626
Intersegment product transfers		2,207		—		—			2,207
EBITDA — Holding		9,608		1,298		(1,479	)		9,427
EBITDA — CPI		9,608		1,298		(1,983	)		8,923
For the 13-Week Period Ended December 28, 2001:
Revenues from external customers	$	51,329		15,861		(962	)		66,228
Intersegment product transfers		2,259		—		76			2,335
EBITDA — Holding		8,073		281		(889	)		7,465
EBITDA — CPI		8,073		281		(1,398	)		6,956

- 11 -

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

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

-9-

COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

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


			Satcom
(In thousands)	VED’s		Equipment		Other			Total

For the 13-Week Period Ended July 4, 2003:
Revenues from external customers	$	55,887		13,955		879			70,721
Intersegment product transfers		5,400		—		—			5,400
EBITDA – Holding		15,644		1,439		(2,172	)		14,911
EBITDA – CPI		15,644		1,439		(2,667	)		14,416
For the 13-Week Period Ended June 28, 2002:
Revenues from external customers	$	54,103		10,015		674			64,792
Intersegment product transfers		3,531		—		229			3,760
EBITDA – Holding		11,535		541		(3,315	)		8,941
EBITDA – CPI		11,535		541		(3,642	)		8,434
For the 40-Week Period Ended July 4, 2003:
Revenues from external customers	$	164,407		35,390		447			200,244
Intersegment product transfers		11,912		—		—			11,912
EBITDA – Holding		38,819		3,823		(5,706	)		36,936
EBITDA – CPI		38,819		3,823		(7,213	)		35,429
For the 39-Week Period Ended June 28, 2002:
Revenues from external customers	$	152,962		36,920		1,750			191,632
Intersegment product transfers		8,400		—		855			9,255
EBITDA – Holding		27,724		768		(5,890	)		22,602
EBITDA – CPI		27,724		768		(7,409	)		21,083

- 12 -

COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

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

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


	Holding				CPI

	13-Week		13-Week		13-Week		13-Week
	Period Ended		Period Ended		Period Ended		Period Ended
(In thousands)	July 4, 2003		June 28, 2002		July 4, 2003		June 28, 2002

Segment EBITDA	$	14,911		8,941	$	14,416		8,434
Less:
Depreciation and amortization		1,576		2,765		1,449		2,605
Interest expense		3,591		4,228		3,093		3,731

Income before taxes	$	9,744		1,948	$	9,874		2,098


	Holding				CPI

	40-Week		39-Week		40-Week		39-Week
	Period Ended		Period Ended		Period Ended		Period Ended
(In thousands)	July 4, 2003		June 28, 2002		July 4, 2003		June 28, 2002

Segment EBITDA	$	36,936		22,602	$	35,429		21,083
Less:
Depreciation and amortization		4,890		8,821		4,475		8,337
Interest expense		10,837		12,767		9,291		11,257

Income before taxes	$	21,209		1,014	$	21,663		1,489

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

	14-Week		13-Week
	13-Week		13-Week		40-Week		39-Week
	Period Ended		Period Ended		Period Ended		Period Ended
(In thousands)	~~January~~July 34, 2003		~~December~~June 28, 2002		July 4, 2003		June 28, 2002
	2003		2001
United States	$	48,132		42,289	$	134,384		135,078
United States	$	38,036		49,817
All foreign countries		22,589		22,503		65,860		56,554
All foreign countries		23,590		16,411
Total Sales	$	70,721		64,792	$	200,244		191,632
Total Sales	$	61,626		66,228

CPI has a single customer that accounts for 10% or more of consolidated sales. Sales to this customer were $1114.56 million and $1014.02 million of the Company’s consolidated sales for the 1413-week period ended ~~January~~July 34, 2003 and June 28, 2002, respectively. Sales to this customer were $40.3 million and $34.4 million of the 13Company’s consolidated sales for the 40-week period ended July 4, 2003 and the 39-week period ended ~~December~~June 28, ~~2001~~2002, respectively. A substantial majority of these sales were VED segment products, but this customer also purchased ~~satcom~~ satcom equipment products.

56. Recent Accounting Pronouncements

The Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 143, “Accounting for Asset Retirement Obligations”, in August 2001, and SFAS No. 144, “Accounting for the Impairment or Disposal of Long-~~lived~~ ~~Assets”,~~13 in October 2001. SFAS No. 143 is effective for fiscal years beginning after June 15, 2002 and requires that the fair value of an asset retirement obligation be recorded as a liability in the period in which it incurs the obligation. SFAS No. 144 is effective for fiscal years beginning after December 15, 2001. It provides a single accounting model for long-~~lived assets to be disposed of and replaces SFAS No. 121 “Accounting for~~ ~~the Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of.”~~ ~~The Company adopted these Statements on September 28, 2002. The adoption did~~ ~~not have a material impact on the Company’s consolidated financial position or results of operations.~~

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

-10-

COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

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

InThe ~~June~~Financial ~~2002,~~Accounting ~~the~~Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. ~~146~~143, “Accounting for ~~Costs~~Asset ~~Associated~~Retirement ~~with~~Obligations”, ~~Exit~~in August 2001, and ~~Disposal~~SFAS ~~Activities~~No.” 144, ~~SFAS~~“Accounting ~~146~~for ~~requires~~the ~~that~~Impairment or aDisposal ~~liability~~of ~~for~~Long-lived ~~a cost~~Assets”, ~~associated~~in ~~with~~October an2001. ~~exit~~SFAS orNo. 143 ~~disposal~~is ~~activity~~effective for befiscal ~~recognized~~years beginning after June 15, 2002 and ~~measured initially~~requires atthat the fair value of ~~only~~an ~~when~~asset ~~the~~retirement ~~liability~~obligation isbe ~~incurred.~~recorded ~~The~~as ~~provisions~~a ofliability in the period in which it incurs the obligation. SFAS No. ~~146~~144 ~~are~~is effective ~~prospectively~~ for ~~exit~~fiscal ~~or disposal activities~~years ~~initiated~~beginning after December 3115, ~~2002~~2001. ~~The~~It ~~Company~~provides ~~does~~a ~~not~~single ~~expect~~accounting ~~the~~model ~~adoption~~for long-lived assets to be disposed of and replaces SFAS No. 121, “Accounting for ~~this~~the ~~statement~~Impairment of Long-Lived Assets and Long-Lived Assets to Be Disposed Of.” The Company adopted these Statements on September 28, 2002. The adoption did not have a material ~~effect~~impact on the Company’s consolidated financial position or results of operations.

In ~~December~~April 2002, the FASB issued SFAS ~~148~~No. 145, “~~Accounting~~Rescission ~~for~~of ~~Stock-Based Compensation~~FASB —Statements ~~Transition~~No. 4, 44, and ~~Disclosure~~64, ~~— an~~ Amendment of ~~SFAS~~FASB ~~123~~Statement No. 13, and Technical Corrections.” This Statement rescinds SFAS ~~148~~No. 4, “Reporting Gains and Losses from ~~provides~~Extinguishment ~~additional~~of ~~transition~~Debt,” ~~guidance~~and ~~for~~an ~~those~~amendment ~~entities~~of that ~~elect~~Statement, toSFAS No. 64, ~~voluntarily~~“Extinguishments ~~adopt~~of ~~the~~Debt ~~accounting~~Made ~~provisions~~to ofSatisfy Sinking-Fund Requirements.” This Statement amends SFAS ~~123~~Statement No. 13, “Accounting for ~~Stock-Based~~ ~~Compensation.~~Leases,” ~~Since~~to ~~the~~eliminate an ~~Company~~inconsistency ~~intends~~between tothe ~~continue~~required toaccounting ~~apply~~for ~~the~~sale-leaseback ~~intrinsic~~transactions ~~value~~and ~~method~~the ofrequired accounting for ~~stock~~certain lease modifications that have economic effects that are similar to sale-~~based~~leaseback ~~compensation~~transactions. This Statement also amends other existing authoritative pronouncements to make various technical corrections, ~~the~~clarify ~~adoption~~meanings, or describe their applicability under changed conditions. The provisions of SFAS ~~148~~No. 145 ~~will~~are effective ~~not~~in ~~have~~fiscal anyears ~~effect~~beginning onafter ~~its~~May 15, ~~financial~~2002, ~~condition~~with orearly ~~results of~~adoption ~~operations.~~permitted ~~However~~and, ~~the~~in ~~Company~~general, ~~will~~are ~~provide~~to ~~the~~be ~~additional~~applied ~~disclosures~~prospectively. The Company adopted ~~required~~this byStatement ~~SFAS~~on ~~148~~September 28, ~~beginning~~2002. inThe adoption did not have a material impact on the ~~second~~Company’s ~~quarter~~consolidated offinancial ~~fiscal~~position ~~year~~or ~~2003~~results of operations.

6In June 2002, the FASB issued SFAS No. 146, ~~Goodwill~~“Accounting for Costs Associated with Exit and ~~Other~~Disposal ~~Intangible~~Activities.” ~~Assets~~SFAS No. 146 requires that a liability for a cost associated with an exit or disposal activity be recognized and measured initially at fair value only when the liability is incurred. SFAS No. 146 will be applied prospectively for exit and disposal activities initiated after December 31, 2002. Adoption of this Statement did not have a material impact on the Company’s consolidated financial position or results of operations.

In ~~June~~December ~~2001~~2002, the FASB issued SFAS No. ~~141~~148, “~~Business~~Accounting ~~Combinations,”~~for ~~and SFAS~~Stock-Based ~~No. 142,~~Compensation ~~“Goodwill~~– Transition and ~~Other~~Disclosure ~~Intangible~~– ~~Assets.”~~an ~~SFAS~~Amendment ~~No. 141 requires that the purchase method~~ of ~~accounting~~SFAS ~~be used for all business combinations initiated after June 30, 2001~~123.” SFAS No. ~~141 also specifies the criteria intangible assets~~ ~~acquired~~148 inprovides aadditional ~~purchase~~transition ~~method~~guidance ~~business~~for ~~combination~~those ~~must~~entities ~~meet~~that elect to voluntarily beadopt ~~recognized and~~the ~~reported~~accounting ~~apart~~provisions ~~from~~of ~~goodwill.~~FASB ~~SFAS~~Statement No. ~~142 requires that goodwill and~~123, ~~intangible~~“Accounting ~~assets~~for ~~with~~Stock-Based ~~indefinite~~Compensation.” ~~useful~~Since ~~lives~~the noCompany ~~longer~~intends ~~be amortized, but~~to ~~instead~~continue beto ~~reviewed~~apply ~~for~~the ~~impairment~~intrinsic ~~annually~~value ormethod ~~more~~of ~~frequently~~accounting iffor ~~certain~~stock-based ~~indicators~~compensation, ~~arise.~~the adoption of SFAS No. ~~142~~148 ~~also~~will ~~requires~~not ~~that~~have ~~intangible~~an ~~assets~~effect ~~with~~on its ~~definite~~financial ~~useful~~condition ~~lives~~or beresults ~~amortized~~of ~~over their respective estimated lives and be reviewed for impairment~~operations. ~~The~~However, the Company ~~adopted~~has provided the ~~provisions~~additional ofdisclosures ~~SFAS~~required ~~No. 141 and~~by SFAS No. ~~142~~148 ~~and~~beginning ~~ceased~~in ~~amortization~~the second quarter of ~~its goodwill, beginning in~~ fiscal year 2003.

~~Upon~~In ~~adoption~~November ~~of SFAS No. 142~~2002, the ~~Company~~FASB ~~performed~~issued aInterpretation ~~transitional~~No. 45 ~~goodwill~~(“FIN 45”), ~~impairment~~“Guarantor’s ~~evaluation~~Accounting toand ~~assess~~Disclosure ~~whether~~Requirements ~~goodwill~~for ~~was~~Guarantees, ~~impaired~~Including Indirect asGuarantees of ~~the~~Indebtedness ~~date~~ of ~~adoption~~ Others.” ~~Based~~FIN on45 ~~the~~requires ~~results~~a ofguarantor ~~the~~to include ~~first~~disclosure ~~step~~ of ~~the~~certain ~~transitional~~obligations, ~~goodwill impairment~~and ~~test~~if ~~it was determined that no potential impairment exists. As a result~~applicable, at the ~~Company has recognized no transitional impairment loss in~~inception ~~connection~~of ~~with~~ the ~~adoption of SFAS No. 142. Also upon adoption of SFAS No. 142~~guarantee, asrecognize ~~required~~a byliability ~~SFAS~~for ~~No. 141,~~ the ~~Company~~fair ~~reassessed~~value ~~the~~of ~~useful~~other ~~lives and~~certain ~~residual~~obligations ~~values~~undertaken ~~of all intangible assets acquired~~ in ~~purchase~~issuing ~~business~~a ~~combinations, and no significant changes were deemed necessary.~~

- 14 -

COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

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

guarantee. The recognition requirement is effective for guarantees issued or modified after December 31, 2002. The adoption of FIN 45 did not have a material impact on the Company’s consolidated results of operations or financial position.

In January 2003, the FASB issued Interpretation No. 46 (“FIN 46”), “Consolidation of Variable Interest Entities.” FIN 46 provides guidance for determining when an entity that is the primary beneficiary of a variable interest entity or equivalent structure should consolidate the variable interest entity into the entity’s financial statements. The consolidation provisions of FIN 46 apply immediately to variable interest entities created after January 31, 2003 and to existing entities in the first interim or annual reporting period beginning after June 15, 2003. The Company does not believe that it has any variable interests that would qualify as a variable interest entity and therefore does not expect adoption of FIN 46 to have an effect on its consolidated results of operations or financial position.

In April 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities.” SFAS 149 amends and clarifies financial accounting and reporting for derivative instruments and for hedging activities under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.” This Statement will be applied prospectively for contracts entered into or modified after June 30, 2003 and hedging relationships designated after June 30, 2003. The Company does not expect adoption of SFAS No. 149 to have a material impact on the Company’s consolidated results of operations or financial position.

In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.” SFAS No. 150 requires that certain financial instruments with characteristics of both liabilities and equity, be classified as liabilities in statements of financial position. The financial instruments affected include mandatorily redeemable stock, certain financial instruments that require or may require the issuer to buy back some of its shares in exchange for cash or other assets and certain obligations that can be settled with shares of stock. SFAS No. 150 is effective for all financial instruments entered into or modified after May 31, 2003 and must be applied to existing financial instruments at the beginning of the first fiscal period beginning after June 15, 2003. The Company will adopt SFAS No. 150 in its fourth quarter beginning July 5, 2003. The Company is currently analyzing this Statement and has not yet determined its impact on the Company’s consolidated results of operations or financial position.

Goodwill and Other Intangible Assets

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

- 15 -

COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

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

the provisions of SFAS No. 141 and SFAS No. 142 and ceased amortization of its goodwill, beginning in fiscal year 2003.

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

Goodwill

As of ~~January~~July 34, 2003 and September 27, 2002, the Company had $19.1 million of goodwill, $13.4 million of which has been allocated to the VED segment and $5.7 million of which has been allocated to the satcom equipment segment. There were no changes in the carrying amount of goodwill for the quarter or nine-month period ended ~~January~~July 34, 2003.

The following table presents the impact of adopting SFAS No. 142 on net income (loss) if such standard had been in effect for the 13-11week and 39-week periods ended June 28, 2002.


	Holding					CPI

	13-Week		13-Week			13-Week		13-Week
	Period Ended		Period Ended			Period Ended		Period Ended
(In thousands)	July 4,		June 28,			July 4,		June 28,
	2003		2002			2003		2002


Net income (loss) as reported	$	8,351		(1,039	)	$	8,622		(1,052	)
Adjustments:
Goodwill amortization, net of tax		—		232			—		232

Adjusted net income (loss)	$	8,351		(807	)	$	8,622		(820	)


	Holding					CPI

	40-Week		39-Week			40-Week		39-Week
	Period Ended		Period Ended			Period Ended		Period Ended
(In thousands)	July 4,		June 28,			July 4,		June 28,
	2003		2002			2003		2002

Net income (loss) as reported	$	14,927		(3,806	)	$	15,390		(3,494	)
Adjustments:
Goodwill amortization, net of tax		—		695			—		695

Adjusted net income (loss)	$	14,927		(3,111	)	$	15,390		(2,799	)

- 16 -

COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

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

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

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

Intangible Assets

As of ~~January~~July 34, 2003 and September 27, 2002, the Company had $1.9 million of intangible assets at cost, with accumulated amortization of $0.57 million and $0.3 million, respectively. Amortization of intangible assets for the ~~fiscal~~40-week period ~~quarters~~ ended ~~January~~July 34, 2003 and ~~December~~the 39-week period ended June 28, ~~2001~~2002 was approximately $0.24 million and $0.14 million, respectively. Amortization expense for these intangible assets is projected to be approximately $0.4 million per year through fiscal year 2006.

78. ~~Amendment~~Stock-Based toCompensation ~~Credit Facility~~ Plans

InThe ~~December~~Company ~~2002,~~accounts ~~the~~for ~~Company~~stock-based ~~amended~~compensation ~~its~~in ~~credit~~accordance ~~facility~~with toAccounting Principles ~~increase~~Board ~~the maximum~~(“APB”) ~~amount~~Opinion ofNo. 25, ~~its~~“Accounting ~~revolving~~for ~~credit~~Stock ~~line~~Issued byto Employees,” ~~$20.0 million~~and ~~(the~~related ~~amount~~interpretations ofincluding aFASB Interpretation No. 44, ~~prepaid~~“Accounting ~~term~~for ~~loan~~Certain ~~formerly~~Transactions ~~outstanding~~involving ~~under~~Stock ~~the~~Compensation ~~same~~an interpretation ~~credit~~of ~~facility)~~APB ~~from $41~~Opinion No.0 ~~million~~25” toissued ~~$61.0 million~~in ~~and~~March to2000. ~~extend~~Since the ~~expiration date from December~~exercise ~~22,~~price ~~2004~~of tooptions ~~May 31,~~granted ~~2005.~~under ~~The~~such ~~credit~~plans ~~facility~~is ~~continues~~generally equal to bethe ~~secured by~~market ~~substantially~~value ~~all~~on of the ~~assets~~date of ~~CPI~~grant, ~~and~~no ~~guaranteed~~compensation bycost ~~Holding~~has ~~and~~been ~~all~~recognized offor grants ~~CPI~~under the Company’s ~~subsidiaries~~stock option plan. ~~Availability~~If ~~under~~compensation cost for the ~~revolving~~Company’s stock-based ~~credit~~compensation ~~facility~~plan ~~continues to~~had bebeen ~~based~~determined ~~upon~~consistent ~~eligible~~with ~~receivables~~SFAS No. 123, “Accounting ~~machinery~~for ~~and~~Stock-Based ~~equipment~~Compensation,” ~~and~~the ~~certain~~Company’s ~~real~~net income (loss) ~~estate.~~would have changed to the pro forma amounts indicated below:

-12-


	Holding						CPI

	13-Week			13-Week			13-Week			13-Week
	Period Ended			Period Ended			Period Ended			Period Ended
(In thousands)	July 4,			June 28,			July 4,			June 28,
	2003			2002			2003			2002

Net income (loss) as reported	$	8,351			(1,039	)	$	8,622			(1,052	)
Deduct:
Stock-based compensation determined under fair value based method, net of tax		(6	)		(10	)		(6	)		(10	)

Pro forma net income (loss)	$	8,345			(1,049	)	$	8,616			(1,062	)


	Holding					CPI

	40-Week		39-Week			40-Week		39-Week
	Period Ended		Period Ended			Period Ended		Period Ended
(In thousands)	July 4,		June 28,			July 4,		June 28,
	2003		2002			2003		2002

Net income (loss) as reported	$	14,927		(3,806	)	$	15,390		(3,494	)
Deduct:
Stock-based compensation determined under fair value based method, net of tax		62		(36	)		62		(36	)

Pro forma net income (loss)	$	14,989		(3,842	)	$	15,452		(3,530	)

- 17 -

COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

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

For the 40-week period ended July 4, 2003, the positive deduction for stock-based compensation determined under the fair value method is due to the actual forfeiture rate exceeding the estimated forfeiture rate for employee stock options granted in prior periods.

Amendment to Credit Facility

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

10.

Mortgage Refinancing

Effective June 1, 2003, Holding’s mortgage financing of $17.5 million was refinanced. Under the terms of the refinancing, the loan was extended until January 31, 2004. The mortgage bears interest at a rate of LIBOR plus 4.25%.

- 18 -

COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

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

ITEM 2: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cautionary Statements Regarding Forward-Looking Statements

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

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

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

Overview

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

The Company serves the communications, radar, electronic countermeasures, industrial, medical and scientific markets. In addition, the Company divides the communications market into applications for ground-based satellite uplinks for military and commercial uses (“satcom”) and broadcast sectors. The Company defines and discusses its orders and sales trends by the end markets to more clearly relate its business to outside investors. Internally, however, the Company is organized into five operating units that are differentiated based on products. Four of these operating units comprise the Company’s vacuum electronic device (“VED”) segment. The Company also has a satellite communications equipment segment. Segment data is included in Note 45 of the Notes to Consolidated Condensed Financial Statements.

The Company’s fiscal years are the 52- or 53-week periods which end on the Friday nearest September 30. Fiscal year 2003 will be comprised of the 53-week period ended October 3, 2003, and fiscal year

-13 19 -

COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

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

2002 was comprised of the 52-week period ended September 27, 2002. The third quarters of fiscal year 2003 and fiscal year 2002 were both comprised of 13 weeks. The first ~~quarter~~nine months of fiscal ~~year2003~~year 2003 was comprised of 14a 40-week period ended July ~~weeks~~4, ~~whereas~~2003 while the first ~~quarter~~nine months of fiscal year 2002 ~~was~~ was comprised of 13a 39-week period ended June ~~weeks~~28, 2002.

Orders during the ~~first~~third quarter of fiscal year 2003 were $7570.39 million, as compared to $7155.42 million for the ~~first~~third quarter of fiscal year 2002. ~~This~~The increase of $315.97 million, ~~for~~or 28.4%, compared to the same quarter of fiscal year 2002, primarily reflects a higher demand for products in the communications, radar, electronic countermeasures and medical markets~~, offset~~. ~~somewhat~~Communications ~~by decreases in~~ orders for the ~~Company’s~~third ~~remaining three markets. This~~ quarter’s ~~communication~~of ~~orders~~fiscal ~~demonstrated~~year ~~the~~2003 ~~first~~were ~~quarter-on-quarter~~$19.9 ~~increase~~million, inan ~~over a year. The~~ increase of $3.19 million ~~or 15.4%~~ from the ~~first~~ third quarter of fiscal year ~~2002 is due primarily to the receipt of a large order~~ ~~from a direct-to-home service supplier~~2002. The increase in ~~communication~~communications orders is ~~not~~ ~~expected~~due primarily to bean ~~sustained~~increase in ~~the upcoming quarters as the Company believes~~ ~~that~~satcom ~~communication~~orders ~~companies~~during ~~are continuing to maintain their capital spending at~~ the ~~moderate rates we have seen in the last several quarters~~quarter. ~~Electronic countermeasures~~Radar orders for the ~~first~~third quarter of fiscal year 2003 were $1130.5 3 million, an increase of $92.4 million from the ~~first~~ third quarter of fiscal year 2002. The increase in radar orders is due primarily to an ~~timing~~increase ofin ~~order~~spares ~~releases~~and ~~from~~repair ~~quarter~~orders ~~to quarter~~for bylogistic ~~OEM’s and government logistics~~ agencies,. ~~and~~Electronic countermeasures ~~annual~~ orders infor ~~this market~~the ~~are~~third ~~expected~~quarter toof ~~be consistent with~~ fiscal year ~~2002~~2003 ~~levels.~~were ~~Medical~~$8.8 ~~orders~~million, ~~increased~~an byincrease of $16.6 million tofrom ~~$7.3 million in~~ the ~~first~~third quarter of fiscal year 2002. ~~2003~~Electronic ascountermeasures ~~compared~~orders toincreased ~~the~~because ~~first quarter~~ of ~~fiscal~~two ~~year~~large ~~2002. Radar,~~orders ~~industrial~~that ~~and~~totaled ~~scientific~~over ~~orders decreased by~~ $~~2.1~~6 million,; ~~$2.8 million~~one ~~and $5.3 million,~~order ~~respectively,~~was ~~from~~a ~~the~~follow-on ~~first~~contract ~~quarter~~for transmitter ofproducts ~~2002~~and to the ~~first~~other ~~quarter of~~order ~~2003~~was ~~due~~for ~~principally~~VED’s. toMedical ~~fluctuations~~orders infor the third ~~timing~~quarter of ~~order~~fiscal ~~receipts~~year 2003 were $7.7 million, ~~with several~~an ~~significant~~increase ~~orders~~of ~~received~~$2.9 million infrom the ~~first~~third quarter of fiscal year 2002 ~~which~~. ~~were~~Medical ~~not~~orders ~~repeated~~increased due into ~~the~~higher ~~first~~demand ~~quarter~~for ofpower ~~2003.~~grid ~~Overall~~tube, ~~incoming~~X-Ray ~~order levels~~generator, ~~fluctuate significantly on a quarterly basis~~ and apower ~~particular quarter’s~~supply ~~order~~products ~~rate~~used ~~may~~in ~~not~~medical ~~be indicative of future order levels~~imaging. InOrders ~~addition,~~in the Company’s ~~sales~~remaining ~~are highly dependent upon manufacturing scheduling, performance~~markets ~~and~~were ~~shipments~~essentially ~~and,~~unchanged ~~accordingly,~~from itthe isthird ~~not~~quarter ~~possible~~of tofiscal ~~accurately~~year ~~predict when these orders will be recognized as sales~~2002.

AsOrders offor ~~January~~the nine months ended July 34, 2003, ~~the~~were ~~Company~~$236.1 million, ~~had~~ an ~~order backlog~~ increase of $~~159~~44.2 million, or 23.0%, from $191.9 million in the comparable period of fiscal year 2002. The increase primarily reflects the higher demand for products in the communications, radar, electronic countermeasures and medical ~~representing~~markets. ~~approximately~~Communication ~~eight~~orders increased by $12.8 million from the first nine months of ~~sales,~~fiscal ~~compared~~year 2002. The increase in communication orders is principally due to anlarge orders from direct-to-home service suppliers. The Company does not expect that the higher communications order ~~backlog~~levels will be sustained in the ofupcoming quarters because communication companies will likely maintain their capital spending at moderate rates that we have seen in recent years. Radar orders, which have increased by $~~157~~16.08 million, orfrom ~~approximately~~the ~~seven-and-a-half~~first nine months of fiscal ~~sales~~year 2002, ashave ~~of December 28,~~been ~~2001~~buoyed by spares and repair orders for logistics agencies. ~~Order~~Orders ~~backlog~~in the electronic countermeasures market have increased ~~during~~$15.9 million from the first ~~quarter~~nine months of fiscal year ~~2003~~2002 due primarily to higher demands from logistic agencies for spares and repairs to support defense system usage as well as the two large electronic countermeasure orders described above. Medical orders increased by $137.90 million from the first nine months of fiscal year 2002, due primarily to an increase in orders for VED’s used in cancer therapy systems and magnetic resonance imaging, and X-Ray generator and power supply products used in X-Ray imaging. These order increases were offset in part by declines in the industrial and scientific markets of $~~145~~3.16 million and at$4.7 million, respectively, from the ~~end~~comparable period of fiscal year 2002. The decline in these markets compared to fiscal year 2002 can be attributed to significant one-time orders received by the Company in fiscal year 2002. Overall, incoming order levels fluctuate significantly on a quarterly basis, and a particular quarter’s order rate may not be indicative of future order levels. In addition, the Company’s sales are highly dependent upon manufacturing scheduling, performance and shipments and, accordingly, it is not possible to accurately predict when these orders will be recognized

~~Critical~~- ~~Accounting~~20 ~~Policies~~-

Management is required to make judgments, assumptions and estimates in preparing its financial statements and related disclosures in conformity with accounting principles generally accepted in the United States. The Company’s significant accounting policies are described in Note 2 to the Consolidated Financial Statements in the Annual Report on Form 10-K for the fiscal year ended September 27, 2002. The following critical accounting policies are those policies that management believes affect its more significant estimates and assumptions used in preparation of its consolidated financial statements.

Revenue Recognition

-14-

COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

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

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

As of July 4, 2003, the Company had an order backlog of $181.5 million, representing approximately eight and-a-half months of sales, compared to an order backlog of $149.0 million, or approximately seven months of sales, as of June 28, 2002. Since the end of fiscal year 2002, order backlog has increased by $36.4 million from $145.1 million at September 27, 2002.

Critical Accounting Policies

Revenue Recognition

The estimated sales values of performance under certain contracts to commercial customers and U. S. Government fixed-price and fixed-price incentive contracts are recognized under the percentage of completion method of accounting. When applying the percentage of completion method, the Company relies on estimates of total expected contract revenue and costs. Recognized revenues and profit are subject to revisions as the contract progresses towards completion. Revisions in profit estimates are charged to income in the period in which they become determinable. Sales under cost-reimbursement contracts, primarily for research and development efforts, are recorded as costs are incurred and include estimated earned fees in the proportion that costs incurred to date bear to total estimated costs. The fees under certain U.S. Government contracts may be increased or decreased in accordance with cost or performance incentive provisions which measure actual performance against established targets or other criteria. Such incentive fee awards or penalties are included in revenue at the time the amounts can be reasonably determined.

Allowance for Doubtful Accounts

The Company monitors the creditworthiness of its customers based on a variety of factors, including the length of time the receivables are past due, the financial health of the customer, economic conditions and historical experience. If collectibility is considered uncertain, then the Company will record a reserve to reduce the receivable to the amount considered collectable. If circumstances change, then further adjustments could be required.

Warranty Reserves

The Company’s products are generally subject to warranties, and the Company provides for the estimated future costs of repair, replacement or customer accommodation at the time of sale as an additional cost of product. Management’s estimates are based on historical costs for warranty, and are adjusted when circumstances indicate that future costs are expected to vary from historical levels. If actual product failure rates or material usage incurred differs from the Company’s estimates, then revisions to the estimated warranty liability would be required.

Inventory Valuation

~~Inventories~~- ~~are~~21 ~~stated at the lower of average cost or market (net realizable~~- ~~value). The carrying value of inventory is reduced for estimated obsolescence~~ ~~or unmarketability based upon assumptions about future demand, market~~ conditions, product lifecycles and product pricing. If the Company’s assumptions were to be substantially different than estimated, further adjustments could be required. While these estimates require management to make assumptions and judgments, management believes its understanding of the markets and customers the Company serves, as well as the mature nature of many of the products the Company manufactures, provides it with the ability to make reliable estimates. Management also evaluates the carrying value of inventory for lower of cost or market on an individual product or contract basis. Analyses are performed based on the estimated costs at completion and if necessary, a provision is recorded to properly reflect the inventory value of the products or contracts at the lower of cost or net realizable value (selling price less estimated cost of disposal). If actual contract costs were to be substantially higher than estimated, further provisions could be required.

Impairment of Long-Lived Assets

The Company reviews long-lived assets, excluding intangible assets which are covered by SFAS 142, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of long-lived assets is measured by comparison of its carrying

-15-

COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

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

~~amount~~Inventories toare ~~future~~stated at the lower of average cost or market (net ~~cash~~realizable value). ~~flows~~The ~~expected~~carrying value of inventory is reduced for estimated obsolescence or unmarketability based upon assumptions about future demand, market conditions, product lifecycles and product pricing. If the Company’s assumptions were to be ~~generated~~substantially ~~from~~different ~~the~~than ~~operation~~estimated, ~~and~~further ~~sale~~adjustments ofcould ~~long-lived~~be ~~assets~~required. IfWhile ~~such~~these ~~assets~~estimates ~~are~~require ~~considered~~management to bemake assumptions ~~impaired~~and judgments, management believes its understanding of the markets and customers the Company’s ~~carrying~~serves, ~~value~~as iswell ~~reduced~~as the mature nature of many of the products the Company manufactures, provides it with the ability to ~~its~~make ~~estimated~~reliable ~~fair~~estimates. Management also evaluates the carrying value of inventory for lower of cost or market on an individual product or contract basis. Analyses ~~Adverse~~are ~~changes~~performed inbased on the ~~customers~~estimated costs at completion and ~~markets~~if necessary, ~~served~~a byprovision is recorded to properly reflect the inventory value of the ~~Company~~products ~~could~~or ~~result~~contracts inat ~~future~~the ~~impairments~~lower of ~~long-lived~~cost ~~assets~~or net realizable value (selling price less estimated cost of disposal). If actual contract costs were to be substantially higher than estimated, further provisions could be required.

Impairment of Long-Lived Assets

The Company reviews long-lived assets, excluding intangible assets which are covered by SFAS No. 142, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of long-lived assets is measured by comparison of its carrying amount to future net cash flows expected to be generated from the operation and sale of long-lived assets. If such assets are considered to be impaired, the Company’s carrying value is reduced to its estimated fair value. Adverse changes in the customers and markets served by the Company could result in future impairments of long-lived assets.

Goodwill Impairment

Goodwill represents the excess of the purchase price over the fair value of the net assets acquired. The Company performed a goodwill impairment test in the first quarter of fiscal year 2003, upon adoption of SFAS No. 142. The Company plans to perform another goodwill impairment test during the fourth quarter of the 2003 fiscal year~~, or earlier if an event or circumstance indicates that an impairment loss has occurred~~. Goodwill and certain other corporate assets and liabilities are assigned to the reporting units which are consistent with the Company’s operating divisions. The fair value of the reporting units are then compared to the carrying value to determine if there is any potential impairment. The process of evaluating potential impairment is subjective and requires ~~judgements~~judgments regarding revenue forecasts, discount rates, and weighted average cost of capital among other things. Adverse changes in the industries served by the Company, customer demand or other market conditions could result in future impairments of goodwill.

Results of Operations

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

~~Gross Margin~~Sales. ~~Gross~~Sales ~~margins~~ for the ~~first~~third quarter of fiscal year 2003 were 27 $70.1%7 million, an increase of $5.79 million, or 9.1%, from the ~~first~~same ~~quarter~~period ofin fiscal year 2002. ~~The~~ The third quarter sales increase is ~~attributable~~primarily due to aincreased ~~more~~spending ~~favorable~~in ~~product~~the communications ~~mix,~~market ~~negotiated~~by ~~reductions~~direct-to-home service providers and increased demand infor ~~component~~power ~~costs~~grid tube and ~~gains~~X-Ray ingenerator ~~production~~products ~~efficiencies~~for the medical market.

~~Operating~~- ~~Costs~~22 and Expenses. Operating costs and expenses were $9.2 million, or 15.0 % of sales, for the first quarter of fiscal year 2003 as compared to $9.8 million, or 14.8 % of sales, for the first quarter of fiscal year 2002. In absolute dollars, the decrease of $0.6 million can be attributed to decreased general and administrative costs resulting from the absence of goodwill amortization upon adoption of SFAS 142 and cost-~~cutting measures,~~ ~~offset in part by increased research and development expenses.~~

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

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

-16-

COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

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

~~Other~~Gross ~~Income~~Margin. ~~Other~~Gross ~~income~~profit ofwas $023.34 million in the ~~first~~third quarter of fiscal year 2003, an increase of $6.8 million, or 40.7%, from $16.7 million in the third quarter of fiscal year 2002. As a percentage of sales, gross profit was ~~2003~~33.2% ~~represents~~in the ~~Company’s~~third ~~portion~~quarter of fiscal year 2003, compared to 25.7% in the ~~fair~~third quarter ~~value~~of fiscal year 2002. The increase in gross profit as a percentage of sales ~~stock~~resulted ~~received~~primarily from gains in production efficiencies from the ~~its~~increase ~~life~~in sales volume, resolution of technical problems, favorable product mix, improved pricing for certain products and ~~disability~~completion ~~insurance~~of ~~provider~~contracts with ~~resulting~~lower pricing in prior periods. In addition, gross profit for fiscal year 2003 does not include lower margin products from the ~~insurance~~Solid ~~company’s~~State ~~2001~~Products ~~demutualization~~Division (SSPD) that was sold in September of 2002.

~~Net~~Operating ~~Income~~Costs ~~(Loss)~~and Expenses. ~~Net~~Operating ~~income~~costs ~~was~~and expenses were $210.51 million, or 14.3% of sales, for the ~~first~~third quarter of fiscal year 2003, compared to a$10.5 million ~~net~~or ~~loss~~16.2% of ~~$1.0 million~~sales for the ~~corresponding~~third ~~period~~ quarter of fiscal year 2002. The ~~increase in the Company’s net income from the first~~$0.4 ~~quarter~~million ofdecrease ~~fiscal~~in ~~year~~operating ~~2002~~expenses ~~can~~is beprimarily ~~attributed~~due to ~~improved~~the ~~operating~~elimination ~~income as~~of ~~discussed~~goodwill ~~above~~amortization ~~and reduced interest~~ expense ~~resulting~~in ~~from~~fiscal ~~lower~~year ~~outstanding debt~~2003, ~~offset~~upon inadoption ~~part~~of bySFAS anNo. 142, ~~increase~~and inelimination ~~tax~~of ~~expense~~operating ~~resulting~~expenses from the ~~Company’s return~~SSPD toDivision ~~profitability~~that was sold in ~~fiscal~~September ~~year 2003~~2002.

~~Differences~~Income ~~between~~Tax ~~Holding and CPI~~Expense. ~~CPI’s~~Income ~~operating~~tax ~~results~~expense ~~differ~~for ~~from those of Holding due to a sale-leaseback transaction between CPI and Holding which took place in December 2000. In~~ the ~~first~~third quarter of fiscal year 2003, ~~CPI’s income before taxes~~ was $41.24 million, ~~which~~compared ~~was~~to ~~approximately~~ $03.20 million ~~higher~~ ~~than~~for ~~Holdings’~~the ~~income~~third ~~before~~quarter ~~taxes~~ of $4fiscal year 2002.~~0 million.~~ AsThe aeffective ~~result~~income oftax ~~the sale-leaseback~~rates ~~transaction,~~were ~~operating~~14% ~~costs~~and 153% for ~~CPI~~the ~~were approximately $0.3~~third ~~million~~quarter ~~higher~~of ~~than~~fiscal ~~those~~year of2003 ~~Holding~~and ~~due~~2002, torespectively. ~~rental~~The ~~payments~~change ~~paid~~in byincome ~~CPI to~~tax ~~Holding~~expense ~~for~~is ~~use~~primarily ofdue ~~the~~to ~~San~~utilization ~~Carlos~~of ~~facility~~net ~~offset~~operating byloss ~~amortization of the~~carryforwards, ~~deferred~~which ~~gain~~had ona ~~the~~valuation ~~sale-leaseback~~allowance, and ~~additional~~the ~~depreciation~~sale onof the ~~San~~Satcom manufacturing ~~Carlos~~division ~~facility.~~to ~~Interest~~Communications ~~expense,~~& ~~net,~~Power ~~for~~Industries ~~CPI~~Canada ~~was approximately $0~~Inc.~~5 million lower~~ ~~than~~in ~~that~~fiscal ofyear ~~Holding~~2002. For ~~The~~fiscal ~~decrease~~years ~~primarily~~2003 ~~relates~~and to2002, ~~the~~income ~~fact~~tax ~~that Holding’s interest~~ expense ~~includes~~included ~~interest~~a ~~paid~~full ~~on the mortgage financing of~~valuation ~~the~~allowance ~~San Carlos facility combined with CPI’s interest income~~ on adeferred ~~note receivable~~tax ~~from~~assets ~~Holding.~~because ~~All~~of ~~other operations data for CPI is consistent with Holding’s operations data for~~ the ~~first~~uncertainty ~~quarter~~ of ~~fiscal~~realizing deferred ~~year~~tax ~~2003~~assets.

EBITDA. Earnings before interest, income taxes, depreciation and amortization (“EBITDA”) for the third quarter of fiscal year 2003 was $14.9 million or 21.1% of sales, compared to $8.9 million, or 13.8% of sales, for the third quarter of fiscal year 2002. This increase in EBITDA can be attributed primarily to the improvement in gross margins as discussed above. While management considers EBITDA to be an important measure of comparative operating performance, it should be considered in addition to, but not as a substitute for or superior to, operating income, net earnings (loss), cash flow and other measures of financial performance prepared in accordance with accounting principles generally accepted in the United States. EBITDA does not reflect cash available to fund cash requirements, and the items excluded from EBITDA, such as depreciation and amortization, are significant components in assessing the Company’s financial performance. Other significant uses of cash flows are required before cash will be available to the Company, including debt service, taxes and cash expenditures for various long-term assets. The Company believes that EBITDA is also used by some investors as a measure of its ability to service indebtedness. The Company’s calculation of EBITDA may be different from the calculation used by other companies and, therefore, comparability may be limited. For reconciliation of EBITDA to income before taxes, see Note 5 of the Notes to Consolidated Condensed Financial Statements.

Net Income (Loss). Net income was $8.4 million for the third quarter of fiscal year 2003, compared to a net loss of $1.0 million for the third quarter of fiscal year 2002. The increase in the Company’s net income from the third quarter of fiscal year 2002 can be attributed to improved operating income, as discussed above, reduced interest expense resulting from less outstanding debt and the realization of tax benefits from net operating losses and credit carryforwards that were reserved in prior years.

- 23 -

COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

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

Differences between Holding and CPI. CPI’s operating results differ from those of Holding due to a sale-leaseback transaction between CPI and Holding which took place in December 2000. In the third quarter of fiscal year 2003, CPI’s income before taxes was $9.9 million, which was approximately $0.2 million higher than Holding’s income before taxes of $9.7 million. As a result of the sale-leaseback transaction, operating costs for CPI were approximately $0.4 million higher than those of Holding primarily because of rental payments paid by CPI to Holding for use of the San Carlos facility. Interest expense, net, for CPI was approximately $0.5 million lower than that of Holding. The difference in interest expense related to Holding’s interest expense on the San Carlos facility mortgage and on the note payable to CPI from the sale-leaseback transaction. All other operations data for CPI is consistent with Holding’s operations data for the third quarter of fiscal year 2003.

First Nine Months of Fiscal Year 2003 Compared to the First Nine Months of Fiscal Year 2002

Sales. Sales for the first nine months of fiscal year 2003 were $200.2 million, an increase of $8.6 million, or 4.5%, from the same period in fiscal year 2002. The sales increase is primarily due to increased spending by the United States Department of Defense for VED’s that are sold in the radar and electronic countermeasure markets and increases in shipments of power grid tubes, X-ray generators and VED products for the medical market. The increased sales in these markets was somewhat offset by decreases in sales to the communications and industrial market segments.

Gross Margin. Gross profit was $60.8 million in the first nine months of fiscal year 2003, compared to $43.8 million in the first nine months of fiscal year 2002, an increase of 39.0%. As a percentage of sales, gross profit was 30.4% in the first nine months of fiscal year 2003, compared to 22.8% from the first nine months of fiscal year 2002. The increase in gross profit as a percentage of sales resulted primarily from gains in production efficiencies from the increase in sales volume and cost reduction programs, a favorable product mix, improved pricing for certain products and completion of contracts with lower pricing in prior periods, and production efficiencies in CPI’s Satcom operation resulting from its relocation in 2001 and 2002 to Ontario, Canada. In addition, gross profit for fiscal year 2003 does not include lower margin products from the Solid State Products Division (SSPD) that was sold in September of 2002.

Operating Costs and Expenses. Operating costs and expenses were $29.0 million, or 14.5% of sales, for the first nine months of fiscal year 2003, compared to $30.0 million, or 15.6% of sales, for the first nine months of fiscal year 2002. The $1.0 million decrease in operating expenses is primarily due to the elimination of goodwill amortization expense in fiscal year 2003, upon adoption of SFAS No. 142, and the elimination of operating expenses from the SSPD Division that was sold in September 2002.

Other Income. Other income of $0.3 million in the first nine months of fiscal year 2003 represents the Company’s portion of the fair value of stock received from its life and disability insurance provider resulting from the insurance company’s 2001 demutualization.

Income Tax Expense. Income tax expense for the nine months ended July 4, 2003 was $6.3 million, compared to $4.8 million for the corresponding period of fiscal year 2002. The effective income tax rates were 30% and 475% for the nine months ended July 4, 2003 and June 28, 2002, respectively. The change in income tax expense is primarily due to utilization of net operating loss carryforwards, which

- 24 -

COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

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

had a valuation allowance, and the sale of the Satcom manufacturing division to Communications & Power Industries Canada Inc. in fiscal year 2002. For fiscal years 2003 and 2002, income tax expense included a full valuation allowance on deferred tax assets because of the uncertainty of realizing the deferred tax assets.

EBITDA. Earnings before interest, income taxes, depreciation and amortization (“EBITDA”) for the first nine months of fiscal year 2003 was $36.9 million or 18.4% of sales, compared to $22.6 million, or 11.8% of sales, for the first nine months of fiscal year 2002. This increase in EBITDA can be attributed primarily to the improvement in gross margins as discussed above. While management considers EBITDA to be an important measure of comparative operating performance, it should be considered in addition to, but not as a substitute for or superior to, operating income, net earnings (loss), cash flow and other measures of financial performance prepared in accordance with accounting principles generally accepted in the United States. EBITDA does not reflect cash available to fund cash requirements, and the items excluded from EBITDA, such as depreciation and amortization, are significant components in assessing the Company’s financial performance. Other significant uses of cash flows are required before cash will be available to the Company, including debt service, taxes and cash expenditures for various long-term assets. The Company believes that EBITDA is also used by some investors as a measure of its ability to service indebtedness. The Company’s calculation of EBITDA may be different from the calculation used by other companies and, therefore, comparability may be limited. For a reconciliation of EBITDA to income before taxes, see Note 5 of the Notes to Consolidated Condensed Financial Statements.

Net Income (Loss). Net income was $14.9 million for the first nine months of fiscal year 2003, compared to a net loss of $3.8 million for the first nine months of fiscal year 2002. The increase in the Company’s net income from the first nine months of fiscal year 2002 can be attributed to improved operating income as discussed above and reduced interest expense resulting from lower outstanding debt and the realization of tax benefits from net operating losses and credit carryforwards that were reserved in prior years.

Differences between Holding and CPI. CPI’s operating results differ from those of Holding due to a sale-leaseback transaction between CPI and Holding which took place in December 2000. In the first nine months of fiscal year 2003, CPI’s income before taxes was $21.7 million, which was approximately $0.5 million higher than Holding’s income before taxes of $21.2 million. As a result of the sale-leaseback transaction, operating costs for CPI were approximately $1.1 million higher than those of Holding primarily due to rental payments paid by CPI to Holding for use of the San Carlos facility. Interest expense, net, for CPI was approximately $1.5 million lower than that of Holding. The difference in interest expense related to Holding’s interest expense on the San Carlos facility mortgage and on the note payable to CPI from the sale-leaseback transaction. All other operations data for CPI is consistent with Holding’s operations data for the first nine months of fiscal year 2003.

Financial Condition

The Company ~~generated~~continues to generate positive cash ~~flows~~flow from operating activities ~~during the~~ ~~first~~with ~~quarter~~$27.6 million ofgenerated ~~fiscal~~during ~~year~~first ~~2003~~nine asmonths ~~well as each quarter~~ of fiscal year ~~2002. Cash flows provided by operating activities for the first quarter of fiscal year~~ 2003 ~~were $11.0 million~~, compared anto ~~increase of~~ $136.25 million ~~from~~in the ~~$9.8 million provided by operating activities during the~~ first ~~quarter~~nine months of fiscal year 2002. ~~The~~ ~~incremental~~In ~~positive cash flow was generated primarily from cash generated~~the ~~from~~first ~~operating~~nine ~~earnings,~~months ~~further~~of ~~reductions~~fiscal inyear ~~inventories and increased advance payments from customers~~2003, ~~offset~~the byCompany ~~decreases~~generated ~~in accounts payable~~$18.7 million

~~Investing~~- ~~activities~~25 ~~were comprised principally of purchases of property, plant~~- ~~and equipment totaling $0.3 million for the first quarter of fiscal year 2003.~~ ~~Purchases of property, plant and equipment were down $0.4 million from $0.7~~ million in the first quarter of fiscal year 2002. The Company currently anticipates that capital expenditure requirements for fiscal year 2003 will be approximately $3.5 million, similar to the amounts spent in fiscal years 2002 and 2001.

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

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

-17-

COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

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

~~same~~more ~~credit~~in ~~facility)~~operating ~~from $41.0 million~~cash toflow ~~$61.0 million~~from ~~and~~net toincome ~~extend~~(loss) than for the ~~expiration~~same ~~date~~period ~~from December~~in ~~22,~~fiscal ~~2004~~year ~~to May 31, 2005~~2002. The ~~credit~~decrease ~~facility~~in ~~continues~~operating tocash beflow ~~secured~~in ~~by substantially~~the ~~all~~first ofnine ~~the~~months fiscal ~~assets~~year of2003 ~~CPI~~compared ~~and~~to ~~guaranteed~~the bysame ~~Holding~~period ~~and~~in ~~all~~2002 ~~of CPI’s~~is ~~subsidiaries.~~primarily ~~Availability~~due ~~under~~to the ~~revolving~~significant ~~credit~~reduction ~~facility~~in ~~continues~~accounts toreceivable ~~be based upon eligible receivables, machinery~~ and ~~equipment~~inventory ~~and~~in ~~certain~~fiscal ~~real~~year ~~estate~~2002.

AsInvesting activities were comprised of ~~January 3~~investment in property, plant and equipment totaling $1.3 million for the first nine months of fiscal year 2003. Purchases of property, plant and equipment decreased approximately $0.8 million from the comparable period of fiscal year 2002. The Company ~~had~~currently anticipates that capital expenditure requirements for fiscal year 2003 will be approximately $273.70 million, ~~available~~which ~~under~~is ~~its~~approximately $0.4 million less than the ~~revolving~~amount ~~line~~spent ofin ~~credit~~fiscal year 2002.

~~The~~Financing ~~following~~activities isduring the first nine months of fiscal year 2003 were primarily related to a ~~summary~~principal payment of ~~certain~~$0.3 million ~~obligations~~made on the mortgage financing held by Holding related to the San Carlos facility and ~~commitments~~$0.3 million for debt issuance costs related to an amendment of the Company’s credit facility, as noted in Note 9 of ~~January~~the Notes to Consolidated Condensed Financial Statements, and extension of the due date on the San Carlos facility mortgage, from June 31, 2003: to January 31, 2004, as noted in Note 10 of the Notes to the Consolidated Condensed Financial Statements.

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

Holding’s short-term debt includes mortgage financing of $17.5 million with respect to Holding’s San Carlos facility. Restrictions in the Company’s Senior Subordinated Notes Indenture and in the Company’s credit facility prohibit CPI from distributing cash to Holding to satisfy this obligation. The mortgage due date was extended from June 1, 2003 to January 31, 2004 as noted in Note 10 to the Consolidated Condensed Financial Statements. Management expects to either refinance this obligation or to consummate a sale or other transaction with respect to the San Carlos property. Holding has entered into an agreement for the sale of the property. In addition to customary closing and due diligence conditions, the sale of the property is contingent upon completion of environmental remediation and demolition of existing structures, to be agreed upon by the parties. The purchaser has not completed or approved its due diligence investigations of the property, and there is no assurance that it will do so or that the other conditions to closing will be satisfied.

~~Holding’s~~In ~~short-term~~connection ~~debt~~with ~~includes~~the ~~mortgage~~sale ~~financing~~ of ~~$17.5 million~~the ~~that expires~~Company’s onSolid ~~June 1,~~State ~~2003.~~Products ~~Restrictions~~Division (“SSPD”) in ~~the~~September ~~Senior~~2002 ~~Subordinated~~to ~~Notes Indenture~~KMIC ~~and~~Technology, inInc., ~~the~~a ~~Company’s~~company ~~credit~~owned ~~facility~~by ~~prohibit~~the former ~~CPI~~management ~~from~~of ~~distributing cash~~SSPD, tothe ~~Holding~~Company was required to ~~satisfy~~provide ~~this~~a ~~obligation.~~$100,000 letter ~~Management~~of ~~expects~~credit toas ~~either refinance~~a ~~this~~partial ~~obligation~~guarantee orfor tothe ~~enter~~new ~~into~~company’s aleased facilities. ~~sale~~The orletter ~~other~~of ~~transaction~~credit ~~with respect~~guarantee toexpires ~~this~~in ~~property~~November 2003.

InCPI’s ~~connection~~financial ~~with~~condition ~~the~~differs ~~sale~~from that of ~~the~~Holding ~~Company~~in that CPI’s ~~Solid~~debt obligations ~~State~~and ~~Products~~financing ~~Division (“SSPD”)~~activities indo ~~September~~not ~~2002~~include to$17.5 million ~~KMIC~~of ~~Technology,~~mortgage financing ~~Inc~~due in January 2004., aThis ~~company~~mortgage ~~owned~~financing byresulted ~~the~~from Holding’s ~~former~~purchase ~~management~~ of ~~SSPD,~~ the ~~Company~~San ~~was~~Carlos ~~required~~facility tofrom ~~provide~~CPI in a ~~$100,000~~sale-leaseback transaction ~~letter~~which oftook ~~credit~~place asin December 2000. In connection with the sale-leaseback transaction, CPI entered into a ~~partial~~non-cancelable ~~guarantee~~lease with Holding for the ~~new~~San Carlos ~~company’s~~real ~~leased facilities.~~property ~~The~~for ~~guarantee~~a ~~expires~~term inof ~~November~~twenty ~~2003~~years and a fixed annual rent of $2.45 million.

~~CPI’s~~As ~~financial condition differs from that~~ of ~~Holding~~July 4, ~~as discussed above~~2003, ~~in that~~the ~~CPI’s~~Company ~~debt~~had ~~obligations and financing activities do not include~~ $1728.5 4 million ofavailable ~~mortgage~~under ~~financing~~its ~~due~~revolving line inof ~~2003~~credit. ~~This~~However, ~~mortgage~~there ~~financing~~can ~~resulted from~~be ~~Holding’s~~no ~~purchase~~assurance ofthat the ~~San~~combination ~~Carlos~~of ~~facility from CPI in a sale-leaseback~~cash ~~transaction~~generated ~~which~~by ~~took~~operations, ~~place~~borrowing inavailability ~~December~~from ~~2000.~~the InCompany’s ~~connection with the~~credit ~~sale-leaseback~~facility ~~transaction,~~and ~~CPI~~additional ~~entered~~collateral-based ~~into~~financing awill ~~non-cancelable~~be ~~lease~~sufficient ~~with Holding~~to ~~for~~ meet the ~~San~~Company’s ~~Carlos~~cash ~~real~~requirements. ~~property~~If ~~for~~the aCompany ~~term~~is ofunable ~~twenty~~to ~~years~~satisfy ~~with~~such acash ~~fixed~~requirements ~~annual~~from ~~rent of $2.45 million.~~these

~~Generally, there can be no assurance that the combination of cash generated by operations, borrowing availability from the Company’s credit facility and additional collateral~~-~~based~~ ~~financing~~26 ~~will be sufficient to meet the Company’s~~- ~~cash requirements. If the Company is unable to satisfy such cash requirements~~ ~~from these sources, the Company will adopt one or more alternatives, such as~~ ~~reducing or delaying~~

-18-

COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

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

sources, the Company will adopt one or more alternatives, such as reducing or delaying capital expenditures, reducing discretionary costs, and ~~attempting~~ attempting to negotiate an increase to the Company’s borrowing capacity under its line of credit.

Recent Accounting Pronouncements

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

In December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation —– Transition and Disclosure —– an Amendment of ~~SFAS~~FASB Statement No. 123.” SFAS No. 148 provides additional transition guidance for those entities that elect to voluntarily adopt the accounting provisions of SFAS No. 123, “Accounting for Stock-Based Compensation.” Since the Company intends to continue to apply the intrinsic value method of accounting for stock-based compensation, the adoption of SFAS No. 148 will not have an effect on its financial condition or results of operations. However, the Company ~~will~~has ~~provide~~ provided the additional disclosures required by SFAS No. 148 beginning in the second quarter of fiscal year 2003.

In November 2002, the FASB issued FIN 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others.” FIN 45 requires a guarantor to include disclosure of certain obligations, and if applicable, at the inception of the guarantee, recognize a liability for the fair value of other certain obligations undertaken in issuing a guarantee. The recognition requirement is effective for guarantees issued or modified after December 31, 2002. The adoption of FIN 45 did not have a material impact on the Company’s consolidated results of operations or financial position.

In January 2003, the FASB issued FIN 46, “Consolidation of Variable Interest Entities.” FIN 46 provides guidance for determining when an entity that is the primary beneficiary of a variable interest entity or equivalent structure should consolidate the variable interest entity into the entity’s financial statements. The consolidation provisions of FIN 46 apply immediately to variable interest entities created after January 31, 2003 and to existing entities in the first interim or annual reporting period beginning after June 15, 2003. The Company does not believe that it has any variable interests that would qualify as a variable interest entity and therefore does not expect adoption of FIN 46 to have an effect on its consolidated results of operations or financial position.

- 27 -

COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

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

Company does not expect adoption of SFAS No. 149 to have a material impact on the Company’s consolidated results of operations or financial position.

In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.” SFAS No. 150 requires that certain financial instruments, with characteristics of both liabilities and equity, be classified as liabilities in statements of financial position. The financial instruments affected include mandatorily redeemable stock, certain financial instruments that require or may require the issuer to buy back some of its shares in exchange for cash or other assets and certain obligations that can be settled with shares of stock. SFAS No. 150 is effective for all financial instruments entered into or modified after May 31, 2003 and must be applied to existing financial instruments at the beginning of the first fiscal period beginning after June 15, 2003. The Company will adopt SFAS No. 150 in its fourth quarter beginning July 5, 2003. The Company is currently analyzing this Statement and has not yet determined its impact on the Company’s consolidated results of operations or financial position.

Risk Factors

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

~~ITEM~~- 3:28 ~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~-

The Company’s market risk disclosures set forth in its Annual Report on Form 10-K for the fiscal year ended September 27, 2002, have not changed materially.

-19-

COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

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

ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company’s market risk disclosures set forth in its Annual Report on Form 10-K for the fiscal year ended September 27, 2002, have not changed materially.

ITEM 4: CONTROLS AND PROCEDURES

~~Evaluation~~Management, ofincluding ~~disclosure~~the ~~controls~~Company’s ~~and~~principal ~~procedures.~~executive ~~Based~~officer onand ~~their~~principal financial ~~evaluation~~officer, ~~as of~~has aevaluated, ~~date~~as ~~within~~of ~~90 days~~the end of the ~~filing~~period ~~date~~covered ofby this ~~Report~~ report, the ~~Company’s principal~~effectiveness ~~executive~~of ~~officer~~the design and ~~principal~~operation ~~financial~~of ~~officer have concluded that~~ the Company’s disclosure controls and procedures ~~(as~~with ~~defined~~respect into ~~Rules 13a-14~~the information generated ~~(c) and~~for ~~15d-14~~use ~~(c) under~~in ~~the~~this ~~Securities~~report. ~~Exchange~~Based ~~Act~~upon, and as of ~~1934~~the date of that evaluation, asthe principal ~~amended~~executive (officer and principal financial officer concluded that the ~~“Exchange~~disclosure ~~Act”))~~controls ~~are~~and procedures were effective to ~~ensure~~provide reasonable assurances that information required to be disclosed byin the ~~Company in~~ reports ~~that~~filed ~~it files~~ or submitted ~~submits~~ under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in ~~Securities~~the SEC’s ~~and Exchange Commission~~ rules and forms.

~~Changes~~In indesigning ~~internal~~and evaluating the disclosure controls. ~~There~~and ~~were~~procedures, management recognized that any controls and procedures, no ~~significant~~matter ~~changes~~how inwell ~~the~~designed and ~~Company’s~~operated, ~~internal~~can ~~controls~~provide oronly inreasonable, ~~other~~not ~~factors~~absolute, ~~that~~assurance ~~could~~of ~~significantly~~achieving ~~affect~~the ~~these~~desired ~~controls~~control ~~subsequent~~objectives and management necessarily was required to apply its judgment in evaluating the ~~date~~cost-benefit relationship of ~~their~~possible ~~evaluation~~controls and procedures. ~~There~~Based ~~were~~upon ~~no significant~~the ~~deficiencies~~above orevaluation, ~~material~~management ~~weaknesses,~~believes ~~and~~that ~~therefore~~its controls ~~there~~do ~~were~~provide ~~no corrective~~such ~~actions~~reasonable ~~taken~~assurances.

~~-20-~~There have been no changes in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

- 29 -

COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

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

PART II: OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

None.

ITEM 2: CHANGES IN SECURITIES

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

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

None.

ITEM 5. OTHER INFORMATION.

None.

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

(a)

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

Exhibit No.		Description
10.1		Amendment Number One to Loan and Security Agreement by and among CPI as borrower, the other obligors named as signatories therein, the lenders that are signatories as lenders, and Foothill Capital Corporation as the arranger and administrative agent, dated as of December 16, 2002.
10.13		Second Modification Agreement, dated May 30, 2003, by and between Holding and Wells Fargo Bank, National Association.
99.1		Certification of the Chief Executive Officer of Holding pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
31.1		Certification of the Chief Executive Officer of Holding pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
99.2		Certification of the Chief Financial Officer of Holding Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of the Chief Financial Officer of Holding pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
99.3		Certification of the Chief Executive Officer of CPI pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
31.3		Certification of the Chief Executive Officer of CPI pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
99.4		Certification of the Chief Financial Officer of CPI pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
31.4		Certification of the Chief Financial Officer of CPI pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification of the Chief Executive Officer of Holding pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2		Certification of the Chief Financial Officer of Holding Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.3		Certification of the Chief Executive Officer of CPI pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.4		Certification of the Chief Financial Officer of CPI pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

~~(b) Reports~~- on30 ~~Form 8~~-K:

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

-21-

COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
and subsidiaries

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

(b)		Reports on Form 8-K:

		No reports were filed on Form 8-K during the quarter ended July 4, 2003.

- 31 -

SIGNATURES

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

		COMMUNICATIONS & POWER INDUSTRIES HOLDING CORPORATION
		By:		/s/ O. Joe Caldarelli
				O. Joe Caldarelli Chief Executive Officer Date: February 12, 2003
				O. Joe Caldarelli Chief Executive Officer Date: August 8, 2003
		By:		/s/ Joel Littman
				Joel Littman Chief Financial Officer, Treasurer and Secretary (Principal Financial and Accounting Officer) Date: February 12, 2003
				Joel Littman Chief Financial Officer, Treasurer and Secretary (Principal Financial and Accounting Officer) Date: August 8, 2003

-22 32 -

CERTIFICATION

I, O. Joe Caldarelli, certify that:

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

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

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

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

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

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

-23-

CERTIFICATION

I, Joel A. Littman, certify that:

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

-24-

SIGNATURES

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

		COMMUNICATIONS & POWER INDUSTRIES, INC.
		By:		/s/ O. Joe Caldarelli
				O. Joe Caldarelli Chief Executive Officer Date: February 12, 2003
				O. Joe Caldarelli Chief Executive Officer Date: August 8, 2003
		By:		/s/ Joel Littman
				Joel Littman Chief Financial Officer, Treasurer and Secretary (Principal Financial and Accounting Officer) Date: February 12, 2003
				Joel Littman Chief Financial Officer, Treasurer and Secretary (Principal Financial and Accounting Officer) Date: August 8, 2003

-25 33 -

CERTIFICATION

I, O. Joe Caldarelli, certify that:

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

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

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

-26-

CERTIFICATION

I, Joel A. Littman, certify that:

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

-27-

EXHIBIT INDEX

Exhibit No.		Description
10.1		Amendment Number One to Loan and Security Agreement by and among CPI as borrower, the other obligors named as signatories therein, the lenders that are signatories as lenders, and Foothill Capital Corporation as the arranger and administrative agent, dated as of December 16, 2002.
10.13		Second Modification Agreement, dated May 30, 2003, by and between Holding and Wells Fargo Bank, National Association.
99.1		Certification of the Chief Executive Officer of Holding pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
31.1		Certification of the Chief Executive Officer of Holding pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
99.2		Certification of the Chief Financial Officer of Holding Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of the Chief Financial Officer of Holding pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
99.3		Certification of the Chief Executive Officer of CPI pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
31.3		Certification of the Chief Executive Officer of CPI pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
99.4		Certification of the Chief Financial Officer of CPI pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
31.4		Certification of the Chief Financial Officer of CPI pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification of the Chief Executive Officer of Holding pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2		Certification of the Chief Financial Officer of Holding Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.3		Certification of the Chief Executive Officer of CPI pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.4		Certification of the Chief Financial Officer of CPI pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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