{COVER}
CSPI ANNUAL REPORT 1995
{4-COLOR PICTURE}
[OUR ROLE IS TO TRANSLATE
TECHNOLOGY INTO USABLE
APPLICATIONS WITH PRODUCTS
AND SERVICES OF THE HIGH-
EST QUALITY.]
[CSPI is a global supplier of computing systems and instruments for defense,
medical, industrial and research applications requiring maximum MFLOPs. Advances
in microprocessor speed are only valuable to our customers when conveniently
packaged and supported by a rich software environment. Our role is to translate
technology into usable applications.]
COMPANY HIGHLIGHTS
CSPI was founded in 1968 by four young entrepeneurs who wanted to build the
world's fastest compute engine. This vision became the array processor,
accelerators for general purpose computers to enhance their scientific
computational capabilities. Early products were geared to Digital Equipment
Corporation systems and gained acceptance for specific military and seismic
applications. In recent years the company repackaged its technology to the VME
form factor and entered the board business. It was the first to ship an array
processor based upon the Intel i860 microprocessor and greatly expanded its
customer base. The SuperCard family of products its now in its fourth generation
and many thousands of units are in use around the world. These boards, together
with a complete array of supporting software, are sold to OEM system integrators
who supply military electronic systems and a variety of commercial medical
imaging and test equipment manufacturers.
The company has vertically integrated into two end-user businesses that make
use of its core technology. Scanalytics provides image analysis systems to
molecular and cell biologists and Vision Systems manufacturers high-speed,
over-the-belt, readers for one and two-dimensional bar-codes.
The company owns its facility in Billerica, MA close to Boston's Rte 128;
staffed by approximately one hundred employees. Sales are made via a direct
sales force in the US and a chain of local distributors throughout the rest of
the world. A public company since 1982, CSPI has enjoyed fifteen consecutive
years of profitability.
Financial Highlights
(Amounts in thousands, except per share data)
FISCAL YEAR ENDED
AUGUST 25, AUGUST 26,
1995 1994
OPERATING STATEMENT DATA:
Sales $18,526 $19,460
Net income 385 1,719
Number of primary shares 2,795 2,823
Earnings per share $ 0.14 $ 0.61
BALANCE SHEET DATA:
Working capital $22,862 $23,085
Total assets 29,279 29,936
Total liabilities 3,554 3,695
Shareholders' equity 25,725 26,241
COMMON STOCK DATA
The Common Stock of the Company is traded in the over-the-counter market and is
quoted on NASDAQ System under the symbol "CSPI". The following table sets forth
the range of closing high and low selling prices for the Common Stock as
reported by NASDAQ.
FISCAL YEAR: 1995 1994
HIGH LOW HIGH LOW
1st Quarter $9 3/8 $8 1/4 $11 $8 1/2
2nd Quarter 8 3/4 7 1/8 10 1/2 8 3/4
3rd Quarter 8 3/4 7 9 27/32 8 3/4
4th Quarter 9 1/8 7 3/8 10 1/2 8 3/4
The Company has never paid cash dividends on its Common Stock. It is the policy
of the Company to retain any earnings to finance and expand operations and the
Company does not currently anticipate any change in this policy.
ANNUAL SALES ($ IN MILLIONS)
{FIGURES BELOW ARE USED IN A LINE GRAPH SHOWING ANNUAL SALES}
1969 0.10
1970 0.30
1971 0.95
1972 1.06
1973 1.65
1974 1.63
1975 2.11
1976 2.07
1977 3.09
1978 4.60
1979 4.01
1980 4.40
1981 7.13
1982 10.12
1983 10.96
1984 9.65
1985 14.63
1986 14.04
1987 9.39
1988 9.56
1989 12.04
1990 11.30
1991 13.09
1992 16.03
1993 18.01
1994 19.46
1995 18.53
NET INCOME ($000'S)
{FIGURES BELOW ARE USED IN A LINE GRAPH SHOWING NET INCOME}
1969 -375
1970 -568
1971 201
1972 -124
1973 177
1974 -48
1975 67
1976 -74
1977 179
1978 185
1979 43
1980 -191
1981 779
1982 1400
1983 1824
1984 815
1985 1961
1986 1702
1987 496
1988 260
1989 869
1990 839
1991 1057
1992 1678
1993 1957
1994 1719
1995 385
DEAR FELLOW SHAREHOLDERS
[SAM'S LEGACY LIES IN OUR
CORPORATE VALUES OF PRUDENT
EXPENDITURE AND CONSERVATIVE
PLANNING, AND HAS RESULTED IN
THE STRENGTH OF OUR BALANCE
SHEET TODAY.]
EARNINGS PER SHARE (DOLLARS)
{FIGURES BELOW ARE USED IN A LINE GRAPH SHOWING EARNINGS PER SHARE}
1969 -2.13
1970 -2.21
1971 0.08
1972 -0.05
1973 0.07
1974 -0.18
1975 0.26
1976 -0.03
1977 0.12
1978 0.13
1979 0.03
1980 -0.14
1981 0.48
1982 0.78
1983 0.67
1984 0.29
1985 0.69
1986 0.60
1987 0.18
1988 0.10
1989 0.32
1990 0.31
1991 0.39
1992 0.61
1993 0.70
1994 0.61
1995 0.14
ANNUAL PERFORMANCE
Sales of $18.526 million, while below last year, are the second highest in your
Company's history. The contribution from our new businesses, Scanalytics and
Vision Systems, reached one third of the total, which we feel is early
justification for our strategy of diversification into end-user applications.
While earnings per share of $0.14 is below recent levels, this has been an
unusually demanding year. We began with considerable uncertainty in our embedded
computing business due to the timing of defense procurements and restructured
the Company in November to reduce our expense profile. Bookings subsequently
improved and, after a loss in the first quarter, each subsequent quarter has
been increasingly profitable - leading to our 15th consecutive profitable year.
RETURNING TO GROWTH
CSPI's role is to translate technology into usable applications. Sales growth
will come from vertical integration into applications solutions and continued
expansion of our base business. The end-user application markets we have chosen
have been carefully selected so as to avoid competing with our existing OEM
customers. Both Scanalytics and Vision Systems are significant growth
opportunities and derive their competitive advantage from our core signal
processing expertise. In addition, COTS (commercial-off-the-shelf) based
military procurements are now the norm and have fueled new growth opportunities
for our traditional products. Careful navigation through a complex product
transition in our base business and prudent investment in our new ventures will
put us back on a growth track.
The key to renewed success is to remain focused on a few critical issues:
o Integrate the new Motorola Power PC and Analog Devices 21060 into our signal
processing product line [Sam's legacy lies in our corporate values of prudent
expenditure and conservative planning, and has resulted in the strength of
our balance sheet today.] to complement the aging Intel i860.
o Take advantage of a growing market acceptance for our CELLscan products.
o Exploit the leadership position gained by licensing bar-code technology from
United Parcel Service (UPS).
{4-COLOR PICTURE SHOWING DAVID BOTTEN AND SAM OCHLIS}
David Botten and Sam Ochlis
SIGNIFICANT NEW PRODUCTS
During the year we installed the first units of a new CELLscan configuration.
Incorporating the latest SuperCard technology, the new restoration server
removes the last objection to wider CELLscan adoption - speed. Image analysis
can now begin within minutes of acquisition, rather than in hours. When
installed on a facility network the server also provides the most cost effective
approach to multi-user operation.
Beta shipments of the flagship SuperCard-4SLX (with SuperLink interconnect)
commenced, despite delays introduced by the manufacturer of the QuickRing
technology on which it is based. SuperLink is still the only non-proprietary,
high speed, interconnect for VME boards.
The first round of shipments of machine code readers to UPS (United Parcel
Service) was completed and our units are in daily operation in UPS's new
automated sortation facility near Chicago, IL.
OPTIMIZING SHAREHOLDER RETURN
The best basis for sustained growth in the value of the Company's stock is
consistent improvement in revenues and earnings. In the past few years some $5
million has been reinvested in order to build our capabilities in Scanalytics
and Vision Systems. This investment is beginning to show return as revenues from
these activities become a meaningful fraction of the total. We firmly believe
that the best utilization of our cash is to grow the Company by internal
development and strategic acquisitions, of which AMBIS (completed in March 1994)
is a typical - though small example. We are actively working with First Albany
Corporation, a local investment bank, to identify target acquisitions and
structure competitive offers. Recognizing that the depressed price of the
company's stock represented an investment opportunity, management (under a prior
authorization) used its discretion to make limited stock repurchases throughout
the year.
SAM OCHLIS RETIRES
Another era in CSPI history closed with the retirement of Samuel Ochlis in
August, 1995. Sam joined the Company in 1974 and served as President for
fourteen years until 1991. He is credited with the introduction of the modern
array processor in 1976 which rapidly became the Company's signature product,
and Cellscan in 1992. He is rightly proud of having steered CSPI through many
difficult periods and product transitions. Sam's legacy lies in our corporate
values of fiscal prudence and conservative planning, which have resulted in the
strength of our balance sheet today. Fortunately we will still benefit from
Sam's wisdom and experience as he continues to serve CSPI as Chairman of the
Board of Directors.
Sincerely,
/s/Sam Ochlis
Sam Ochlis
Chairman of the Board
/s/David Botten
David Botten
President, CEO
{3 4-COLOR PICTURES -- 1 LARGE ROUND, 2 SMALL RECTANGULAR}
Despite overall reductions
in military spending, com-
mercial-off-the-shelf (COTS)
procurements are increasing
rapidly-effectively a change
from make to buy at the prime
contractor level.
[COTS HAS BECOME THE NORM; A
CONTRACTOR MUST NOW ASK FOR AN
EXEMPTION (RARELY GRANTED) TO USE
CUSTOM PARTS.]
EXPLOITING MARKET TRENDS
OUTSOURCING
As product life cycles shorten, product development times must shrink. All of
our commercial OEM customers (e.g. medical imaging manufacturers) outsource
their signal processing needs, purchasing pre-existing products and adapting the
system design accordingly. In military procurement the trend is to contract for
proof of system design without production commitments. Since all of the expense
is in design, prime contractors are forced to reduce risk and cost by
outsourcing all but the system integration and application software. In
addition, military procurement agencies around the world are demanding that
prime contractors employ commercial (COTS) sub-assemblies. They have proven cost
effective, reliable, easier to procure rapidly and significantly higher in
performance. COTS has become the norm; a contractor must now ask for an
exemption (rarely granted) to use custom parts. System designs may have to be
reused in a variety of hazardous environments and a pathway to both ruggedized
(ROTS) and militarized (MOTS) versions is mandatory. Hughes Aircraft Corporation
has licensed the SuperCard design and manufactures a militarized version.
SOFTWARE REUSE
Our customers biggest investment is their applications software. We have
provided a performance upgrade path through four generations of SuperCard, and
our choice of VxWorks as a development environment assures compatibility across
different platforms for future programs.
AUTOMATION
Coming regulations will require that every bag be checked for explosives before
loading onto a commercial aircraft. Present manual systems are inadequate to
meet this requirement and automated examination demands SuperCard levels of
signal processing expertise. In a different field, the interpretation of the
complex electrophoresis patterns produced in DNA fragment analysis (e.g. for DNA
fingerprinting) is repetitive and subjective. Our RFLPscan software
automatically cans the output, compares the pattern to stored standards and
provides a statistically based match.
[AS HARDWARE BECOMES MORE OF A
COMMODITY, SOFTWARE IS EMERGING AS
THE CORE OF OUR ADDED VALUE.]
RIDING TECHNOLOGY ADVANCES
STANDARDIZATION DRIVES MARKETS
We embrace standards as a strategy, working closely with industry groups and
market leaders. All of our OEM customers rely on the field-proven VME form
factor to ensure hardware compatibility. We are also adopting PCI which is
rapidly gaining popularity due to improved performance and lower cost. For data
distribution, where still higher bandwidths are necessary, we have pioneered the
introduction of National Semiconductor's QuickRing into the VME/PCI community.
In the software arena, VxWorks, from Wind River Systems, is the dominant
development environment. CSPI has ported VxWorks to the Intel i860 for existing
SuperCard-4 users, enhanced its multiprocessor capabilities and will carry it
forward to new platforms.
NEW GENERATION OF MICROPROCESSORS
The floating point performance of RISC microprocessors continues to improve,
with multiple vendors and ever higher clock speeds. CSPI has selected Motorola's
Power PC, supported by Analog Devices' 21060, as replacement for the Intel i860.
High density, multiple processor designs mandate the use of low voltage
components and custom ASICs. We are investing heavily into VHDL, the latest
generation of ASIC development tools, to standardize design and simulation
procedures. The majority of our R/D resources are allocated to software
development, both tools and end-user applications. As hardware becomes more of a
commodity, software is emerging as the core of our added value.
A REVOLUTION IN AUTOMATIC IDENTIFICATION
The bar-code world is moving towards the adoption of two-dimensional codes.
Increases in information content, lower printing costs and higher read rates are
just some of the predicted improvements. While many different codes have been
proposed, only those with a substantial installed base will survive as
standards. Maxicode - developed by and already deployed within UPS - is the
leading contender for high-speed sortation applications. Forward looking users
are insisting that new readers have dual (on and two-dimensional) capability,
which today's laser scanners lack. Maxicode, and other similar codes, demands
the inherently higher bandwidth of CCD readers like our Lightning 500.
{3 4-COLOR PICTURES -- 1 LARGE ROUND, 2 SMALL RECTANGULAR}
By embracing standards we
provide our customers the
optimal flexibility and a guar-
antee of continuous product
enhancement.
{3 4-COLOR PICTURES -- 1 LARGE ROUND, 2 SMALL RECTANGULAR}
Our competitive advantage
stems from the engineering
expertise to blend multi-
processor design, data man-
agement, input/output flexibility
and software tools to create win-
ning solutions.
[THIS TOTAL SYSTEM SOLUTION IS SUP-
PORTED BY DEDICATED SPECIALISTS WHO
GUIDE CUSTOMERS THROUGH EVALUATION,
OPTIMIZATION AND INSTALLATION.]
TRANSFORMING TECHNOLOGY INTO TOOLS
SOURCES OF TECHNICAL ADVANTAGE
CSPI has been very successful in importing technology. Scanalytics stems from
academia, under licensing agreements from the University of Massachusetts
Medical Center and the National Cancer Institute. Vision Systems grew from UPS's
internal research and the products that subsequently evolved to meet their
needs. The underlying microprocessor technology that drives our business
advances relentlessly, and maintaining a hardware performance advantage requires
a multi-processor architecture, large memories and distributed data management.
The biggest differentiator lies in software, either a rich development
environment for an OEM's applications engineer or dedicated packages for the
molecular and cell biologist. This total system solution is supported by
dedicated specialists who guide customers through evaluation, optimization and
installation.
SOME EXAMPLES OF OUR STRATEGIES IN ACTION
COTS procurement: CSPI's SuperCard-4 has been selected by the prime contractor,
Loral Federal Systems, for the USY-1 sonar signal processor upgrade. They will
provide a VME based solution that is less expensive than its custom predecessor
and forty times faster, yet fits within the same physical space. Use of COTS
hardware and the popular VxWorks development software led the way to the winning
bid.
Automated sortation: UPS's new Chicago Area Central Hub is the largest and most
automated package sortation facility in the world. CSPI supplied bar-code
readers to control the flow of parcels through the building using
two-dimensional Maxicode to direct them to the correct loading dock.
Visualizing the barely detectable: Fluorescence microscopy provides insight into
the structure and internal activity of living cells. CELLscan's novel approach
to the technique is the least invasive and most sensitive. Researchers at the
University of Connecticut are even able to make quantitative measurements within
the mitochondrial substructures of cells.
CSP INC. AND SUBSIDIARIES SELECTED FINANCIAL DATA
(Amounts in thousands, except per share data)
FISCAL YEAR ENDED AUGUST
1995 1994 1993 1992 1991
OPERATIONS STATEMENT DATA:
Sales $18,526 $19,460 $18,015 $16,035 $13,089
Costs and expenses 18,725 17,425 15,544 14,531 12,548
Operating income (loss) (199) 2,035 2,471 1,504 541
Other income 821 478 426 719 855
Income before income taxes 622 2,513 2,897 2,223 1,396
Income taxes 237 794 940 545 339
Net income $385 $1,719 $1,957 $1,678 $1,057
EARNINGS PER SHARE $0.14 $0.61 $0.70 $0.61 $0.39
Weighted average number of
common shares 2,795 2,823 2,789 2,753 2,685
BALANCE SHEET DATA:
Working capital $22,862 $23,085 $21,873 $19,831 $17,856
Total assets 29,279 29,936 27,853 24,973 22,937
Long term obligations 1,943 1,804 1,746 1,524 1,295
Total liabilities 3,554 3,695 3,539 2,777 2,563
Retained earnings 17,224 16,839 15,120 13,163 11,485
Shareholders equity 25,725 26,241 24,314 22,196 20,374
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
The following table sets forth certain information which is based on Operating
Statement Data:
PERIOD TO PERI0D
DOLLAR CHANGES
(IN THOUSANDS)
1995 1994
PERCENTAGE OF SALES FISCAL YEAR ENDED AUGUST COMPARED TO COMPARED TO
1995 1994 1993 1994 1993
SALES 100.0% 100.0% 100.0% ($934) $1,445
COSTS AND EXPENSES:
Cost of sales 44.1% 40.0% 33.7% 381 1,701
Engineering and development 16.7% 14.5% 17.9% 265 (392)
Marketing and sales 27.0% 24.4% 23.4% 246 538
General and administrative 11.1% 10.6% 11.3% (8) 34
Restructuring 2.2% - - 416 -
Total costs and expenses 101.1% 89.5% 86.3% 1,300 1,881
Operating income (loss) (1.1%) 10.5% 13.7% (2,234) (436)
Other income 4.5% 2.4% 2.4% 343 52
Income before taxes 3.4% 12.9% 16.1% (1,891) (384)
Provision for income taxes 1.3% 4.1% 5.2% (557) (146)
Net income 2.1% 8.8% 10.9% ($1,334) ($238)
MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS-1995 COMPARED TO 1994:
Sales of $18,526,000 were the second highest in the Company's history. Sales for
the Embedded Computing Division represented two thirds of the total with the
SuperCard family of products accounting for 51% of total sales, a decrease of
24% from the prior fiscal year. The decrease in sales was due in part to delays
in procurement of SC-4/4XL and SC-3/3XL, and to lower sales of COTS
(commercial-off-the-shelf) programs to the United States military, primarily the
Department of the Navy. COTS programs continue to be a major source of revenue,
accounting for approximately 35% of total sales for 1995. Shipments of the older
SuperCards (models SC-1 and SC-2/2XL) declined with the completion of prior COTS
programs, and also accounted for part of the reduced sales volume. SuperCards
continue to be used in many other applications in the signal processing and
medical imaging areas.
RTS-860 real-time systems represented approximately 7% of sales, an increase of
73% over the prior year. The RTS-860 is a development system used by either
end-users or developers/integrators to develop applications software. One of a
number of large system sales included equipment used to analyze data from a
Doppler radar detecting wind shear anomalies at the new Osaka airport in Japan.
Combined sales of the older products MAP-4000, and MiniMAP represented 4% of
total sales. The units are shipped only to existing OEMs and volume end-users.
Vision Systems Division sales of machine code readers for United Parcel
Service(UPS) represented 21% of total sales for the year. These shipments
represented the balance of the procurement received from UPS in 1994 for their
recently completed automated sorting hub in Chicago, IL.
Scanalytics Division (bio-instrumentation for molecular and cell biology) sales
represented approximately 12% of total revenues, a 50% increase over the prior
fiscal year. The improvement in sales was due to the increased shipments of
AMBIS, CELLscan and applications specific software packages (respectively 48%,
26%, and 19% of the total Scanalytics sales). The sales of application specific
software modules (DNAScan, RFLPScan etc.) increased by 67% and CELLscan sales
were approximately 64% higher than the prior year.
North American sales represented 86% of total sales, a 3% increase over the
prior year. The other geographic areas experienced decreases in sales due to the
decline in military procurement and slow economic recovery in foreign markets.
Whilst there has been some improvement in the economy of our international
markets, it is important to note that the procurement cycles for our products
are much longer than in the North American market.
The Company restructured and consolidated its operations in November 1994. The
restructuring was necessitated by the change in mix of the Company's business to
lower margin products sold by the Vision Systems and Scanalytics Divisions. The
Company reduced its work force by thirteen percent, relocated its French
subsidiary and closed its San Diego manufacturing operation. The Company
estimated the costs of restructuring to be $409,000 and expensed this amount in
the first fiscal quarter of 1995. The actual costs were $416,000, of which
$288,000 represented severance costs and the remaining $128,000 was due to the
closure of the San Diego manufacturing operation. The restructuring reduced the
annual operating expenses of the Company by over $1,000,000.
Cost of sales as a percentage of sales increased to 44%. The increase of 4% over
1994 was due primarily to product mix. Both the Vision Systems and Scanalytics
businesses have higher, per unit, costs of goods sold. Continuing competitive
pressure in the Embedded Computing business required larger discounts to secure
the successful award of some contracts with both new and existing customers.
Approximately $167,000 of obsolete inventory was written off. Other costs
included six months of running the San Diego AMBIS manufacturing operation,
which was closed down in February 1995 as part of an overall restructuring. The
Company continues to take steps to lower its manufacturing overhead and improve
the overall efficiency in order to lower the cost of goods sold. The outlook
going forward is that the cost of sales, as a percent of sales, will probably
not increase significantly from what we have experienced this fiscal year unless
there are further changes in product mix (if, for example, a large portion of
the future business comes directly from additional orders from UPS for machine
code readers).
Engineering and development expenditures increased by approximately 9% from the
prior fiscal year. The major portion of the increase being for outside services
and the purchase of new equipment and software for the development of our ASIC
(Application Specific Integrated Circuit) capability for the Embedded Computing
Division. Other increases included expenses incurred in the improvement of the
machine code reader for the Vision Systems Division. Scanalytics Division
expenses declined by 8% from the prior year, primarily due to a minor reduction
in staff.
Sales and marketing expenses increased by 5% from the previous fiscal year. The
Scanalytics Division expenses increased 40% over the prior year and the Vision
Systems Division, in its initial year of operation, represented 11% of overall
sales and marketing expenses. The major portion of the Vision Systems increase
was due to the transfer of personnel from the Embedded Computer Division and
start up expenses, which included literature, advertising, trade shows and other
normal operating expenses. The Scanalytics Division increase in expenses was due
in part to the addition of the four employees for customer support, sales and
marketing personnel added as part of the AMBIS purchase for a complete fiscal
year, additional sales commissions for the increased sales, and advertising and
promotional programs for the CELLscan and modular software packages. The
Embedded Computer Division expenses declined by approximately 19% from the prior
year. Reduced expenses were due to reorganizing the French sales office, staff
reductions in marketing and field operations (both from attrition and
restructuring), decreased advertising and lower commissions due to the reduced
sales volume.
General and administrative expenses were flat compared to the prior fiscal year.
They included expenses related to a settlement reached with the Department of
Commerce concerning the alleged violation of export regulations in 1990/1991.
The settlement resulted in an $82,000 expense in this fiscal year (an additional
$50,000 was accrued in the prior year) and additional legal fees. Other expenses
included a merger and acquisition program, with costs for advisor and consulting
services, and additional consulting services in the implementation of a new
manufacturing and accounting system. These incremental expenses were offset by a
reduction in bonus payments.
Other income increased by 72% over the prior year, due primarily to an increase
in interest income. The Company invested a larger percentage of its cash in
taxable instruments during the year, due to lower anticipated operating income.
The taxable securities have a higher rate of return on a pre-tax basis than our
prior year non-taxable investments and thus increase the yield. The Company
continues its conservative investment strategy of maintaining a short-term
liquid position while maximizing return on an after-tax basis with as limited
exposure of principal as possible. As a result of maintaining a liquid position,
the Company believes that it has been able to avoid borrowing for capital needs,
has been able to augment its operating results and is well-positioned to make an
acquisition or a joint venture if appropriate opportunities arise.
The Company's effective tax rate was greater than the statutory rates for both
federal and state taxes since the loss of $202,000 from its French subsidiary
operation (a French corporation) could not be deducted from either federal or
state taxes. There were some benefits against statutory rates for tax-exempt
investment income, the foreign sales corporation and research and development
credits.
RESULTS OF OPERATIONS-1994 COMPARED TO 1993:
Sales of $19,460,000 were a record high for the Company. It was also the fifth
year of increased revenues. The SuperCard family of products represents the
major source of revenue, accounting for 65% of total sales. SuperCard sales
increased by 8% over 1993 due to the shipment of SC-2/2XL and SC-3/3XL which
represented 45% of total sales. The new SC-4/4XL represented 20% of the total
sales. Sales of COTS program represented approximately 45% of sales.
The Company received a $6.2 million order from United Parcel Service (UPS) for
production of machine code readers. Sales to UPS represented 13% of total sales
for the year, representing only a portion of the overall procurement.
Sales of the older products MAP-4000 and MiniMAP continued to decline, and
represented only 4% of total sales. RTS-860 real-time systems represented
approximately 4% of sales.
Scanalytics Division sales represented approximately 9% of total revenues with a
30% increase over the prior fiscal year. The increase in sales was due in part
to the acquisition of certain assets of AMBIS Inc. of San Diego, California (a
manufacturer of radio-isotopic imaging instruments) in March, 1994. The sales of
AMBIS products represented approximately 19% of Scanalytics sales. MasterScan
sales were down by 38% compared to the prior year due to a change in focus from
selling commodity hardware with our software to that of selling application
specific software modules. CELLscan sales were at approximately the same level
as the prior year.
North American sales represented 83% of total sales. This was due to the
continued success of SuperCards and the UPS shipments. Another geographic area
with increased sales was the Far East, with increased SuperCards and RTS-860
sales and continued success of Scanalytics products in Japan. Middle East sales
also grew due to shipments to a large OEM. European sales continued to decline
due to continuing poor economic conditions.
Cost of sales as a percentage of sales increased to 40%. This was an increase of
6.3% over the prior fiscal year and was due to increased competition,
introductory pricing on the new SuperCard-4/4XL products, the addition of the
AMBIS manufacturing operation and lower prices on specially manufactured units
for UPS. The continuing competitive pressures in the Embedded Computing business
required larger discounts to secure the successful award of some business with
both new and existing customers. The purchase of AMBIS products required the
hiring of three AMBIS employees responsible for the manufacturing of products
and setting up a small manufacturing facility in San Diego, California.
Engineering and development expenditures decreased by approximately 12% from
the prior fiscal year. The major portion of the reduction (60%) was in
Scanalytics labor costs while the Embedded Computer division had a large
reduction in the procurement of materials and outside service costs.
Sales and marketing expenses increased by 13% from the previous fiscal year. The
Embedded Computer division accounted for 55% of the increase. The major portion
of the increase was due to the expansion of the Marketing and Sales staff by
three employees and additional commissions. The Scanalytics Division represented
45% of the total increase in expenses from redeployment of staff (represented
30% of the increase) and the additional four employees added as part of the
AMBIS asset purchase. There was increased advertising and promotional expenses
related to the announcement of new software and AMBIS products.
General and administrative expenses were approximately at the same level as the
prior fiscal year. There were increased expenses related to the merger and
acquisition program and other outside services which were offset by a reduction
in bonus expenses and personnel.
Other income increased by 12% over the prior year due to reductions in the loss
on foreign exchange from our French operation.
The Company's effective tax rate has been reduced from the statutory rates for
both federal and state taxes due to benefits from tax-exempt investment income,
the foreign sales corporation and research and development credits.
FINANCIAL POSITION, CAPITAL RESOURCES AND LIQUIDITY:
The Company's solid financial position continued into fiscal year 1995. During
the fiscal year the Company repurchased 117,900 shares of its own common stock
for $952,000, leading to a decrease in working capital of $223,000 from the
prior fiscal year. Working capital had increased by $1.2 million to $23.1
million on August 26, 1994, from $21.9 million on August 27, 1993. The Company's
accounts receivable decreased by $1.2 million to a more typical level of $3.9
million at August 25, 1995. Inventory decreased to $2.1 million from $3.2
million due to completion of the UPS order, AMBIS consolidation, inventory write
off and improved just-in-time inventory procurement. The inventory levels are
expected to remain more in line with typical industry norms and we expect to
continue to improve inventory turns.
The Company's cash and marketable securities increased by approximately $1.9
million.
The Company spent $988,000, $771,000 and $833,000 respectively on capital
improvements during the years 1995, 1994 and 1993.
Management believes that all the Company's current and foreseeable needs can be
met through working capital generated by operations and investments.
INFLATION AND CHANGING PRICES:
Management does not believe that inflation and changing prices had a significant
impact on sales or operating income for 1995, 1994 and 1993. There is no
assurance, however, that the Company's business will not be materially and
adversely affected by inflation and changing prices in the future.
CSP INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
August 25, 1995 and August 26, 1994
(dollars in thousands, except for par value)
AUGUST 25, AUGUST 26,
1995 1994
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $11,069 $8,556
Marketable securities (Note 2) 6,482 7,055
Accounts receivable, net 3,933 5,084
Inventories (Note 3) 2,150 3,192
Deferred income taxes (Note 4) 368 381
Prepaid expenses 471 708
Total current assets 24,473 24,976
PROPERTY, EQUIPMENT AND IMPROVEMENTS, NET (NOTE 5) 3,470 3,276
OTHER ASSETS:
Land held for future development 163 163
Deferred income taxes (Note 4) 355 323
Other assets 818 1,198
Total other assets 1,336 1,684
Total assets $29,279 $29,936
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses (Note 6) $1,461 $1,689
Income taxes payable 150 202
Total current liabilities 1,611 1,891
DEFERRED COMPENSATION AND RETIREMENT PLANS (NOTE 8) 1,943 1,804
COMMITMENTS AND CONTINGENCIES (NOTE 9)
SHAREHOLDERS' EQUITY: (NOTES 7 AND 9)
Common stock, $.01 par; authorized, 7,500,000
shares; issued 2,922,034 and 2,912,409 shares 29 29
Additional paid-in capital 10,187 10,136
Retained earnings 17,224 16,839
Equity adjustment from foreign currency translation 65 65
27,505 27,069
Less treasury stock, at cost, 273,314 and 155,414 shares (Note 9) 1,780 828
Total shareholders' equity 25,725 26,241
Total liabilities and shareholders' equity $29,279 $29,936
See accompanying notes to consolidated financial statements.
CSP INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended August 25, 1995, August 26, 1994 and August 27, 1993
(Amounts in thousands, except for per share data)
1995 1994 1993
SALES (NOTE 10) $18,526 $19,460 $18,015
COSTS AND EXPENSES:
Cost of sales 8,157 7,776 6,075
Engineering and development 3,099 2,834 3,226
Marketing and sales 4,993 4,747 4,209
General and administrative 2,060 2,068 2,034
Restructuring (Note 11) 416 --- ---
Total costs and expenses 18,725 17,425 15,544
OPERATING INCOME (LOSS) (199) 2,035 2,471
OTHER INCOME (EXPENSE):
Dividend income 13 25 66
Interest income 804 475 464
Interest expense (50) (31) (36)
Other 54 9 (68)
Total other income 821 478 426
Income before income taxes 622 2,513 2,897
INCOME TAXES (NOTE 4) 237 794 940
Net income $385 $1,719 $1,957
EARNINGS PER SHARE $0.14 $0.61 $0.70
WEIGHTED AVERAGE SHARES OUTSTANDING 2,795 2,823 2,789
See accompanying notes to consolidated financial statements.
CSP INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Year Ended August 25, 1995, August 26, 1994 and August 27, 1993
(Dollars in thousands)
EQUITY
ADJUSTMENT
FROM FOREIGN TOTAL
COMMON STOCK PAID-IN RETAINED CURRENCY TREASURY SHAREHOLDERS'
SHARES AMOUNT CAPITAL EARNINGS TRANSLATION STOCK EQUITY
BALANCE, AUGUST 28, 1992 2,850,984 $29 $9,767 $13,163 $65 ($828) $22,196
Net income -- -- -- 1,957 -- -- 1,957
Exercise of stock options 26,625 -- 161 -- -- -- 161
BALANCE, AUGUST 27, 1993 2,877,609 29 9,928 15,120 65 (828) 24,314
Net income -- -- -- 1,719 -- -- 1,719
Exercise of stock options 34,800 -- 208 -- -- -- 208
BALANCE, AUGUST 26, 1994 2,912,409 29 10,136 16,839 65 (828) 26,241
Net income -- -- -- 385 -- -- 385
Exercise of stock options 9,625 -- 51 -- -- -- 51
Purchase of Treasury Stock -- -- -- -- -- (952) (952)
BALANCE, AUGUST 25, 1995 2,922,034 $29 $10,187 $17,224 $65 ($1,780) $25,725
See accompanying notes to consolidated financial statements.
CSP INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended August 25, 1995, August 26, 1994 and August 27, 1993
(Dollars in thousands)
1995 1994 1993
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $385 $1,719 $1,957
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 792 658 651
Deferred compensation and retirement plans 139 58 222
Deferred income taxes (19) (109) (81)
Other -- (13) (67)
Changes in current assets and liabilities:
(Increase) decrease in accounts receivable, net 1,151 (2,232) (1,393)
(Increase) decrease in inventories 1,042 (1,291) (367)
Decrease in refundable income taxes -- -- 193
(Increase) decrease in prepaid expenses 237 (314) (56)
Increase (decrease) in accounts payable and accrued expenses (228) (120) 491
Increase (decrease) in income taxes payable (52) 70 49
Net cash from operating activities 3,447 (1,574) 1,599
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities (159,099) (130,013) (104,807)
Sales of marketable securities 159,674 129,519 105,611
Business acquired -- (496) --
Property, equipment and improvements (988) (771) (833)
Other 380 (738) (15)
Net cash used in investing activities (33) (2,499) (44)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from stock options 51 208 161
Purchase of treasury stock (952) -- --
Net cash provided by (used in) financing activities (901) 208 161
Net increase (decrease) in cash 2,513 (3,865) 1,716
Cash and cash equivalents, beginning of year 8,556 12,421 10,705
Cash and cash equivalents, end of year $11,069 $8,556 $12,421
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for income taxes, net $323 $893 $747
Cash paid for interest $50 $31 $36
Business acquired $645
Less liabilities assumed 149
Cash paid $496
See accompanying notes to consolidated financial statements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For years ended August 25, 1995, August 26, 1994, and August 27, 1993
ORGANIZATION AND BUSINESS
The Company designs, manufactures and markets embedded processors which are
small, low power special-purpose computers which enhance a system's ability to
perform high-speed arithmetic. The Company also develops and markets turnkey
image analysis workstations targeted toward the biological sciences and
industrial bar-code readers.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FISCAL YEAR:
The Company's fiscal year end is on the last Friday in August.
PRINCIPLES OF CONSOLIDATION:
The consolidated financial statements include the accounts of the Company and
its subsidiaries. All significant inter-company accounts and transactions have
been eliminated.
FOREIGN CURRENCY TRANSLATION:
Monetary assets and liabilities of the Company's foreign subsidiary are
translated into U.S. dollars using the exchange rate in effect at each balance
sheet date. Non monetary assets and liabilities are translated into U.S. dollars
using historical exchange rates. Sales and expenses for each year are translated
using weighted average exchange rates.
MARKETABLE SECURITIES:
Investments consist of corporate bonds and notes, government agency bonds, and
money market funds. Most investments mature within a two year period. The
Company classifies its marketable securities as held-to-maturity based on its
ability and intent to hold these securities until maturity. Held-to-maturity
securities are recorded at amortized cost, which approximates market value.
Interest income is accrued as earned. Dividend income is recognized as income on
the date the stock trades "ex-dividend". The cost of marketable securities sold
is determined on the specific identification method and realized gains or losses
are reflected in income.
INVENTORIES:
Inventories are stated at the lower of cost or market; cost is determined
principally by use of the average-cost method.
PROPERTY, EQUIPMENT AND IMPROVEMENTS:
The components of property, equipment and improvements are stated at cost. The
Company provides for depreciation by use of the straight-line method over the
estimated useful lives of the related assets.
PRODUCT WARRANTY:
The Company ordinarily provides a one year warranty. In addition, certain major
customers are granted extended warranties. The Company accrues estimated costs,
which in the opinion of management, are adequate to cover such warranty
obligations.
REVENUE RECOGNITION:
Revenues from product sales are recognized at the time of shipment.
ENGINEERING AND DEVELOPMENT EXPENSES:
Engineering and development expenditures for company- sponsored projects are
charged to expenses as incurred.
INCOME TAXES:
As of August 28, 1993, the Company changed its method of accounting for income
taxes from the deferred method to the asset and liability method. Under the
asset and liability method, deferred tax assets and liabilities are recognized
for the future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. There
was no cumulative effect of the change in the method of accounting for income
taxes.
Under the deferred method of accounting for income taxes, which was applied in
1993 and prior years, deferred income taxes were recognized for income and
expense items that were reported in different years for financial reporting
purposes and income tax purposes using the tax rate applicable in the year of
the calculation.
EARNINGS PER SHARE:
Earnings per share are calculated based upon the weighted average number of
common shares outstanding, adjusted when dilutive, for the number of shares
issuable upon the exercise of stock options after the assumed purchase of shares
with the related proceeds.
2. MARKETABLE SECURITIES
At August 25, 1995 and August 26, 1994, marketable securities consist of the
following:
(In thousands) 1995 1994
Marketable equity securities,
at cost $296 $294
Less valuation allowance 9 7
Marketable equity securities,
at market 287 287
Bonds and municipal revenue
notes, at cost 5,787 6,395
Money market funds and
commercial paper 118 126
U.S. treasury bills 290 247
Total $6,482 $7,055
Assets of $686,000 and $638,000 at August 25, 1995 and August 26, 1994,
respectively, are held in a rabbi trust and generally are available only to pay
certain retirement benefits of a key employee.
3. INVENTORIES
Inventories consist of the following:
(In thousands) 1995 1994
Raw materials $ 851 $1,248
Work-in-process 822 1,272
Finished goods 477 672
Total $2,150 $3,192
4. INCOME TAXES
Reconciliations of expected income tax expense to actual income tax expense are
as follows:
(In thousands) 1995 1994 1993
Computed expected tax expense $211 34.0% $854 34.0% $985 34.0%
Increases (reductions) in taxes resulting from:
Dividend exclusion (42) (6.8) -- -- (16) (0.6)
Tax exempt interest (74) (11.9) (133) (5.3) (119) (4.1)
Research and experimentation and
investment tax credits (37) (5.9) (89) (3.5) (115) (4.0)
State income taxes, net of federal tax benefit 47 7.6 148 5.9 152 5.3
Non-taxable FSC earnings (26) (4.2) (29) (1.2) (31) (1.1)
Other items 158 25.4 43 1.7 84 2.9
Income tax expense $237 38.1% $794 31.6% $940 32.4%
For the years ended 1995 and 1994 temporary differences which give rise to a
significant portion of deferred tax assets (liabilities) are as follows:
1995 1994
DEFERRED TAX ASSETS:
Deferred compensation $834 $748
Other accruals 118 98
Bad debt reserves 41 41
Inventory capitalization and reserves 192 176
Unrealized loss on securities 43 41
Gross deferred tax assets $1,228 $1,104
Less valuation allowance (317) (285)
Deferred tax asset less valuation allowance $911 819
DEFERRED TAX LIABILITY:
Depreciation (188) (115)
Net deferred tax asset $723 $704
The valuation allowance was $317,000 and $285,000 at August 25, 1995 and August
26, 1994. The valuation allowance was established due to the long-term nature of
certain deferred compensation and retirement obligations for which the tax
benefit will be realized over an extended period of time. In assessing the
realizability of deferred tax assets, management considers whether it is more
likely than not that some portion or all of the deferred tax assets will not be
realized. Based upon the level of historical taxable income and projections for
future taxable income over the periods which the deferred tax assets are
deductible, management believes it is more likely than not the Company will
realize the benefits of these deductible differences, net of the existing
valuation allowance at August 25, 1995.
The provisions for income taxes are comprised of the following:
(In thousands) 1995 1994 1993
CURRENT:
Federal $232 $695 $788
State 24 208 233
$256 $903 $1,021
DEFERRED:
Federal (15) (85) (63)
State (4) (24) (18)
(19) (109) (81)
$237 $794 $940
5. PROPERTY, EQUIPMENT AND IMPROVEMENTS, NET
Property, equipment and improvements, net consist of the following:
(In thousands) 1995 1994
Land $587 $587
Building and improvements 1,334 1,303
Equipment 9,375 8,353
Automotive equipment 79 79
11,375 10,322
Less accumulated
depreciation and amortization 7,905 7,046
Property, equipment and
improvements, net $3,470 $3,276
6. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consist of the following:
(In thousands) 1995 1994
Accounts payable $606 $513
Commissions 113 143
Compensation and fringe benefits 341 535
Customer advances 163 205
Professional fees and shareholders'
reporting services 108 135
Taxes, other than income 36 65
Other, individually less than 5%
of current liabilities 94 93
$1,461 $1,689
During 1994 the Company was notified by the Department of Commerce (DOC) about
possible violations of certain export regulations during the period September
15, 1990 to July 6, 1991. The Company has reached an agreement with the DOC
subject to final documentation, pursuant to which the Company will incur a
penalty of $160,000 of which $132,000 will be paid and $28,000 will be suspended
if the Company complies with export regulations for a period of one year. The
Company has accrued the amount to be paid in the agreed upon settlement at
August 25, 1995 ($50,000 of which had been accrued as of August 26, 1994).
7. STOCK OPTIONS
In 1991, the Company adopted the 1991 Stock Option Plan covering 250,000 shares
of common stock. Under the Plan, both incentive stock options and non-qualified
stock options may be granted to officers, key employees and other persons
providing services to the Company. In addition, up to 20,000 shares are
allocated for annual non-discretionary grants of 1,000 shares each to
non-employee directors of the Company who are serving on the last business day
of January in each year.
The 1991 Plan supersedes three earlier plans, each of which was terminated in
1991.
The following is a summary of common stock option activity for the three years
ended August 25, 1995:
NUMBER OF SHARES
OPTION 1991 1987 1981 1979
PRICES PLAN PLAN PLAN PLAN TOTAL
OUTSTANDING AUGUST 28, 1992 $5.00-$9.75 76,500 9,000 175,800 12,000 273,300
Granted $9.13-$10.75 29,025 -- -- -- 29,025
Exercised $5.00-$6.63 -- (3,000) (23,625) -- (26,625)
Expired & terminated $5.38-$5.63 -- -- (1,750) (12,000) (13,750)
OUTSTANDING AUGUST 27, 1993 $5.00-$10.75 105,525 6,000 150,425 -- 261,950
Granted $9.50 4,000 -- -- -- 4,000
Exercised $5.00-$9.00 (500) -- (34,300) -- (34,800)
Expired & terminated $9.00-$9.125 (2,000) -- -- -- (2,000)
OUTSTANDING AUGUST 26,1994 $5.00-$10.75 107,025 6,000 116,125 -- 229,150
Granted $7.625-$8.50 49,000 -- -- -- 49,000
Exercised $5.00-$6.625 -- -- (9,625) -- (9,625)
Expired & terminated $5.00-$10.75 (17,975) (6,000) (2,375) -- (26,350)
OUTSTANDING AUGUST 25,1995 $5.00-$10.75 138,050 -- 104,125 -- 242,175
Available for future grants -- 111,450 -- -- -- 111,450
Exercisable $5.00-$10.75 76,900 -- 104,125 -- 181,025
8. DEFERRED COMPENSATION AND RETIREMENT PLANS
The Company has a 401(k) Retirement Plan under which the Company matches a
portion of the employee's salary reduction contributions and may make
discretionary contributions to the plan. All employees with one year of
continuous service are eligible for the plan. All Company contributions are
fully vested. Contributions by the Company were $122,000, $167,000, and $175,000
for 1995, 1994 and 1993, respectively. The Company has a Supplemental Retirement
Plan for certain employees that provides for payments (generally over 15 years)
upon retirement, death or disability. The annual benefit is based upon a
percentage of salary at the inception of the plan, plus an annual percentage
increase, plus interest. In addition, the Company adopted deferred compensation
plans for key executives that provide for payments, over a ten-year period, upon
retirement, death or disability based upon a percentage of salary at that time.
The charge to expense for the plans for 1995, 1994 and 1993 amounted to
$207,000, $160,000 and $222,000 respectively.
9. COMMITMENTS AND CONTINGENCIES
LEASES:
The Company occupies office space under lease agreements expiring at various
dates during the next two years. The leases are classified as operating leases
and provide for the payment of real estate taxes, insurance, utilities and
maintenance.
At August 25, 1995, the Company is obligated under noncancelable operating
leases (net of minor amounts of sublease income) as follows:
(In thousands)
Fiscal year ending August: OPERATING LEASES
1996 $40
1997 $14
Occupancy costs under the operating leases approximated $76,000 in 1995, $76,000
in 1994, and $75,000 in 1993.
STOCK REPURCHASE:
On October 9, 1986 the Board of Directors authorized the Company to repurchase
up to 282,723 of the outstanding stock at market prices. The timing of stock
purchases are made at the discretion of management. Through August 25, 1995, the
Company has repurchased 268,950 shares or 95% of the total authorized.
On September 28, 1995 the Board of Directors authorized the Company to
repurchase up to an additional 150,000 shares of the outstanding stock at market
prices.
10. SALES BY MAJOR CUSTOMERS AND GEOGRAPHIC AREAS
Sales (in thousands of dollars) to individual customers constituting 10% or more
of total sales were as follows:
1995 1994 1993
Customer A -- -- -- -- $4,769 26%
Customer B -- -- $3,348 17% -- --
Customer C $3,948 21% $2,639 14% -- --
The Company anticipates that, for the foreseeable future, a significant
percentage of its sales will be dependent upon a relatively small number of
customers.
The Company's sales by geographic area are as follows:
(In thousands) 1995 1994 1993
North America $15,992 $16,234 $14,443
Europe 1,207 1,392 2,362
Middle East 318 535 431
Far East 953 1,299 705
South America 56 -- 74
$18,526 $19,460 $18,015
11. RESTRUCTURING EXPENSES
In November 1994 the Company accrued approximately $409,000 of the estimated
costs to be incurred in consolidating its manufacturing operations and reducing
its workforce. Actual costs incurred of approximately $416,000 are comprised of
severance costs of $288,000,and $128,000 for closing the San Diego manufacturing
operation.
INDEPENDENT AUDITORS' REPORT
BOARD OF DIRECTORS AND SHAREHOLDERS CSP INC.:
We have audited the accompanying consolidated balance sheets of CSP Inc. and
subsidiaries as of August 25, 1995 and August 26, 1994 and the related
consolidated statements of operations, shareholders' equity and cash flows for
each of the years in the three year period ended August 25, 1995. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of CSP Inc. and
subsidiaries as of August 25, 1995 and August 26, 1994, and the results of their
operations and their cash flows for each of the years in the three year period
ended August 25, 1995, in conformity with generally accepted accounting
principles.
KPMG Peat Marwick
September 28, 1995
Boston, Massachusetts
CORPORATE INFORMATION
DIRECTORS
Samuel Ochlis
Chairman of the Board
CSP Inc.
David S. Botten
President and
Chief Executive Officer
CSP Inc.
Boruch B. Frustajer
President
BBF Corp.
Stanford A. Fingerhood
Senior Vice President
Laidlaw Holdings, Inc.
John Ingram, PhD
Research Fellow
Schlumberger Limited
C. Shelton James
President
Fundamental Management Corp.
Sandford Smith
President and CEO
Repligen Corp.
OFFICERS
Samuel Ochlis
Chairman of the Board
David S. Botten
President and
Chief Executive Officer
Michael M. Stern
Vice President of Operations
and Treasurer
Gary W. Levine
Vice President of Finance
and Chief Financial Officer
James A. Waggett
Vice President of Advanced
Development
James E. Storer
Chief Scientist and
Vice President
Donald E. Johansen
Vice President of Business
Development
Dean Hanley
Clerk
Foley, Hoag & Eliot
CORPORATE OFFICE
CSP, Inc.
40 Linnell Circle
Billerica, Massachusets 01821
508 663-7598
508 663-0150 fax
GENERAL INFORMATION
General Counsel
Foley, Hoag & Eliot
Boston, Massachusetts
Transfer Agent
American Stock Transfer Co.
New York, New York
Auditors
KPMG-Peat Marwick LLP
Boston, Massachusetts
Stock Information
Stock Traded Over the Counter
NASDAQ Symbol: CSPI
FORM 10-K
A copy of the Company's Annual Report on Form 10-K for fiscal 1995 as filed with
the Securities and Exchange Commission will be furnished without charge to any
stockholder upon written request to the Vice President of Finance, CSP Inc. 40
Linnell Circle, Billerica, Massachusetts 01821.
(Back Cover)
CSPI
40 Linnell Circle
Billerica, Massachusetts 01821
508 663-7598
508 663-0150 fax