UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark one)

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

For the Quarterly Period ended ~~January~~July 31, 2009

o¨

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

For the transition period from __________ to __________

Commission File No. 1-8061

FREQUENCY ELECTRONICS, INC.

(Exact name of Registrant as specified in its charter)

Delaware	11-1986657
(State or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)

55 CHARLES LINDBERGH BLVD., MITCHEL FIELD, N.Y.	11553
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code: 516-794-4500

Indicate by check mark whether the ~~Registrant~~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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No x (the registrant is not yet required to submit Interactive Data)

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a ~~non-accelerated filer.~~smaller reporting company. See ~~definition~~the definitions of “large accelerated filer,” “accelerated ~~filer~~filer” and ~~large accelerated filer”~~smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):

~~Large accelerated filer~~ oLarge accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer ¨ Smaller Reporting Company x

(do not check if a smaller reporting company)

~~Accelerated filer~~ o

~~Non-accelerated filer~~ o

~~Smaller Reporting Company~~ x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o¨ No x

APPLICABLE ONLY TO CORPORATE ISSUERS:

The number of shares outstanding of Registrant's Common Stock, par value $1.00 as of ~~March 10,~~September 11, 2009 – ~~8,105,628~~8,175,550

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FREQUENCY ELECTRONICS, INC. and SUBSIDIARIES

INDEX

		Page No.
Part I. Financial Information:		~~Page No.~~

	Item 1 - Financial Statements:

	Condensed Consolidated Balance Sheets -
~~January~~	July 31, 2009 and April 30, ~~2008~~2009	3

	Condensed Consolidated Statements of Operations
~~Nine months~~	Three Months Ended ~~January~~July 31, 2009 and 2008	4

	Condensed Consolidated Statements of ~~Operations~~Cash Flows
	Three Months Ended ~~January~~July 31, 2009 and 2008	5

~~Condensed Consolidated Statements of Cash Flows~~
~~Nine months Ended January 31, 2009 and 2008~~	6

Notes to Condensed Consolidated Financial Statements	~~7-11~~6-11

	Item 2 - Management's Discussion and Analysis of
	Financial Condition and Results of Operations	~~11-16~~12-17

	Item 4T- Controls and Procedures	17-18

Part II. Other Information:

	Items 1, 1A, 2, 3, 4 and 5 are omitted because they are not applicable

	Item 6 - Exhibits	18

	Signatures	19

	Exhibits	~~20-23~~

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FREQUENCY ELECTRONICS, INC. and SUBSIDIARIES

Condensed Consolidated Balance Sheets

__________________________

January 31, April 30,
2009 2008
(UNAUDITED) (AUDITED)
(NOTE A)
(In thousands except share data)
ASSETS:
Current assets:
Cash and cash equivalents $ 3,274 $ 11,029
Marketable securities 9,830 4,414
Accounts receivable, net of allowance for doubtful accounts
of $178 at January 31, 2009 and $185 at April 30, 2008 13,913 10,271
Costs and estimated earnings in excess of billings 1,997 9,556
Inventories 30,219 30,218
Deferred income taxes 4,079 3,974
Income taxes receivable 800 151
Prepaid expenses and other 976 1,371
Total current assets 65,088 70,984
Property, plant and equipment, at cost,
less accumulated depreciation and amortization 8,244 9,531
Deferred income taxes 3,032 2,990
Goodwill and other intangible assets, net 264 405
Cash surrender value of life insurance and cash held in trust 8,047 7,671
Investments in and loans receivable from affiliates 4,397 4,522
Other assets 817 817
Total assets $ 89,889 $ 96,920

LIABILITIES AND STOCKHOLDERS’ EQUITY:
Current liabilities:
Short-term credit obligations $ 1,326 $ 5,168
Accounts payable - trade 3,508 2,215
Accrued liabilities and other 5,075 4,694
Total current liabilities 9,909 12,077
Lease obligation – noncurrent 741 911
Deferred compensation 9,836 9,467
Deferred gain and other liabilities 580 855
Total liabilities 21,066 23,310
Stockholders’ equity:
Preferred stock - $1.00 par value - -
Common stock - $1.00 par value 9,164 9,164
Additional paid-in capital 48,830 48,213
Retained earnings 11,991 13,558
69,985 70,935
Common stock reacquired and held in treasury
-at cost, 1,058,311 shares at January 31, 2009
and 427,366 shares at April 30, 2008 (5,060 ) (2,175 )
Accumulated other comprehensive income 3,898 4,850
Total stockholders' equity 68,823 73,610
Total liabilities and stockholders' equity $ 89,889 $ 96,920

	July 31,			April 30,
	2009			2009
	(UNAUDITED)			(AUDITED)
				(NOTE A)
	(In thousands except share data)
ASSETS:
Current assets:
Cash and cash equivalents	$	5,662		$	4,911
Marketable securities		10,321			9,998
Accounts receivable, net of allowance for doubtful accounts of $285 at July 31 and April 30, 2009		10,778			10,775
Costs and estimated earnings in excess of billings		3,083			2,193
Inventories		26,589			26,051
Income taxes refundable		788			886
Prepaid expenses and other		992			1,257
Total current assets		58,213			56,071
Property, plant and equipment, at cost, less accumulated depreciation and amortization		7,693			7,961
Goodwill and other intangible assets, net		218			218
Cash surrender value of life insurance and cash held in trust		8,543			8,423
Investments in and loans receivable from affiliates		4,386			4,430
Other assets		817			817
Total assets	$	79,870		$	77,920

LIABILITIES AND STOCKHOLDERS’ EQUITY:
Current liabilities:
Short-term credit obligations	$	1,336		$	1,327
Accounts payable - trade		3,167			2,305
Accrued liabilities and other		3,868			4,408
Total current liabilities		8,371			8,040

Lease obligation – noncurrent		626			684
Deferred compensation		9,561			9,546
Other liabilities		547			484
Total liabilities		19,105			18,754
Stockholders’ equity:
Preferred stock - $1.00 par value		-			-
Common stock - $1.00 par value		9,164			9,164
Additional paid-in capital		49,133			48,997
Retained earnings		3,176			2,522
		61,473			60,683
Common stock reacquired and held in treasury -at cost, 988,389 shares at July 31, 2009 and 1,021,159 shares at April 30, 2009		(4,858	)		(4,972	)
Accumulated other comprehensive income		4,150			3,455
Total stockholders' equity		60,765			59,166
Total liabilities and stockholders' equity	$	79,870		$	77,920

See accompanying notes to condensed consolidated financial statements.

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~~FREQUENCY ELECTRONICS, INC. and SUBSIDIARIES~~

~~Condensed Consolidated Statements of Operations~~

~~Nine months Ended January 31,~~

~~(Unaudited)~~

2009 2008
(In thousands except per share data)
Revenues $ 40,297 $ 50,105
Cost of revenues 30,932 34,710
Gross margin 9,365 15,395
Selling and administrative expenses 8,797 9,480
Research and development expense 3,068 5,526
Operating (loss) income (2,500 ) 389

Other income (expense):
Investment income 526 3,965
Equity loss (100 ) (17 )
Interest expense (269 ) (402 )
Other income, net 80 449
(Loss) Income before (benefit) provision for income taxes (2,263 ) 4,384
(Benefit) Provision for income taxes (696 ) 1,837
Net (loss) income $ (1,567 ) $ 2,547

Net (loss) income per common share
Basic $ (0.19 ) $ 0.29
Diluted $ (0.19 ) $ 0.29

Weighted average shares outstanding
Basic 8,381,424 8,702,755
Diluted 8,381,424 8,782,763

~~See accompanying notes to consolidated condensed financial statements.~~

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FREQUENCY ELECTRONICS, INC. and SUBSIDIARIES

Condensed Consolidated Statements of Operations

Three Months Ended ~~January~~July 31,

(Unaudited)

	2009			2008			2009			2008
	(In thousands except per share data)						(In thousands except share data)
Revenues	$	13,208		$	17,055

Net revenues							$	12,442		$	13,063
Cost of revenues		9,749			11,600			8,141			9,872
Gross margin		3,459			5,455			4,301			3,191

Selling and administrative expenses		2,845			3,109			2,567			3,116
Research and development expense		829			1,541			1,075			1,365
Operating (loss) income		(215	)		805
Operating profit (loss)								659			(1,290	)

Other income (expense):
Investment income		159			202			128			158
Equity income		208			128
Equity (loss) income								(49	)		37
Interest expense		(76	)		(110	)		(44	)		(84	)
Other income, net		4			366
Income before (benefit) provision for income taxes		80			1,391
(Benefit) Provision for income taxes		(19	)		633
Net income	$	99		$	758
Other (expense) income, net								(40	)		81
Income (Loss) before benefit for income taxes								654			(1,098	)
Benefit for income taxes								-			(325	)
Net income (loss)							$	654		$	(773	)

Net income per common share
Net income (loss) per common share:
Basic	$	0.01		$	0.09		$	0.08		$	(0.09	)
Diluted	$	0.01		$	0.09		$	0.08		$	(0.09	)

Weighted average shares outstanding
Average shares outstanding:
Basic		8,097,899			8,714,104			8,164,627			8,742,086
Diluted		8,097,899			8,780,308			8,172,080			8,742,086

See accompanying notes to condensed consolidated financial statements.

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FREQUENCY ELECTRONICS, INC. and SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

~~Nine months~~Three Months Ended ~~January~~July 31,

(Unaudited)

2009 2008
(In thousands)
Cash flows from operating activities:
Net (loss) income $ (1,567 ) $ 2,547
Non-cash (income) charges to earnings, net 3,717 (473 )
Net changes in operating assets and liabilities 3,184 (6,028 )
Net cash provided by (used in) operating activities 5,334 (3,954 )

Cash flows from investing activities:
Proceeds from sale of marketable securities
and investments 1,036 13,241
Purchase of marketable securities (6,599 ) (2,099 )
Purchase of fixed assets (423 ) (1,482 )
Net cash (used in) provided by investing activities (5,986 ) 9,660

Cash flows from financing activities:
Proceeds from short-term credit obligations 2,500 500
Debt payments (6,663 ) (18 )
Payment of cash dividend - (1,748 )
Proceeds from stock option exercises - 157
Purchase of stock for treasury (3,106 ) (233 )
Net cash used in financing activities (7,269 ) (1,342 )

Net (decrease) increase in cash and cash equivalents
before effect of exchange rate changes (7,921 ) 4,364

Effect of exchange rate changes
on cash and cash equivalents 166 973

Net (decrease) increase in cash and cash equivalents (7,755 ) 5,337

Cash and cash equivalents at beginning of period 11,029 1,336

Cash and cash equivalents at end of period $ 3,274 $ 6,673

Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 201 $ 386
Income Taxes - $ 940

	2009			2008
	(In thousands)

Cash flows from operating activities:
Net income (loss)	$	654		$	(773	)
Non-cash charges to earnings		1,024			811
Net changes in other assets and liabilities		(495	)		(2,108	)
Net cash provided by (used in) operating activities		1,183			(2,070	)

Cash flows from investing activities:
Purchase of marketable securities		-			(6,586	)
Capital expenditures		(175	)		(111	)
Net cash used in investing activities		(175	)		(6,697	)

Cash flows from financing activities:
Proceeds from short-term credit obligations		-			1,500
Payment of short-term credit and lease obligations		(70	)		(52	)
Stock transactions, net		-			(100	)
Net cash (used in) provided by financing activities		(70	)		1,348

Net increase (decrease) in cash and cash equivalents before effect of exchange rate changes		938			(7,419	)

Effect of exchange rate changes on cash and cash equivalents		(187	)		135

Net increase (decrease) in cash and cash equivalents		751			(7,284	)

Cash and cash equivalents at beginning of period		4,911			11,029

Cash and cash equivalents at end of period	$	5,662		$	3,745

Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	55		$	32
Income Taxes		-			-

See accompanying notes to condensed consolidated financial statements.

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FREQUENCY ELECTRONICS, INC. and SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(Unaudited)

NOTE A - CONSOLIDATED FINANCIAL STATEMENTS

In the opinion of management of Frequency Electronics, Inc. (“the Company”), the accompanying unaudited condensed consolidated interim financial statements reflect all adjustments (which include only normal recurring adjustments) necessary to present fairly, in all material respects, the consolidated financial position of the Company as of ~~January~~July 31, 2009 and the results of its operations and cash flows for the ~~nine and~~ three months ended ~~January~~July 31, 2009 and 2008. The April 30, ~~2008~~2009 condensed consolidated balance sheet was derived from audited financial statements. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested that these condensed consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Company's April 30, ~~2008~~2009 Annual Report to ~~Stockholders on Form 10-K.~~Stockholders. The results of operations for such interim periods are not necessarily indicative of the operating results for the full ~~fiscal~~ year.

NOTE B - EARNINGS PER SHARE

Reconciliation of the weighted average shares outstanding for basic and diluted Earnings Per Share are as follows:

	Nine months				Three months				Three months ended July 31,
			Periods ended January 31,						2009		2008
	2009		2008		2009		2008
Basic EPS Shares outstanding
(weighted average)		8,381,424		8,702,755		8,097,899		8,714,104
Basic EPS Shares outstanding (weighted average)										8,164,627		8,742,086
Effect of Dilutive Securities		***		80,008		***		66,204		7,453		***
Diluted EPS Shares outstanding		8,381,424		8,782,763		8,097,899		8,780,308		8,172,080		8,742,086

***

Dilutive securities are excluded for the ~~nine and three months~~three-month period ended ~~January~~July 31, ~~2009~~2008 since the inclusion of such shares would be ~~antidilutive.~~antidilutive due to the net loss for the period then ended.

The computation of diluted earnings per share excludes those options and stock appreciation rights with an exercise price in excess of the average market price of the Company’s common shares during the periods presented. The inclusion of such options in the computation of earnings per share would have been antidilutive. The number of excluded options ~~were:~~

Nine months Three months
Periods ended January 31,
2009 2008 2009 2008
Outstanding Options excluded 1,073,719 850,675 1,073,719 1,063,175

~~During~~for the ~~three-month period~~three months ended ~~January~~July 31, 2009 ~~the Company granted Stock Appreciation Rights (“SARS”) to officers, directors~~ and employees of the Company based on 88,000 shares of Company common stock. When the SARS become exercisable, the Company will settle the SARS by issuing to exercising recipients the number of shares of stock equal to the appreciated value of the Company’s stock between the grant date2008 were 1,325,525 and ~~exercise date.~~1,408,675, respectively.

NOTE C – COSTS AND ESTIMATED EARNINGS IN EXCESS OF BILLINGS

At ~~January~~July 31, 2009 and April 30, ~~2008~~2009 costs and estimated earnings in excess of billings on uncompleted contracts accounted for on the percentage of completion basis were approximately ~~$1,997,000~~$3,083,000 and ~~$9,556,000,~~$2,193,000, respectively. Such amounts represent revenue recognized on long-term contracts that had not been billed at the balance sheet dates. Such amounts are billed pursuant to contract terms. ~~During the nine~~

NOTE D - INVENTORIES

Inventories, which are reported net of reserves of $4,701,000 and ~~three months ended January~~$4,596,000 at July 31, 2009 and April 30, 2009, respectively, consist of the ~~revenue recognized under percentage~~following:

	July 31, 2009		April 30, 2009
	(In thousands)

Raw materials and Component parts	$	12,879	$	12,542
Work in progress		11,440		10,613
Finished Goods		2,270		2,896
	$	26,589	$	26,051

As of ~~completion contracts was $14.6~~July 31, 2009 and April 30, 2009, approximately $18.1 million and ~~$5.1~~$18.0 million, ~~respectively. For~~respectively, of total inventory is located in the ~~same periods of fiscal year 2008, the Company recognized percentage of completion revenue of $21.2~~United States, approximately $7.4 million and ~~$6.4~~$6.8 million, ~~respectively.~~respectively, is in Belgium and $1.1 million and $1.2 million, respectively, is in China.

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Notes to Condensed Consolidated Financial Statements

(Unaudited)

NOTE ~~D - INVENTORIES~~

~~Inventories, which are reported net of reserves of $7,036,000 and $6,206,000 at January 31, 2009 and April 30, 2008, respectively, consist of the following:~~

January 31, 2009 April 30, 2008
(In thousands)
Raw materials and Component parts $ 15,138 $ 12,523
Work in progress 11,986 13,938
Finished Goods 3,095 3,757
$ 30,219 $ 30,218

As of January 31, 2009 and April 30, 2008, approximately $20.9 million and $22.9 million, respectively, of total inventory is located in the United States, approximately $7.9 million and $5.8 million, respectively, is located in Belgium and approximately $1.4 million and $1.5 million, respectively, is located in China.

~~NOTE~~ E – COMPREHENSIVE ~~(LOSS)~~ INCOME

For the ~~nine~~three months ended ~~January~~July 31, 2009 and 2008, comprehensive income (loss) is composed of:

Nine months ended January 31,
(in thousands)
2009 2008
Net (loss) income $ (1,567 ) $ 2,547
Foreign currency translation adjustment (854 ) 1,695
Change in market value of marketable securities (163 ) (190 )
Deferred tax effect of change in market value of
marketable securities
65 76
Comprehensive (loss) income $ (2,519 ) $ 4,128

	Three months ended July 31,
	(in thousands)
	2009		2008
Net income (loss)	$	654	$	( 773	)
Foreign currency translation adjustment		372		223
Change in market value of marketable securities		323		(384	)
Deferred tax effect of change in market value of marketable securities (net of valuation allowance on deferred tax assets)		-		154
Comprehensive income (loss)	$	1,349	$	( 780	)

NOTE F ~~– TREASURY STOCK TRANSACTIONS~~

On September 11, 2008, the Company announced that it had acquired 615,000 shares of its outstanding common stock in a block transaction with what had been its largest institutional shareholder. The Company paid approximately $2.6 million for these shares. Coupled with other purchases of common stock during the nine month period ended January 31, 2009, the Company acquired a total of 724,632 shares at an average price per share of $4.29. With these purchases, the Company has acquired approximately $4 million of its common stock out of the total authorization of $5 million. Offsetting the treasury stock transactions, the Company contributed 93,687 shares to the profit sharing plan and trust under section 401(k) of the Internal Revenue Code for the benefit of the Company’s employees.

~~NOTE G~~ – SEGMENT INFORMATION

The Company operates under three reportable segments:

(1)

FEI-NY – consists principally of precision time and frequency control products used in three principal markets: communication satellites (both commercial and U.S. Government-funded); terrestrial cellular telephone or other ground-based telecommunication ~~stations;~~stations and other components and systems for the U.S. military.

(2)	Gillam-FEI - the Company’s Belgian subsidiary primarily sells wireline synchronization and network management systems.

(3)

FEI-Zyfer - the products of the Company’s subsidiary incorporate Global Positioning System (GPS) technologies into systems and subsystems for secure communications, both government and commercial, and other locator applications. Beginning in fiscal year 2009, this segment assumed responsibility for marketing, sales and support of the Company’s wireline synchronization products for the U.S. telecommunications market.

The FEI-NY segment also includes the operations of the Company’s wholly-owned subsidiary, FEI-Asia, which functions primarily as a manufacturing facility for the FEI-NY segment.

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~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

The Company’s Chief Executive Officer measures segment performance based on total revenues and profits generated by each geographic center rather than on the specific types of customers or end-users or types of markets served.

The table below presents information about reported segments with reconciliation of segment amounts to consolidated amounts as reported in the statement of operations or the balance sheet for each of the periods (in thousands):

	Nine months						Three months						Three months ended July 31,
				Periods ended January 31,									2009			2008
	2009			2008			2009			2008
Revenues:
Net revenues:
FEI-NY	$	28,104		$	37,175		$	9,471		$	11,803		$	7,065		$	8,844
Gillam-FEI		7,708			8,058			2,407			3,308			2,474			2,619
FEI-Zyfer		6,243			6,733			2,116			2,442			4,249			2,303
less intersegment revenues		(1,758	)		(1,861	)		(786	)		(498	)
Consolidated revenues	$	40,297		$	50,105		$	13,208		$	17,055

Operating (loss) income:
less intercompany revenues														(1,346	)		(703	)
Consolidated Revenues													$	12,442		$	13,063
Operating profit (loss):
FEI-NY	$	(1,748	)	$	471		$	33		$	517		$	87		$	(1,228	)
Gillam-FEI		(55	)		(109	)		(45	)		78			(20	)		(55	)
FEI-Zyfer		(419	)		410			(137	)		317			656			74
Corporate		(278	)		(383	)		(66	)		(107	)		(64	)		(81	)
Consolidated operating (loss) income	$	(2,500	)	$	389		$	(215	)	$	805
Consolidated Operating Profit (Loss)													$	659		$	(1,290	)

January 31, 2009 April 30, 2008
Identifiable assets:
FEI-NY $ 47,393 $ 54,522
Gillam-FEI 19,424 18,611
FEI-Zyfer 7,062 6,538
less intercompany balances (16,928 ) (17,786 )
Corporate 32,938 35,035
Consolidated Identifiable Assets $ 89,889 $ 96,920

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Notes to Condensed Consolidated Financial Statements

(Unaudited)

	July 31, 2009			April 30, 2009
Identifiable assets:
FEI-NY	$	40,469		$	39,658
Gillam-FEI		19,379			17,615
FEI-Zyfer		8,931			8,672
less intercompany balances		(18,955	)		(17,853	)
Corporate		30,046			29,828
Consolidated Identifiable Assets	$	79,870		$	77,920

NOTE HG – RELATED PARTY TRANSACTIONS

The Company has an equity interest in two strategically important companies: Elcom Technologies, Inc. (“Elcom”) and Morion Inc. (“Morion”). During the ~~nine and~~ three month periods ended ~~January~~July 31, 2009 and 2008, the Company acquired technical services from Elcom, purchased crystal oscillator products from Morion and sold certain of its products to both companies. The Company also receives interest from Elcom under a convertible note receivable. The table below summarizes these transactions:

	Nine months				Three months
			Periods ended January 31,						Three months ended July 31,
	2009		2008		2009		2008		2009		2008
			(in thousands)						(in thousands)
Purchases from:
Elcom	$	249	$	577	$	136	$	184	$	6	$	75
Morion		814		399		345		31		166		291
Sales to:
Elcom	$	62	$	-	$	37	$	-	$	25	$	13
Morion		98		152		48		38		8		18
Interest on Elcom note receivable	$	53	$	89	$	16	$	28	$	12	$	19

The cost, gross unrealized gains, gross unrealized losses and fair market value of available-for-sale securities at July 31, 2009 and April 30, 2009 are as follows (in thousands):

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Notes to Condensed Consolidated Financial Statements

The following table presents the fair value and unrealized losses, aggregated by investment type and length of time that individual securities have been in a continuous unrealized loss position:

The Company regularly reviews its investment portfolio to identify and evaluate investments that have indications of possible impairment. The Company does not believe that its investments in marketable securities with unrealized losses at July 31, 2009 are other-than-temporary due to market volatility of the security’s fair value, analysts’ expectations and the Company’s ability to hold the securities for a period of time sufficient to allow for any anticipated recoveries in market value.

During each of the three month periods ended July 31, 2009 and 2008, the Company did not sell or redeem any available-for-sale securities. Accordingly, there were no realized gains or losses included in the determination of net income (loss) for those periods.

Maturities of fixed income securities classified as available-for-sale at July 31, 2009 are as follows, at cost (in thousands):

FAS 157 establishes a framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy under FAS 157 are described below:

Level 1

Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access.

Level 2

Inputs to the valuation methodology include:

- Quoted prices for similar assets or liabilities in active markets;

- Quoted prices for identical or similar assets or liabilities in inactive markets

- Inputs other than quoted prices that are observable for the asset or liability;

- Inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3

Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

The asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. All of the Company’s investments in marketable securities are Level 1 assets.

In ~~September 2006,~~August 2009, the FASB issued ~~Statement~~the Codification update No. ~~157,~~2009-05 “Fair Value ~~Measurements.”~~Measurements and Disclosures” (“~~FAS 157”~~ASU 2009-05”) ~~This statement defines~~. The amendment is to subtopic 820-10, Fair Value Measurements and Disclosures-Overall, for the fair value ~~establishes a framework for~~measurement of liabilities. The purpose of this amendment is to reduce ambiguity in financial reporting when measuring fair value of liabilities. The guidance in ~~generally accepted~~the update is effective for the Company during the interim period ending October 31, 2009. The Company is currently evaluating the impact to its financial reporting process of complying with this amendment.

In June 2009, the FASB approved the “FASB Accounting Standards Codification” (“Codification”) as the single source of authoritative nongovernmental U.S. GAAP to be launched on July 1, 2009. The Codification does not change current U.S. GAAP, but is intended to simplify user access to all authoritative U.S. GAAP by providing all the authoritative literature related to a particular topic in one place. All existing accounting ~~principles~~standard documents will be superseded and all other accounting literature not included in the Codification will be considered nonauthoritative. The Codification is effective for interim and annual periods ending after September 15, 2009. The Codification is effective for the Company during the interim period ending October 31, 2009 and will not have an impact on the financial condition or results of operations. The Company is currently evaluating the impact to its financial reporting process of providing Codification references in its public filings.

In June 2009, the FASB issued FAS No. 167, “Amendments to FASB Interpretation No. 46(R)” (“~~GAAP”~~FAS 167”), which modifies how a company determines when an entity that is insufficiently capitalized or is not controlled through voting (or similar rights) should be consolidated. FAS 167 clarifies that the determination of whether a company is required to consolidate an entity is based on, among other things, an entity’s purpose and ~~expands~~design and a company’s ability to direct the activities of the entity that most significantly impact the entity’s economic performance. FAS 167 requires an ongoing reassessment of whether a company is the primary beneficiary of a variable interest entity. FAS 167 also requires additional disclosures about ~~fair value measurements.~~a company’s involvement in variable interest entities and any significant changes in risk exposure due to that involvement. FAS ~~157~~167 is effective for fiscal years beginning after November 15, 2009 and is effective for the Company on May 1, 2010. The Company is currently evaluating the impact that the adoption of FAS 167 will have on the financial condition, results of operations, and disclosures.

In June 2009, the FASB issued FAS No. 166, “Accounting for Transfers of Financial Assets — an amendment of FASB Statement No. 140” (“FAS 166”), which requires additional information regarding transfers of financial assets, including securitization transactions, and where companies have continuing exposure to the risks related to transferred financial assets. FAS 166 eliminates the concept of a “qualifying special-purpose entity,” changes the requirements for derecognizing financial assets, and requires additional disclosures. FAS 166 is effective for fiscal years beginning after November 15, 2009. FAS 166 is effective for the Company on May 1, 2010. The Company does not ~~require any new~~expect the adoption of FAS 166 will have a material impact on its financial condition, results of operations, and disclosures.

In May 2009, the FASB issued FAS No. 165, “Subsequent Events” (“FAS 165”), which provides guidance to establish general standards of accounting for and disclosures of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. FAS 165 also requires entities to disclose the date through which subsequent events were evaluated as well as the rationale for why that date was selected. FAS 165 is effective for interim and annual periods ending after June 15, 2009, and accordingly, the Company adopted this standard during the three months ended July 31, 2009. The adoption of FAS 165 did not have a material impact on the financial condition, results of operations, and disclosures of the Company.

In April 2009, the FASB issued FASB Staff Position FAS 157-4, Determining Whether a Market Is Not Active and a Transaction Is Not Distressed, (“FSP FAS 157-4”) FSP FAS 157-4 provides guidelines for making fair value measurements ~~but simplifies~~more consistent with the principles presented in FAS 157. FSP FAS 157-4 provides additional authoritative guidance in determining whether a market is active or inactive, and ~~codifies related guidance.~~whether a transaction is distressed, is applicable to all assets and liabilities (i.e. financial and nonfinancial) and will require enhanced disclosures. This FASB Staff Position is effective for periods ending after June 15, 2009. The Company’s adoption of this FASB Staff Position did not impact its financial position, results of operation, or cash flows.

In April 2009, the FASB issued FASB Staff Position FAS 115-2, and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments, (“FSP FAS 115-2 and FAS 124-2”). FSP FAS 115-2 and FAS 124-2 provide additional guidance to provide greater clarity about the credit and noncredit component of an other-than-temporary impairment event and to more effectively communicate when an other-than-temporary impairment event has occurred. This FSP applies to debt securities. The Company adopted ~~FAS 157 in fiscal year~~this FASB Staff Position during the quarter ended July 31, 2009. Such adoption did not have a material ~~impact~~effect on its financial position, results of operation, or cash flows.

In April 2009, the FASB issued FASB Staff Position FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments, (“FSP FAS 107-1 and APB 28-1”). FSP FAS 107-1 and APB 28-1, amends FASB Statement No. 107, Disclosures about Fair Value of Financial Instruments, to require disclosures about fair value of financial instruments in interim as well as in annual financial statements. This FSP also amends APB Opinion No. 28, Interim Financial Reporting, to require those disclosures in all interim financial statements. The effective date for this FASB Staff Position is for interim reporting periods ending after June 15, 2009 thus, the Company adopted the FASB Staff Position in the quarter ended July 31, 2009. Such adoption did not have a material effect on the Company’s financial position, results of operation, or cash flows but does require additional disclosures in the notes to its interim financial statements.

During calendar year 2008, the FASB issued FASB Staff Positions (“FSP FAS”) 157-1, 157-2, and 157-3. FSP FAS 157-1 amends FAS 157 to exclude FAS No. 13, “Accounting for Leases”, and its related interpretive accounting pronouncements that address leasing transactions, FSP FAS 157-2 delays the effective date of the application of FAS 157 to fiscal years beginning after November 15, 2008 for all nonfinancial assets and nonfinancial liabilities that are recognized or disclosed at fair value in the financial statements on a nonrecurring basis, and FSP FAS 157-3 clarifies how the fair value of a financial asset is determined when the market for that financial asset is inactive.

In February 2007, the FASB issued Statement No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities including an amendment of SFAS No. 115” (“FAS 159”). The new statement allows entities to choose, at specified election dates, to measure eligible financial assets and liabilities at fair value that are not otherwise required to be measured at fair value. If a company elects the fair value option for an eligible item, changes in that item’s fair value in subsequent reporting periods must be recognized in current earnings. FAS 159 is effective for fiscal years beginning after November 15, 2007. The adoption of FAS 159 in fiscal year 2009 had no impact on the Company’s financial statements since the Company elected not to measure any financial assets or liabilities at fair value other than those for which previous pronouncements required it to do so.

In December 2007, the FASB issued Statements No. 141(R), “Business Combinations”, and No. 160, “Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB 51.” Effective for fiscal years beginning after December 15, 2008, these statements revise and converge internationally the accounting for business combinations and the reporting of noncontrolling interests in consolidated financial statements. The adoption of these statements will change the Company’s accounting treatment for business combinations on a prospective basis but will have no impact on the Company’s current financial statements.

In March 2008, the FASB issued Statement No.161, Disclosures about Derivative Instruments and Hedging Activities - An Amendment of FASB Statement No. 133 (“FAS 161”). FAS 161 requires enhanced qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. FAS 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008. The Company is currently evaluating the impact of FAS 161 on its consolidated financial statements although it does not anticipate that the statement will have a material impact since the Company has not historically engaged in hedging activities or acquired derivative instruments.

In May 2008, the FASB issued Statement of Financial Accounting Standards No. 162 (“FAS 162”), “The Hierarchy of Generally Accepted Accounting Principles.” FAS 162 identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with U.S. GAAP. FAS 162 will become effective 60 days following the SEC’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, “The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles.” This statement is not expected to change the Company’s current accounting practice.

~~FREQUENCY ELECTRONICS, INC. and SUBSIDIARIES~~

~~Notes to Condensed Consolidated Financial Statements~~

In ~~April~~March 2008, the FASB issued ~~FSP~~ Statement No.161, Disclosures about Derivative Instruments and Hedging Activities - An Amendment of FASB Statement No. 133 (“FAS ~~142-3, “Determination of the Useful Life of Intangible Assets” (“FSP FAS 142-3”~~161”). ~~FSP~~ FAS ~~142-3 amends the factors that should be considered in developing a renewal or extension assumptions used~~161 requires enhanced qualitative disclosures about objectives and strategies for purposes of determining the useful life of a recognized intangible asset under SFAS No. 142, “Goodwill and Other Intangible Assets (“FAS 142”). FSP FAS 142-3 is intended to improve the consistency between the useful life of a recognized intangible asset under SFAS 142 and the period of expected cash flows used to measure theusing derivatives, quantitative disclosures about fair value amounts of ~~the asset under SFAS 141 (R)~~ and ~~other U.S. generally accepted accounting principles. FSP~~gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. FAS ~~142-3~~161 is effective for financial statements issued for fiscal years and interim periods beginning after ~~December~~November 15, 2008. ~~Earlier application is not permitted.~~ The ~~Company will be assessing the potential effect of FSP FAS 142-3 if applicable, if it enters into a business combination.~~

On December 21, 2007, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 110 ("SAB 110”) to permit entities, under certain circumstances to continue to use the "simplified" method, in developing estimates of expected term of "plain-vanilla" share options in accordance with Statement No. 123R Share-Based Payment. ~~SAB 110 amended SAB 107 to permit the use of the "simplified" method beyond December 31, 2007. The Company believes that the~~Company’s adoption of ~~SAB 110 will~~FAS 161 did not have a material impact on its consolidated financial ~~statements.~~

In accordance with current accounting standards, subsequent events to the filing date of this Form 10-Q, September 14, 2009, have been evaluated for disclosure or recognition and the Company concluded that no subsequent events have occurred that would require recognition or disclosure in the condensed consolidated financial statements.

NOTE K – TREASURY STOCK TRANSACTIONS

During the three month period ended July 31, 2009, the Company made a contribution of 32,770 shares of its common stock held in treasury to the Company’s profit sharing plan and trust under section 401(k) of the Internal Revenue Code. Such contribution is in accordance with the Company’s discretionary match of employee voluntary contributions to this plan.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995:

The statements in this quarterly report on Form 10-Q regarding future earnings and operations and other statements relating to the future constitute "forward-looking" statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements.�� Factors that would cause or contribute to such differences include, but are not limited to, continued acceptance of the Company's products in the marketplace, competitive factors, new products and technological changes, product prices and raw material costs, dependence upon third-party vendors, competitive developments, changes in manufacturing and transportation costs, changes in contractual terms, the availability of capital, and other risks detailed in the Company's periodic report filings with the Securities and Exchange Commission. By making these forward-looking statements, the Company undertakes no obligation to update these statements for revisions or changes after the date of this report.

Critical Accounting Policies and Estimates

The Company’s significant accounting policies are described in Note 1 to the consolidated financial statements included in the Company’s April 30, ~~2008~~2009 Annual Report to Stockholders. The Company believes its most critical accounting policies to be the recognition of revenue and costs on production contracts and the valuation of inventory. Each of these areas requires the Company to make use of reasoned estimates including estimating the cost to complete a contract, the realizable value of its inventory or the market value of its products. Changes in estimates can have a material impact on the Company’s financial position and results of operations.

Revenues under larger, long-term contracts which generally require billings based on achievement of milestones rather than delivery of product, are reported in operating results using the percentage of completion method. On fixed-price contracts, which are typical for commercial and U.S. Government satellite programs and other long-term U.S. Government projects, and which require initial design and development of the product, revenue is recognized on the cost-to-cost method. Under this method, revenue is recorded based upon the ratio that incurred costs bear to total estimated contract costs with related cost of ~~revenues~~sales recorded as the costs are incurred. Each month management reviews estimated contract costs through a process of aggregating actual costs incurred and updating estimated costs to completion based upon the current available information and status of the contract. The effect of any change in the estimated gross margin percentage for a contract is reflected in revenues in the period in which the change is known. Provisions for anticipated losses on contracts are made in the period in which they become determinable.

~~FREQUENCY ELECTRONICS, INC. and SUBSIDIARIES~~

On production-type ~~contracts,~~orders, revenue is recorded as units are delivered with the related cost of ~~revenues~~sales recognized on each shipment based upon a percentage of estimated final program costs. Changes in job performance may result in revisions to costs and income and are recognized in the period in which revisions are determined to be required. Provisions for anticipated losses on contracts are made in the period in which they become determinable.

For customer orders in the Company’s Gillam-FEI and FEI-Zyfer segments or smaller contracts or orders in the FEI-NY segment, ~~which are not long-term contracts, revenues on~~sales of products and services to customers are reported in operating results based upon (i) shipment of the product or (ii) performance of the services pursuant to terms of the customer order. When payment is contingent upon customer acceptance of the installed system, revenue is deferred until such acceptance is received and installation completed.

Contract costs include all direct material, direct labor costs, manufacturing overhead and other direct costs related to contract performance. Selling, general and administrative costs are charged to expense as incurred.

FREQUENCY ELECTRONICS, INC. and SUBSIDIARIES

(Continued)

Inventory

~~Inventoried~~In accordance with industry practice, inventoried costs contain amounts relating to contracts and programs with long production cycles, a portion of which will not be realized within one year. Inventory reserves are established for slow-moving and obsolete items and are based upon management’s experience and expectations for future business. Any ~~changes in~~increases for such estimated reserves are reflected in cost of ~~revenues~~sales in the period the revision is made.

RESULTS OF OPERATIONS

The table below sets forth for the respective periods of fiscal years ~~2009~~2010 and ~~2008~~2009 the percentage of consolidated ~~Revenues~~net revenues represented by certain items in the Company’s consolidated statements of operations:

Nine months Three months
Periods ended January 31,
2009 2008 2009 2008
Revenues
FEI-NY 69.7 % 74.2 % 71.7 % 69.2 %
Gillam-FEI 19.1 16.1 18.2 19.4
FEI-Zyfer 15.5 13.4 16.0 14.3
Less intersegment revenues (4.3 ) (3.7 ) (5.9 ) (2.9 )
100.0 100.0 100.0 100.0
Cost of revenues 76.8 69.3 73.8 68.0
Gross Margin 23.2 30.7 26.2 32.0
Selling and administrative expenses 21.8 18.9 21.5 18.3
Research and development expenses 7.6 11.0 6.3 9.0
Operating (Loss) Income (6.2 ) 0.8 (1.6 ) 4.7
Other income, net 0.6 8.0 2.2 3.4
Pretax (Loss) Income (5.6 ) 8.8 0.6 8.1
(Benefit) Provision for income taxes (1.7 ) 3.7 (0.1 ) 3.7
Net (Loss) Income (3.9 )% 5.1 % 0.7 % 4.4 %

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~~FREQUENCY ELECTRONICS, INC. and SUBSIDIARIES~~

~~(Continued)~~

	Three months ended July 31,
	2009			2008
Net Revenues
FEI-NY		56.8	%		67.7	%
Gillam-FEI		19.9			20.0
FEI-Zyfer		34.1			17.6
Less Intersegment Revenues		(10.8	)		(5.3	)
		100.0			100.0
Cost of Revenues		65.4			75.6
Gross Margin		34.6			24.4
Selling and administrative expenses		20.6			23.9
Research and development expenses		8.7			10.4
Operating Income (Loss)		5.3			(9.9	)
Other income, net		-			1.5
Pretax Income (Loss)		5.3			(8.4	)
(Benefit) Provision for income taxes		-			(2.5	)
Net Income (Loss)		5.3	%		(5.9	)%

(Note: All dollar amounts in following tables are in thousands, except ~~Revenues~~Net Sales which are in millions)

Revenues (in millions)
Nine months Three months
Periods ended January 31,
Segment 2009 2008 Change 2009 2008 Change
FEI-NY $ 28.1 $ 37.2 $ (9.1 ) (24 %) $ 9.5 $ 11.8 $ (2.3 ) (20 %)
Gillam-FEI 7.7 8.1 (0.4 ) (4 %) 2.4 3.3 (0.9 ) (27 %)
FEI-Zyfer 6.2 6.7 (0.5 ) (7 %) 2.1 2.4 (0.3 ) (13 %)
Intersegment revenues (1.7 ) (1.9 ) 0.2 (0.8 ) (0.5 ) (0.3 )
$ 40.3 $ 50.1 $ (9.8 ) (20 %) $ 13.2 $ 17.0 $ (3.8 ) (23 %)

Net sales	(in millions)
	Three months ended July 31,
	2009			2008			Change
FEI-NY	$	7.1		$	8.9		$	(1.8	)	(20	)%
Gillam-FEI		2.5			2.6			(0.1	)	(6	)%
FEI-Zyfer		4.2			2.3			1.9		84	%
Intersegment sales		(1.4	)		(0.7	)		(0.6	)
	$	12.4		$	13.1		$	(0.6	)	(5	)%

~~For~~

The decrease in revenues for the ~~nine and~~ three month ~~periods~~period ended January 31, 2009, revenues declined in all major market areas and in each segment of the Company, compared to the same periods of fiscal year 2008. Revenues from telecommunications customers, which are recorded in each of the Company’s operating segments, were 16% lower for the nine month period and 38% lower in the third quarter of fiscal year 2009 compared to the same periods of fiscal year 2008. The Company expects wireless telecommunication revenues to remain soft for the near term but expects an increase in wireline product sales during the fourth quarter of fiscal year 2009 based on current backlog. Revenues from satellite payloads, which are recorded in the FEI-NY segment, remained relatively constant over each of the three quarters of fiscal year 2009 but are lower by 35% and 18%, respectively, for the nine and three month periods ended JanuaryJuly 31, 2009 compared to the same ~~periods~~period of fiscal year ~~2008. These results reflect the conclusion of certain long-term programs and the lower level of recent contract awards partially as~~2009, is due to a ~~result of current macroeconomic conditions. With its current backlog and potential new contracts, the Company expects~~decrease in revenues from commercial satellite payload programs recorded in the FEI-NY segment and lower non-core revenues from the Gillam-FEI segment. Revenue for the Company’s telecommunication market area increased year-over-year as continuing decreases in revenue ~~to continue at~~from wireless telecommunications customers, generally recorded in the ~~current pace. For~~FEI-NY segment, were more than offset by increased revenue from wireline telecommunication customers in both the ~~nine~~U.S. and ~~three month periods ended January 31, 2009, revenues~~Europe. Sales of the Company’s new US5G productline for the U.S. domestic wireline market are generated by the FEI-Zyfer segment where the sales and customer-support functions are located. Revenues from non-space U.S. Government customers, which are recorded in the FEI-NY and FEI-Zyfer segments, ~~were lower~~increased by 9% over the prior year primarily due to additional revenues from the Company’s low-g oscillators. During fiscal year 2010, the Company expects revenues from U.S. Government programs to continue at current levels while revenues from commercial satellite programs are uncertain due to economic conditions and ~~23%, respectively. This~~the availability of funding for commercial projects. Telecommunication infrastructure revenues may also be comparable to the prior year although the mix of sales of wireless and wireline products is ~~primarily~~expected to change with a greater portion of such revenues coming from the ~~result of temporary delays~~US5G productline and other wireline products. Based on current backlog and the vital role that the Company’s low-g products play in the ~~awarding of certain orders. The Company anticipates that revenues for this market area will be higher in~~U.S. military’s weapons systems, sales to non-space U.S. Government programs are also expected to increase over the ~~last quarter~~balance of the ~~current~~ fiscal year.

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FREQUENCY ELECTRONICS, INC. and SUBSIDIARIES

(Continued)

Gross margin

Nine months Three months
Periods ended January 31,
2009 2008 Change 2009 2008 Change
$ 9,365 $ 15,395 $ (6,030 ) (39 %) $ 3,459 $ 5,455 $ (1,996 ) (37 %)
GM Rate 23.2 % 30.7 % 26.2 % 32.0 %

	Three months ended July 31,
	2009			2008			Change
	$	4,301		$	3,191		$	1,110	35	%
GM Rate		34.6	%		24.4	%

The ~~39% and 37% decreases~~increase in gross margin for the ~~nine and~~ three months ended ~~January~~July 31, 2009, ~~respectively,~~is due to a different mix of product revenues. In the first quarter of fiscal year 2010, the largest satellite programs on which the Company is working are ~~due primarily to lower revenues,~~performed under cost-plus-fee contracts which effectively assure that the Company will recognize positive gross margin on these programs. In the fiscal year 2009 period, the Company incurred higher levels of engineering and manufacturing costs on certain large satellite payload programs ~~that~~which significantly reduced the ~~Company began to experience~~gross margin realized in ~~late~~the quarter. These large programs were completed during fiscal year ~~2008 and higher overhead costs.~~2009. The current quarter’s gross margin ~~rates~~rate of ~~23.2% and 26.2% for~~34.6% reflects a sequential improvement from the nine and three-month periods ended January 31, 2009, respectively, also reflect the impact of recording higher reserves for slow moving inventory. Such reserve increases reduced gross margins by approximately 3.6% and 4.9%, respectively. With the completion of the challenging satellite programs7% rate recorded in the ~~first half~~fourth quarter of fiscal year 2009 or the 30% rate that results from the exclusion of an inventory writedown in that period. At current revenue levels, the Company anticipates that its fiscal year 2010 gross margin rate will be comparable to that of the current period but will be significantly improved ~~from 22% to 26%. The Company expects~~over the ~~rate to continue to improve moderately based on the future revenue mix.~~prior year.

Selling and administrative expenses

Nine months   Three months
Periods ended January 31,
2009 2008 Change   2009 2008 Change
$ 8,797 $ 9,480 $ (683 ) (7 %) $ 2,845 $ 3,109 $ (264 ) (8 %)

Three months ended July 31,
2009		2008		Change
$	2,567	$	3,116	$	(549	)	(18	)%

For the ~~nine and~~ three months ended ~~January~~July 31, 2009 and 2008, selling and administrative expenses were ~~21.8%~~20.6% and ~~21.5%~~23.9%, respectively, of consolidated revenues. ~~This is compared to 18.9% and 18.3%, respectively, for the same periods of fiscal year 2008.~~ The Company’s target for such expenses is not to exceed 20% of ~~revenues but this ratio was not achieved~~revenues. The decrease in expenses in the fiscal year ~~2009 periods primarily due~~2010 period compared to ~~a lower level of revenues. Selling and administrative expenses declined in the~~ fiscal year 2009 ~~periods due~~is largely attributable to ~~decreases~~declines in personnel costs ~~including reduced incentive compensation and decreased employee benefits resulting from~~through a reduction in ~~personnel. For~~force, reduced professional fees, and lower deferred compensation expense. In addition, fiscal year 2010 expenses from the ~~balance~~Gillam-FEI segment benefited from the 13% decline in the value of the Euro to the U.S. dollar compared to the same period of fiscal year ~~2009,~~2009. In subsequent quarters of fiscal year 2010, the Company expects selling and administrative expenses to be incurred at approximately the same ~~level.~~

13rate in both dollars and as a percentage of 19

~~FREQUENCY ELECTRONICS, INC. and SUBSIDIARIES~~

~~(Continued)~~

revenues.

Research and development expense

Nine months Three months
Periods ended January 31,
2009 2008 Change 2009 2008 Change
$ 3,068 $ 5,526 $ (2,458 ) (44 %) $ 829 $ 1,541 $ (712 ) (46 %)

Three months ended July 31,
2009		2008		Change
$	1,075	$	1,365	$	(290	)	(21	)%

Research and development expenditures represent investments that keep the Company’s products at the leading edge of time and frequency technology and enhance competitiveness for future ~~revenues. Research and development spending for~~sales. In the ~~nine and three-month periods ended January 31, 2009, was 7.6% and 6.3% of revenues, respectively, compared to 11.0% and 9.0% of revenues for the same periods of~~ fiscal year ~~2008, respectively. The decreased spending in fiscal year 2009 is~~2010 period, a ~~result of many~~portion of the Company’s development resources ~~being applied to~~were engaged on certain large cost-plus-fee satellite payload programs. As a consequence, some of the Company’s development expenditures ~~will be~~were customer-funded ~~and the costs will appear in cost of revenues,~~ thus reducing the level of internal research and development spending. InThe Company retains a proprietary interest in any products or technologies which result from the ~~nine and three-month periods ended January 31, 2008, the Company incurred exceptional levels of engineering spending~~customer-funded efforts. Research and development ~~work on its satellite payload products. This effort abated throughout fiscal year 2008.~~spending for the quarters ended July 31, 2009 and 2008, were 8.7% and 10.4% of revenues, respectively. The Company targets research and development spending at approximately 10% of ~~revenues,~~sales, but the rate of spending can increase or decrease from quarter to quarter as new projects are identified and others are concluded. The ~~number of such projects, their size and duration can vary widely depending on the intermediate and long-term needs of the Company. The~~ Company ~~expects to~~will continue to devote significant resources to develop new products, enhance existing products and implement efficient manufacturing ~~processes.~~processes, including its efforts applied to certain cost-plus-fee satellite payload programs. In fiscal 2010, the Company anticipates that internal research and development spending will be less than 10% of revenues. Internally generated cash and cash reserves are adequate to fund these internal development efforts.

~~Operating (Loss) Income~~

Nine month Three months
Periods ended January 31,
2009
2008
Change 2009 2008 Change
$ (2,500 ) $ 389 $ (2,889 ) NM $ (215 ) $ 805 $ (1,020 ) NM

Lower revenues, the higher level of engineering and manufacturing effort related to satellite payload programs during the first half of the year, higher overhead costs and recording a higher level of inventory reserves resulted in operating losses for the nine and three-month periods ended January 31, 2009, compared to the same periods of fiscal year 2008. Although fiscal year 2009 revenues have been relatively flat during the year, the operating loss in the third quarter has decreased significantly from the first half of the year as the Company has made adjustments to the lower level of business. The Company anticipates that the combination of cost reductions and improving revenues will enable it to generate an operating profit in the last quarter of fiscal year 2009.

~~Other income (expense)~~

Nine months Three months
Periods ended January 31,
2009 2008 Change 2009 2008 Change
Investment income $ 526 $ 3,965 $ (3,439 ) (87 %) $ 159 $ 202 $ (43 ) (21 %)
Equity (loss) income (100 ) (17 ) (83 ) (488 %) 208 128 80 62 %
Interest expense (269 ) (402 ) 133 33 % (76 ) (110 ) 34 31 %
Other income, net 80 449 (369 ) (82 %) 4 366 (362 ) (99 %)
$ 237 $ 3,995 $ (3,758 ) (94 %) $ 295 $ 586 $ (291 ) (50 %)

During the nine months ended January 31, 2008, the Company reduced its investment in Morion, Inc. from 36.6% to 8% by selling shares to a Russian government majority-owned bank. The Company received proceeds of approximately $5.8 million and realized a book gain of approximately $3.0 million. Such gain was included in investment income for the first quarter of fiscal year 2008. Comparable gains were not recorded during the fiscal year 2009 periods. In addition, investment income from interest and dividends was reduced in the fiscal year 2009 period due to a lower level of marketable securities than in the same periods of the prior year.

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FREQUENCY ELECTRONICS, INC. and SUBSIDIARIES

(Continued)

Operating Profit (Loss)

Three months ended July 31,
2009		2008			Change
$	659	$	(1,290	)	$	1,949	NM

The improved gross margin and lower operating expenses in the fiscal year 2010 period enabled the Company to record an operating profit equal to 5.3% of revenues. Sequentially, the operating profit for the period ended July 31, 2009, represents a $1.1 million improvement from the quarter ended April 30, 2009, excluding the $2.9 million inventory writedown from that period. The Company anticipates that at the current level of business and having implemented certain cost savings, that it can sustain operating profits at this level. The Company will strive to improve on these results by gaining additional business through increased bookings on its current product lines and expanding its product offerings through its research and development efforts. The Company anticipates that it will generate an operating profit for the full fiscal year 2010.

Other income (expense)

	Three months ended July 31,
	2009			2008			Change
Investment income	$	128		$	158		$	( 30	)		(19	)%
Equity (loss) income		(49	)		37			(86	)	NM
Interest expense		(44	)		(84	)		40			48	%
Other income, net		(40	)		81			(121	)		(149	)%
	$	( 5	)	$	192		$	( 197	)		(103	)%

Investment income is derived primarily from the Company’s holdings of marketable securities. Earnings on these securities may vary based on fluctuating interest rate levels and the timing of purchases or sales of the securities.

The equity (loss) or income in the fiscal year ~~2009~~2010 and ~~2008~~2009 periods represent the Company’s share of the quarterly ~~results~~income or (loss) recorded by Elcom Technologies in which the Company owns a 25% interest.

The decrease in interest expense for the ~~nine and~~ three month ~~periods~~period ended ~~January~~July 31, 2009, resulted from both a decrease in borrowings under the Company’s line of credit as well as a lower rate of interest charged on such borrowings compared to the ~~same periods~~three month period ended ~~January~~July 31, 2008.

Under the provisions of sale and leaseback accounting, a portion of the capital gain realized on a fiscal year 2005 real estate transaction iswas deferred and recognized in income over the initial lease term. Under the caption “Other income, net” the Company recognized deferred gain of ~~$236,000 and $59,000~~$88,000 for the ~~nine and~~ three months ended ~~January~~July 31, ~~2009, respectively. The deferred~~2008. Since the gain was fully amortized during ~~the third quarter of~~ fiscal year 2009, comparable income was not recorded in the quarter ended July 31, 2009. In the ~~same periods of~~ fiscal ~~2008, deferred gain was $265,000~~year 2010 period, other expense included royalty expense and ~~$88,000, respectively. These gains were partially offset by certain nonrecurring expenses at the FEI-NY and Gillam-FEI segments, including certain~~ foreign currency exchange losses ~~settlement of European insurance claims and business interruption costs.~~at the Company’s overseas subsidiaries. Other insignificant income and expense items are also recorded under this caption.

Net Income (Loss) ~~income~~

Nine months Three months
Periods ended January 31,
2009 2008 Change 2009 2008 Change
$ (1,567 ) $ 2,547 $ (4,114 ) NM $ 99 $ 758 $ (659 ) (87 %)

~~The decline in profitability~~

Three months ended July 31,
2009		2008			Change
$	654	$	(773	)	$	1,427	185	%

Net income for the ~~nine and~~ three ~~month periods~~months ended ~~January~~July 31, 2009, ~~compared to the same periods of fiscal year 2008,~~ resulted from the ~~decrease in revenues,~~improved gross margin and reduced operating expenses as discussed above. The fiscal year 2009 results were negatively impacted by the higher engineering ~~and production~~ costs on certain satellite payload programs ~~higher overhead costs and increases to inventory reserves as discussed above. The results for the nine month period of~~which were completed during that fiscal ~~year 2008 were positively impacted by the investment gain recorded on the sale of a portion of the Company’s investment in Morion.~~year. The Company expects to realize improved gross and operating margins in the ~~last quarter~~subsequent quarters of fiscal year ~~2009.~~2010 and anticipates that it will report a profit for the full year.

15 of 19

FREQUENCY ELECTRONICS, INC. and SUBSIDIARIES

(Continued)

Income Taxes

During the quarter ended July 31, 2009, the Company recorded an income tax provision of approximately $160,000, or approximately 25% of pre-tax income. This provision was completely offset by a reduction in the valuation allowance on deferred tax assets that was established in prior years. As of July 31, 2009, the valuation allowance is approximately $8.4 million and may continue to be reduced as the Company realizes pre-tax profits in future periods.

The Company is subject to taxation in several countries as well as the states of New York and California. The statutory federal rates vary from 34% in the United States to 35% in Europe. The effective rate is impacted by the income or loss of certain of the Company’s European and Asian subsidiaries which are currently not taxed. In addition, the Company utilizes the availability of research and development tax credits in the United States to lower its tax rate. As of April 30, ~~2008,~~2009, the Company’s European subsidiaries had available net operating loss carryforwards of approximately ~~$1.2~~$1.1 million, which ~~may be used to~~will offset future taxable income. The ~~Company’s effective~~domestic U.S. tax ~~rate~~loss carryforward, which expires in 2028, is approximately $3.0 million and the tax loss carryforward for ~~fiscal year 2008 was higher than in prior years as a result of the gain recognized on the Morion transaction. The Company’s~~state income tax ~~basis in its Morion investment was less than its book basis resulting in greater taxable income than that recorded for financial reporting purposes.~~purposes is approximately $7.3 million.

LIQUIDITY AND CAPITAL RESOURCES

The Company’s balance sheet continues to reflect a strong working capital position of ~~$55~~$50 million at ~~January~~July 31, 2009, which is ~~compared~~comparable to $48 million in working capital ~~of $59 million~~ at April 30, ~~2008.~~2009. Included in working capital at ~~January~~July 31, 2009 is ~~$13.1~~$16.0 million of cash, cash equivalents and marketable securities which are offset by $1.1 million in borrowings under ~~its~~the Company’s bank line of credit. The Company’s current ratio at ~~January~~July 31, 2009 is ~~6.6~~6.95 to 1.1 similar to that at April 30, 2009.

For the ~~nine~~three months ended ~~January~~July 31, 2009, the Company ~~had positive~~generated $1.2 million in cash ~~flow~~ from operating activities ~~of $5.3 million~~ compared to ~~$4.0~~$2.1 million used by operations in the comparable fiscal year ~~2008~~2009 period. The primary source of cash in the fiscal year ~~2009~~2010 period was profitable operations. During the ~~collection of accounts receivable. As~~quarter ended July 31, 2009, the Company ~~achieved milestones on certain large satellite programs, it was contractually permitted~~incurred over $1.0 million of non-cash operating expenses, such as depreciation and amortization and accruals for employee benefit programs. These expenses are comparable to ~~issue invoices to its customers and a significant portion of the receivables were collected by the end of the fiscal quarter.~~prior years. In the ~~nine~~three month period ended ~~January~~July 31, 2008, the decrease in operating cash flow was due ~~primarily~~ to ~~increases~~operating losses and the growth in ~~unbilled~~ accounts receivable ~~inventory~~ and ~~payments against accounts payable.~~inventory. For the balance of fiscal year ~~2009,~~2010, the Company expects to generate positive cash flow from operating activities.

~~15 of 19~~

~~FREQUENCY ELECTRONICS, INC. and SUBSIDIARIES~~

~~(Continued)~~

Net cash used in investing activities for the ~~nine~~three months ended ~~January~~July 31, 2009, was ~~$6.0 million~~$175,000 compared to cash ~~provided~~used by investing activities of ~~$9.7~~$6.7 million for the same period of fiscal year ~~2008.~~2009. In the fiscal year 2010 period, investing activities consisted solely of acquisition of fixed assets. During the comparable fiscal year 2009 period, the Company invested ~~$5.6~~$6.6 million in ~~marketable securities, net of $1.0 million in proceeds from the sale of certain~~ marketable securities and acquired additional fixed assets for $423,000. In the prior fiscal year, the Company received net proceeds of $5.6 million from the sale of a portion of its investment in Morion and the net proceeds from the redemption and purchase of marketable securities for $5.5 million. This cash inflow was partially offset by fixed asset acquisitions of $1.5 million.$111,000. The Company may continue to acquire or sell marketable securities as dictated by its ~~liquidity requirements.~~investment strategies as well as by the cash requirements for its development activities. Capital equipment purchases for all of fiscal year ~~2009~~2010 are expected to ~~aggregate less than~~be in the range of $1.0 million to $1.5 million. Internally generated cash is adequate to acquire this level of capital equipment.

Net cash used in financing activities for the ~~nine~~three months ended ~~January~~July 31, 2009, was ~~$7.3 million~~$70,000 compared to $1.3 million ~~used~~provided by financing activities during the comparable fiscal year ~~2008~~2009 period. The fiscal year 2010 activity consisted solely of payments against the Company’s capital lease obligation. During the first ~~nine months~~quarter of fiscal year 2009, the Company repurchased approximately 725,000 shares of its common stock at an average per share price of $4.29, or approximately $3.1 million, compared to treasury stock purchases of $233,000 for the same period of fiscal year 2008. During fiscal year 2009, the Company had repaid $4.0borrowed $1.5 million against its line of credit, ~~and~~ made principle payments of ~~$163,000~~$52,000 against a long-term capital ~~lease. During~~lease and reacquired capital stock for treasury in the ~~nine months ended January 31, 2008,~~approximate amount of $100,000. The Company has available a $7.4 million line of credit with the financial institution which also manages a substantial portion of its investment in marketable securities. The line is secured by the investments and has no maturity date so long as the Company ~~paid a cash dividend of $1.7 million and repaid $3.0 million of~~maintains its investments with the ~~$3.5 million borrowed~~financial institution. At July 31, 2009, the Company had borrowings under ~~its~~the line of ~~credit.~~approximately $1.1 million.

The Company has been authorized by its Board of Directors to repurchase up to $5 million worth of shares of its common stock for treasury whenever appropriate opportunities arise but it has neither a formal repurchase plan nor commitments to purchase additional shares in the future. As of ~~the end of the most recent fiscal quarter,~~July 31, 2009, the Company has repurchased approximately $4 million of its common stock out of the $5 million authorization.

16 of 19

FREQUENCY ELECTRONICS, INC. and SUBSIDIARIES

(Continued)

The Company will continue to expend resources to develop and improve products for space applications, guidance and targeting systems, ~~wireless networks~~ and ~~wireline~~ communication systems which management believes will result in future growth and continued profitability. During fiscal year ~~2009,~~2010, the Company intends to make ~~investments~~a substantial investment of capital and technical resources to develop new products to meet the needs of the U.S. Government, commercial space and telecommunications infrastructure marketplaces and to invest in more efficient product designs ~~automatic test equipment, employee training~~ and ~~improved~~ manufacturing processes. For the current fiscal year and for the foreseeable future, the Company has been awarded several cost-plus-fee development contracts for satellite payloads. Such customer-funded programs will enable the Company to conduct important development activities andprocedures. Where possible, the Company will ~~be reimbursed by its customers~~secure partial customer funding for ~~its efforts. Thus, the Company expects~~such development efforts but is targeting to spend its own funds at a ~~lower~~ rate less than ~~it has historically~~10% of revenues to achieve its development goals. Internally generated cash will be adequate to fund these ~~internal research and~~ development efforts.

As of ~~January~~July 31, 2009, the Company's consolidated backlog amounted to approximately ~~$39~~$31 million. Approximately 70% of this backlog is expected to be realized in the next twelve months. Included in the backlog at ~~January~~July 31, 2009 is approximately ~~$12.8~~$9 million under cost-plus-fee contracts which the Company believes represent firm commitments from its customers for which the Company has not ~~yet~~ received full ~~funding.~~funding to date. The Company excludes from backlog any contracts or awards for which it has not received authorization to proceed.

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

~~16 of 19~~

~~FREQUENCY ELECTRONICS, INC. and SUBSIDIARIES~~

~~(Continued)~~

Item 4T.

Controls and Procedures

Disclosure Controls and Procedures. The Company’s management, with the participation of the Company’s ~~Chief Executive Officer~~chief executive officer and ~~Chief Financial Officer,~~chief financial officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based on their evaluation, the Company’s ~~Chief Executive Officer~~chief executive officer and ~~Chief Financial Officer~~chief financial officer have concluded that, as of ~~January~~July 31, 2009, the Company’s disclosure controls and procedures were not effective for the reasons discussed below, to ensure that information relating to the Company, including its consolidated subsidiaries, required to be included in its reports that it filed or submitted under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

Management’s Report on Internal Control over Financial Reporting

Management of Frequency Electronics is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. The Company’s internal control system is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

17 of 19

FREQUENCY ELECTRONICS, INC. and SUBSIDIARIES

(Continued)

~~At the end of fiscal year 2008, management~~Management has assessed the effectiveness of the Company’s internal control over financial ~~reporting.~~reporting as of July 31, 2009. In making this assessment, management used the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). ~~As of January 31, 2009, management reviewed its original assessment and the current status of its internal controls over financial reporting.~~ Based on this ~~review,~~evaluation, management has concluded that the Company’s internal control over financial reporting was not effective as of ~~January~~July 31, 2009. The Company’s chief executive officer and chief financial officer have concluded that the Company has material weaknesses in its internal control over financial reporting.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

Financial Reporting

The Company had inadequate resources and an insufficient number of personnel having adequate knowledge, experience and training to provide effective oversight and review of ~~our~~its internal controls within the prescribed timeframe. As a result, as of ~~January~~July 31, 2009, there was a material weakness in the Company’s internal control because management has not performed a self-assessment or the necessary documentation and testing of the internal controls at two of the Company’s subsidiaries, Gillam-FEI and FEI-Zyfer. The lack of documentation and testing of these subsidiaries constitutes a material weakness. In order to remediate this material weakness, management ~~expects~~in part, will continue to establish policies and procedures to provide for the necessary documentation and testing of such internal controls ~~over~~during the ~~coming~~current fiscal year. During fiscal year ~~2009,~~2010, the Company ~~began~~plans to fully document and test the internal controls over financial reporting at its Gillam-FEI and FEI-Zyfer subsidiaries. ~~The Company expects to conduct tests of such controls and, if~~If this process identifies material weaknesses or significant deficiencies over such internal controls, the Company ~~intends to~~will implement appropriate remediation efforts.

~~17 of 19~~

~~FREQUENCY ELECTRONICS, INC. and SUBSIDIARIES~~

~~(Continued)~~

~~Due~~In addition, due to the Company’s small size and lack of resources and staffing, the Chief Financial Officer is actively involved in the preparation of the financial statements and therefore, cannot provide an independent review and quality assurance function within the accounting and financial reporting group. The limited number of accounting personnel results in an inability to have independent review and approval by the Chief Financial Officer of financial accounting entries. There is a risk that a material misstatement of the financial statements could be caused, or at least not be detected in a timely manner, due to this ~~insufficient segregation of duties. During fiscal year 2009, the~~limitation. The Company ~~plans to remediate~~addressed this material weakness by engaging third-party tax accounting advisors who identified the need to adjust the fiscal year 2008 deferred tax and byincome tax receivable balances. The Company also hired a new controller and is creating processes whereby personnel in its Accounting Department (other than the Chief Financial Officer) will create analysis and original accounting entries, which will subsequently be reviewed and approved by the Chief Financial Officer.

The Company expects that compliance with such measures will remediate this material weakness.

Changes in Internal Control Over Financial Reporting. There were no changes in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ~~ending January~~ended July 31, 2009 to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II

ITEMS 1, 1A, 2, 3, 4 and 5 are omitted because they are not applicable.

ITEM 6 - Exhibits

31.1 -

- Certification by the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2 -

- Certification by the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of ~~2002.~~2002

32.1 -

- Certification by the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2 -

- Certification by the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

18 of 19

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.

	FREQUENCY ELECTRONICS, INC. ~~(Registrant)~~
	(Registrant)

Date: ~~March 17,~~September 14, 2009	~~By:~~BY	~~/s/~~ /s/ Alan Miller
		Alan Miller ~~Chief Financial Officer~~ ~~and Treasurer~~
		Chief Financial Officer
		and Treasurer

19 of 19

	July 31, 2009
			Gross		Gross			Fair
			Unrealized		Unrealized			Market
	Cost		Gains		Losses			Value
Fixed income securities	$	10,165	$	234	$	(391	)	$	10,008
Equity securities		450		-		(137	)		313
	$	10,615	$	234	$	(528	)	$	10,321

	April 30, 2009
			Gross		Gross			Fair
			Unrealized		Unrealized			Market
	Cost		Gains		Losses			Value
Fixed income securities	$	10,165	$	278	$	(803	)	$	9,640
Equity securities		450		-		(92	)		358
	$	10,615	$	278	$	(895	)	$	9,998

	Less than 12 months				12 Months or more					Total
	Fair		Unrealized		Fair		Unrealized			Fair		Unrealized
	Value		Losses		Value		Losses			Value		Losses
July 31, 2009
Fixed Income Securities	$	-	$	-	$	1,661	$	(391	)	$	1,661	$	(391	)
Equity Securities		-		-		313		(137	)		313		(137	)
	$	-	$	-	$	1,974	$	(528	)	$	1,974	$	(528	)
April 30, 2009
Fixed Income Securities	$	-	$	-	$	2,268	$	(803	)	$	2,268	$	(803	)
Equity Securities		-		-		358		(92	)		358		(92	)
	$	-	$	-	$	2,626	$	(895	)	$	2,626	$	(895	)

Current	$	-
Due after one year through five years		8,136
Due after five years through ten years		2,029
	$	10,165

	January 31,			April 30,
	2009			2008
	(UNAUDITED)			(AUDITED)
				(NOTE A)
	(In thousands except share data)
ASSETS:
Current assets:
Cash and cash equivalents	$	3,274		$	11,029
Marketable securities		9,830			4,414
Accounts receivable, net of allowance for doubtful accounts
of $178 at January 31, 2009 and $185 at April 30, 2008		13,913			10,271
Costs and estimated earnings in excess of billings		1,997			9,556
Inventories		30,219			30,218
Deferred income taxes		4,079			3,974
Income taxes receivable		800			151
Prepaid expenses and other		976			1,371
Total current assets		65,088			70,984
Property, plant and equipment, at cost,
less accumulated depreciation and amortization		8,244			9,531
Deferred income taxes		3,032			2,990
Goodwill and other intangible assets, net		264			405
Cash surrender value of life insurance and cash held in trust		8,047			7,671
Investments in and loans receivable from affiliates		4,397			4,522
Other assets		817			817
Total assets	$	89,889		$	96,920

LIABILITIES AND STOCKHOLDERS’ EQUITY:
Current liabilities:
Short-term credit obligations	$	1,326		$	5,168
Accounts payable - trade		3,508			2,215
Accrued liabilities and other		5,075			4,694
Total current liabilities		9,909			12,077
Lease obligation – noncurrent		741			911
Deferred compensation		9,836			9,467
Deferred gain and other liabilities		580			855
Total liabilities		21,066			23,310
Stockholders’ equity:
Preferred stock - $1.00 par value		-			-
Common stock - $1.00 par value		9,164			9,164
Additional paid-in capital		48,830			48,213
Retained earnings		11,991			13,558
		69,985			70,935
Common stock reacquired and held in treasury
-at cost, 1,058,311 shares at January 31, 2009
and 427,366 shares at April 30, 2008		(5,060	)		(2,175	)
Accumulated other comprehensive income		3,898			4,850
Total stockholders' equity		68,823			73,610
Total liabilities and stockholders' equity	$	89,889		$	96,920

	January 31, 2009		April 30, 2008
	(In thousands)
Raw materials and Component parts	$	15,138	$	12,523
Work in progress		11,986		13,938
Finished Goods		3,095		3,757
	$	30,219	$	30,218

	Nine months ended January 31,
	(in thousands)
	2009			2008
Net (loss) income	$	(1,567	)	$	2,547
Foreign currency translation adjustment		(854	)		1,695
Change in market value of marketable securities		(163	)		(190	)
Deferred tax effect of change in market value of
marketable securities		65			76
Comprehensive (loss) income	$	(2,519	)	$	4,128

Nine month									Three months
Periods ended January 31,
2009			2008		Change				2009			2008		Change
$	(2,500	)	$	389	$	(2,889	)	NM	$	(215	)	$	805	$	(1,020	)	NM