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<SEC-DOCUMENT>/in/edgar/work/0000356037-00-000016/0000356037-00-000016.txt : 20000713
<SEC-HEADER>0000356037-00-000016.hdr.sgml : 20000713
ACCESSION NUMBER:		0000356037-00-000016
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20000531
FILED AS OF DATE:		20000712

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			CSP INC /MA/
		CENTRAL INDEX KEY:			0000356037
		STANDARD INDUSTRIAL CLASSIFICATION:	 [3577
]		IRS NUMBER:				042441294
		STATE OF INCORPORATION:			MA
		FISCAL YEAR END:			0831
</COMPANY-DATA>

		FILING VALUES:
			FORM TYPE:		10-Q
			SEC ACT:		
			SEC FILE NUMBER:	000-10843
			FILM NUMBER:		671636
</FILING-VALUES>

			BUSINESS ADDRESS:	
				STREET 1:		40 LINNELL CIRCLE
				CITY:			BILLERICA
				STATE:			MA
				ZIP:			01821
				BUSINESS PHONE:		5086637598
</BUSINESS-ADDRESS>

				MAIL ADDRESS:	
					STREET 2:		40 LINNELL CIRCLE
					CITY:			BILLERICA
					STATE:			MA
					ZIP:			01821
</MAIL-ADDRESS>
</FILER>
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>0001.htm
<DESCRIPTION>FORM 10-Q 05/31/00
<TEXT>

<HTML>
<HEAD>
<TITLE>SECURITIES AND EXCHANGE COMMISSION</TITLE>
</HEAD>
<BODY>

<B><FONT SIZE=4><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;UNITED STATES<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SECURITIES AND EXCHANGE COMMISSION<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;</FONT>Washington, D.C. 10549<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT SIZE=4>___________________<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT SIZE=5>FORM 10-Q</P>
</B></FONT><FONT FACE="Courier">
</FONT><FONT SIZE=3><P>(Mark One)</P>

<B><P>[X]&nbsp;Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934<BR>
</B>For the quarterly period ended<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;May 31, 2000&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
</U><P ALIGN="CENTER"></P>
<P ALIGN="CENTER">or</P>

<B><P>[&nbsp;&nbsp;]&nbsp;&nbsp;Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934<BR>
</B>For the transition period from<U> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;to&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P><DIR>
<DIR>

</U><P>&#9;</P>

<P>&nbsp;</P></DIR>
</DIR>

<B><P>Commission File Number<U>: &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;0-10843&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
</P>
</B></U>
<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT><B><U><FONT SIZE=5>CSP Inc.&nbsp;<BR>
</U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B></FONT><FONT SIZE=3>(Exact name of registrant as specified in its
charter)</P>

<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Massachusetts&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;
</U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B>(State or other jurisdiction of&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(I.R.S. Employer<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;incorporation or organization)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Identification No.)</P>

<B><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>40 Linnell Circle, Billerica, Massachusetts&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;01821-3901<BR>
</U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B>(Address of principal executive offices)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Zip Code)</P>

<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><U>(978) 663-7598&nbsp;             <BR>
</U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B>(Registrant's
telephone number, including area code)</P>

<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><U>None&nbsp;</B></U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B>(Former name, former address, former fiscal year, if changed since last report)</P>

<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 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.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;[X]&nbsp;&nbsp;Yes&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;

<P>&nbsp;</P>
<B><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;APPLICABLE ONLY TO CORPORATE
ISSUERS:<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B>Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.</P>

<B><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Class&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&n
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Common Stock, $.01 par value&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;    3,587,415   shares</B> </P></FONT>
<P ALIGN="CENTER"><CENTER><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=555>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=26><P></P></TD>
<TD WIDTH="68%" VALIGN="TOP" HEIGHT=26>
<B><FONT SIZE=3><P ALIGN="CENTER">INDEX</B></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=26><P></P></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=24><P></P></TD>
<TD WIDTH="68%" VALIGN="TOP" HEIGHT=24><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=24>
<B><FONT SIZE=3><P ALIGN="CENTER">PAGE</B></FONT></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=24><P></P></TD>
<TD WIDTH="68%" VALIGN="TOP" HEIGHT=24><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=24>
<B><U><FONT SIZE=3><P ALIGN="CENTER">NUMBER</B></U></FONT></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=24>
<B><FONT SIZE=3><P>PART I.</B></FONT></TD>
<TD WIDTH="68%" VALIGN="TOP" HEIGHT=24>
<B><FONT SIZE=3><P>FINANCIAL INFORMATION:</B></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=24><P></P></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=24><P></P></TD>
<TD WIDTH="68%" VALIGN="TOP" HEIGHT=24><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=24><P></P></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=24>
<B><FONT SIZE=3><P>Item 1.</B></FONT></TD>
<TD WIDTH="68%" VALIGN="TOP" HEIGHT=24>
<B><FONT SIZE=3><P>Financial Statements</B></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=24><P></P></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=24><P></P></TD>
<TD WIDTH="68%" VALIGN="TOP" HEIGHT=24>
<FONT SIZE=3><P>Consolidated Balance Sheets</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=24>
<FONT SIZE=3><P ALIGN="CENTER">3</FONT></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=24><P></P></TD>
<TD WIDTH="68%" VALIGN="TOP" HEIGHT=24>
<FONT SIZE=3><P>Consolidated Statements of Operations</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=24>
<FONT SIZE=3><P ALIGN="CENTER">4</FONT></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=24><P></P></TD>
<TD WIDTH="68%" VALIGN="TOP" HEIGHT=24>
<FONT SIZE=3><P>Consolidated Statements of Cash Flows</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=24>
<FONT SIZE=3><P ALIGN="CENTER">5</FONT></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=24><P></P></TD>
<TD WIDTH="68%" VALIGN="TOP" HEIGHT=24>
<FONT SIZE=3><P>Notes to Consolidated Financial Statements</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=24>
<FONT SIZE=3><P ALIGN="CENTER">6</FONT></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=24><P></P></TD>
<TD WIDTH="68%" VALIGN="TOP" HEIGHT=24><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=24><P></P></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=24>
<B><FONT SIZE=3><P>Item 2.</B></FONT></TD>
<TD WIDTH="68%" VALIGN="TOP" HEIGHT=24>
<B><FONT SIZE=3><P>Management's Discussion and Analysis of Financial</B></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=24><P></P></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=24><P></P></TD>
<TD WIDTH="68%" VALIGN="TOP" HEIGHT=24>
<B><FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;Condition and Results of Operations</B></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=24>
<FONT SIZE=3><P ALIGN="CENTER">10</FONT></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=24><P></P></TD>
<TD WIDTH="68%" VALIGN="TOP" HEIGHT=24><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=24><P></P></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=24>
<B><FONT SIZE=3><P>PART II.</B></FONT></TD>
<TD WIDTH="68%" VALIGN="TOP" HEIGHT=24>
<B><FONT SIZE=3><P>OTHER INFORMATION:</B></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=24><P></P></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=24><P></P></TD>
<TD WIDTH="68%" VALIGN="TOP" HEIGHT=24><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=24><P></P></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=24>
<FONT SIZE=3><P>Item 4.</FONT></TD>
<TD WIDTH="68%" VALIGN="TOP" HEIGHT=24>
<FONT SIZE=3><P>Submission of Matters to  a vote of Security Holders</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=24>
<FONT SIZE=3><P ALIGN="CENTER">14</FONT></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=24>
<FONT SIZE=3><P>Item 6.</FONT></TD>
<TD WIDTH="68%" VALIGN="TOP" HEIGHT=24>
<FONT SIZE=3><P>Exhibits &amp; Reports on Form 8-K</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=24>
<FONT SIZE=3><P ALIGN="CENTER">14</FONT></TD>
</TR>
<TR><TD WIDTH="15%" VALIGN="TOP" HEIGHT=24><P></P></TD>
<TD WIDTH="68%" VALIGN="TOP" HEIGHT=24><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=24><P></P></TD>
</TR>
</TABLE>
</CENTER></P>

<FONT SIZE=3>
<B><P>&nbsp;</P>
<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CSP INC. AND SUBSIDIARIES<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CONSOLIDATED BALANCE SHEETS<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Amounts in thousands, except par value)</P></B></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=690>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="CENTER">May 31,</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="CENTER">August 27,</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="CENTER">2000</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="CENTER">1999</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="CENTER">(Unaudited)</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="CENTER">(Audited)</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Assets</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Current assets:</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Cash and cash equivalents</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$2,551</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$3,749</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Short-term investments</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">8,852</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">10,046</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Accounts receivable, net</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">12,578</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">7,395</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Refundable income taxes</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">396</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">--</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<P>&nbsp;&nbsp;&nbsp;Inventories</TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">5,942</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">5,805</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Deferred income taxes</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">1,104</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">1,104</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Prepaid expenses</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">1,070</U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">1,545</U></FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current assets</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">32,493</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">29,644</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Property, equipment and improvements, net</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">3,223</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">3,497</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Other assets:</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Long-term investments&nbsp;&nbsp;&nbsp;</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">2,469</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">470</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Land held for future development</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">163</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">163</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Deferred income taxes</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">735</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">735</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Goodwill, net</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">1,017</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">1,226</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Other assets</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">1,414</U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">1,378</U></FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total other assets</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">5,798</U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">3,972</U></FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total assets</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$41,514</U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$37,113</U></FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Liabilities and Shareholders' Equity</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Current liabilities:</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;Accounts payable and accrued expenses</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$9,286</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$6,128</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;Income taxes payable</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT"> 258</U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">     47</U></FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current liabilities</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">9,544</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">6,175</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Deferred compensation and retirement plans</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">3,637</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">3,573</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Commitments and contingencies</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Shareholders' equity:</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Common stock, $.01 par; authorized, 7,500 shares; issued 4,075</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and 4,020 shares</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">41</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">40</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Additional paid-in capital</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">11,044</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">10,812</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Retained earnings</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">19,903</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">&nbsp;19,287</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Accumulated other comprehensive income</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">(158)</U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">(456)</U></FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">30,830</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">29,683</FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Less treasury stock, at cost,  483 and 449 shares</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">2,497</U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">2,318</U></FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total shareholders' equity</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">28,333</U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">27,365</U></FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities and shareholders' equity</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$41,514</U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$37,113</U></FONT></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="66%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>See accompanying notes to consolidated financial statements.</FONT></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="16%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
</TABLE>

<B><FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CSP INC. AND SUBSIDIARIES<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CONSOLIDATED STATEMENTS OF
OPERATIONS<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;(Amounts in thousands, except for per share data)<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Unaudited)</P>
</B><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>/-For the three months ended-/&nbsp;&nbsp;/-For the nine months ended-/</P></B></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=708>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P ALIGN="CENTER">May 31,</B></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P ALIGN="CENTER">May 28,</B></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P ALIGN="CENTER">May 31,</B></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P ALIGN="CENTER">May 28,</B></FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P ALIGN="CENTER">2000</B></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P ALIGN="CENTER">1999</B></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P ALIGN="CENTER">2000</B></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P ALIGN="CENTER">1999</B></FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P>Sales:</B></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Systems</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$3,231</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$3,258</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$9,478</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$12,318</FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Service and system integration</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">12,298</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">8,124</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">38,187</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">24,118</FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;E-Commerce software</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">415</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">354</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">1,302</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">700</FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Other software</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">359</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">1,650    </U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">1,430</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">3,350    </U></FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total sales</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">16,303</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">13,386</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">50,397</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">40,486</FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P>Cost of Sales:</B></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Systems</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">848</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">1,300</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">3,475</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">5,140</FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Service and system integration</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">10,272</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">6,174</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">31,780</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">18,185</FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;E-Commerce software</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">200</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">201</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">645</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">327</FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Other software</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;72</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;791</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;442</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">1,294     </U></FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total cost of sales</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">11,392</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">8,466</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">36,342</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">24,946</U></FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Gross profit</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">4,911</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">4,920</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">14,055</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">15,540</FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P>Operating expenses:</B></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Engineering and development</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">1,057</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">1,008</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">3,107</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">3,113</FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Selling, general &amp; administration</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">3,197</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">3,309</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">9,878</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">10,155</FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Restructuring</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;64</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;310</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;64</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;310</U></FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total operating expenses</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">4,318</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">4,627</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">13,049</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">13,578</U></FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P>Operating income</B></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">593</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">293</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">1,006</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">1,962</FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Other income</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">175</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">268</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">317</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">497    </U></FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Income before income taxes</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">768</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">561</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">1,323</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">2,459</FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Provision for income taxes</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">447</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">292 </U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">707</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">1,279</U></FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>Net income</B></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$321</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$269</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$616</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$1,180</U></FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Net income per share - basic</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$0.09</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$0.07</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$0.17</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$0.33</U></FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Weighted average shares outstanding - basic</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">3,589</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">3,597</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">3,573</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">3,599</U></FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Net income per share - diluted</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$0.09</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$0.07</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$0.17</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$0.33</U></FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Weighted average shares outstanding - diluted</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">3,738</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">3,648</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">3,676</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">3,630</U></FONT></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="42%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="15%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
</TABLE>

<FONT SIZE=3><P>See accompanying notes to consolidated financial statements.</P>
</FONT><FONT FACE="Courier">
<P>&nbsp;</P>
<P>&nbsp;</P>
</FONT><B><FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CSP INC. AND SUBSIDIARIES<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CONSOLIDATED STATEMENTS OF CASH FLOWS<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Amounts in thousands)<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Unaudited)</P>
</B><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>&nbsp;&nbsp;&nbsp;/---Three months ended
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=696>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P ALIGN="CENTER">May 31,</B></FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P ALIGN="CENTER">May 28,</B></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P ALIGN="CENTER">May 31,</B></FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P ALIGN="CENTER">May 28,</B></FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P ALIGN="CENTER">2000</B></FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P ALIGN="CENTER">1999</B></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P ALIGN="CENTER">2000</B></FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P ALIGN="CENTER">1999</B></FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P>Cash flows from operating activities:</B></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Net income </FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$321</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$269</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$616</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">$1,180</FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Adjustments to reconcile net income to net cash</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;used in operating activities:</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">353</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">338</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">1,033</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">900</FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred compensation and retirement plans</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">34</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(51)</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">64</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">151</FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred income taxes</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">--</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">138</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">--</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">--</FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(15)</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">133</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(36)</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">254</FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Changes in current assets and liabilities:</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Increase) decrease  in accounts receivable, net</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(555)</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">2,003</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(5,183)</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(2,057)</FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Increase) decrease in refundable income taxes</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">83</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">--</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(396)</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">--</FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Increase) decrease in inventories</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(9)</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">6</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(137)</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">822</FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Increase) decrease in prepaid expenses</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">203</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(271)</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">475</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(490)</FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase (decrease) in accounts payable and</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;and accrued expenses</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">659</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(3,245)</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">3,158</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(443)</FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Increase (decrease) in income taxes payable</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">(217)</U></FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">211</U></FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">(872)</U></FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Net cash (used in) provided by operating activities</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">857</U></FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">(667)</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">(195)</U></FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">(555)</U></FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P>Cash flows from investing activities:</B></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchases of available-for-sale securities</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(209)</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(205)</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(356)</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(385)</FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchases of held-to-maturity securities</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(19,443)</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(2,681)</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(47,754)</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(15,576)</FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales of available-for-sale securities</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">165</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">118</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">310</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">265</FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Maturities of held-to-maturity securities</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">19,326</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">2,369</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">47,039</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">15,127</FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Property, equipment and improvements</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">(154)</U></FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">(310)</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">(550)</U></FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">(893)  </U></FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Net cash used in investing activities</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">(315)</U></FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">(709)</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">(1,311)</U></FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">(1,462)</U></FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P>Cash flows from financing activities:</B></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from issuance of shares under employee</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;stock purchase plan</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">--</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">65</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">36</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">146</FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from stock options</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">13</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">--</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">197</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">36</FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchase of treasury stock</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;--</U></FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">(144)</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;(179)</U></FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">(144)</U></FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Net cash provided by (used in) financing activities</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">13</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(79)</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">54</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">38</FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Effects of exchange rate on cash</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">645</U></FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">(239)</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">254</U></FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">(348)       </U></FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>Net increase (decrease) in cash</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">1,200</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(1,694)</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(1,198)</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">(2,327)</FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P>Cash and cash equivalents, beginning of period</B></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">1,351</U></FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">3,280</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">3,749</U></FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">3,913</U></FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P>Cash and cash equivalents, end of period</B></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$2,551</U></FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$1,586</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$2,551</U></FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$1,586</U></FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<B><FONT SIZE=3><P>Supplementary cash flow information:</B></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17><P></P></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;Cash paid for income taxes, net</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$227</U></FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$148</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$853</U></FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$2,750</U></FONT></TD>
</TR>
<TR><TD WIDTH="50%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;Cash paid for interest</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$&nbsp;&nbsp;12</U></FONT></TD>
<TD WIDTH="13%" VALIGN="TOP" HEIGHT=17>
<FONT SIZE=3><P ALIGN="RIGHT">  <U>$&nbsp;&nbsp;&nbsp;--</U></FONT></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$&nbsp;&nbsp;92</U></FONT></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=17>
<U><FONT SIZE=3><P ALIGN="RIGHT">$&nbsp;&nbsp;&nbsp;&nbsp;47</U></FONT></TD>
</TR>
</TABLE>

<FONT SIZE=3><P>See accompanying notes to consolidated financial statements.</P>
<B><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CSP INC. AND SUBSIDIARIES<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;NOTES TO CONSOLIDATED FINANCIAL STATEMENTS</P>
</B></FONT><FONT FACE="Courier">
</FONT><FONT SIZE=3><P>The accompanying financial statements have been prepared by the Company, without audit, and reflect all adjustments which, in the opinion of management, are necessary for a fair statement of the results of the interim periods
presented.  All adjustments were of a normal recurring nature.  Certain information and footnote disclosures normally included in the annual financial statements, which are prepared in accordance with generally accepted accounting principles, have been
condensed

<B><P>1.&nbsp;&nbsp;&nbsp;&nbsp;Change in Fiscal Year:</P>

</B><P>The Company has changed its fiscal year from the last Friday in August in Fiscal 1999 to the last day in August for Fiscal 2000.  In Fiscal 1999 each quarter was 13 weeks in length ending on the last Friday of the quarter.  Beginning in Fiscal 2000
each quarter will end on the last day of the last month of the quarter.  Fiscal Year 2000 will be 53 weeks in length compared to 52 weeks in Fiscal 1999.  The effect of the change, which is spread over each quarter, is not expected to have a material effec
<B><P>2.&nbsp;&nbsp;&nbsp;&nbsp;Reclassifications:</P>
</B>
<P>Certain reclassifications were made to the 1999 financial statements to conform to the 2000 presentation.</P>

<B><P>3.&nbsp;&nbsp;&nbsp;&nbsp;New Accounting Pronouncements:</P>

</B><P>On June 15, 2000, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No.138 ("SFAS No.138"), Accounting for Certain Derivative Instruments and Certain Hedging Activities, an amendment of FASB Statement
No.133 ("SFAS No. 138").   This Statement addresses a limited number of issues causing implementation difficulties for numerous entities that are required to apply SFAS No.133.  SFAS No.133, as amended by SFAS No.137, Accounting for Derivative Instruments
and He
</B>
<B><P>4.&nbsp;&nbsp;&nbsp;&nbsp;Inventories:</P>
</B>
<P>Inventories consist of the following (in thousands):</P>
</FONT>
<P ALIGN="LEFT"><TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=351>
<TR><TD WIDTH="34%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="34%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">May 31,</FONT></TD>
<TD WIDTH="32%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">August 27,</FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="34%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="CENTER">2000</U></FONT></TD>
<TD WIDTH="32%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="CENTER">1999</U></FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="34%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="32%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="TOP">
<FONT SIZE=3><P>Raw materials</FONT></TD>
<TD WIDTH="34%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;$2,152   </FONT></TD>
<TD WIDTH="32%" VALIGN="TOP">
<FONT FACE="Courier"><P>&nbsp;&nbsp;&nbsp;&nbsp;</FONT><FONT SIZE=3>$1,422</FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="TOP">
<FONT SIZE=3><P>Work in process</FONT></TD>
<TD WIDTH="34%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;543</FONT></TD>
<TD WIDTH="32%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;227</FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="TOP">
<FONT SIZE=3><P>Finished goods</FONT></TD>
<TD WIDTH="34%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>3,247</U></FONT></TD>
<TD WIDTH="32%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>4,156</U></FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="34%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="32%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total</FONT></TD>
<TD WIDTH="34%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>$5,942</U></FONT></TD>
<TD WIDTH="32%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>$5,805</U></FONT></TD>
</TR>
<TR><TD WIDTH="34%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="34%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="32%" VALIGN="TOP">&nbsp;</TD>
</TR>
</TABLE>
</P>

<FONT SIZE=3>
<B><P>5.&nbsp;&nbsp;&nbsp;&nbsp;Stock Repurchase:</P>
</B>
<P>On October 9, 1986, the Board of Directors authorized the Company to repurchase up to 344,892 additional shares of the outstanding stock at market price.  On September 28, 1995, the Board of Directors authorized the Company to repurchase up to 199,650
additional shares of the outstanding stock at market price.  The timing of stock purchases are made at the discretion of management.  On October 19, 1999, the Board of Directors authorized the Company to repurchase up to 200,000 additional shares of the
out

<B><P>6.&nbsp;&nbsp;&nbsp;&nbsp;Long-Term Investments: </P>

</B><P>During the quarter the Company invested $2 million in Vertical Buyer Inc., which is a holding company for a network of internet sites formed to capitalize on business to business e-commerce opportunities initially in the global commercial lighting
and electrical markets. The Company announced that it would distribute 1 share of Vertical Buyer Inc. common stock for every 5 shares of CSPI stock owned for shareholders of record on July 7, 2000.  The Company is accounting for this investment under the
co
<B>
<P>7.&nbsp;&nbsp;&nbsp;&nbsp;Earnings Per Share Reconciliation:</P>
</B>
<P>The reconciliation of the numerators and denominators of the basic and diluted net income (loss) per common share computations for the Company's reported net income (loss) is as follows:</P>
<P>                                                                   /-------Three months ended------/&nbsp;&nbsp;&nbsp;&nbsp;/-----Nine months ended-----/</P></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=655>
<TR><TD WIDTH="39%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">May 31,</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">May 28,</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">May 31,</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">May 28,</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="TOP">
<FONT SIZE=3><P>(In thousands, except per share</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">2000</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">1999</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">2000</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">1999</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;amounts)</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="TOP">
<FONT SIZE=3><P>Basic net income</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$321</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$269</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$616</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$1,180</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="TOP">
<FONT SIZE=3><P>Weighted average number of shares</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;outstanding - basic</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">3,589</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">3,597</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">3,573</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">3,599</FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="TOP">
<FONT SIZE=3><P>Incremental shares from the assumed</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">     </U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">    </U></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;exercise of stock options</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">149</U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">51</U></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">103</U></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">31</U></FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="TOP">
<FONT SIZE=3><P>Weighted average number of shares</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;outstanding - dilutive</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">3,738</U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">3,648</U></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">3,676</U></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">3,630</U></FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="TOP">
<FONT SIZE=3><P>Net income per share - basic</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$0.09</U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$0.07</U></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$0.17</U></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$0.33</U></FONT></TD>
</TR>
<TR><TD WIDTH="39%" VALIGN="TOP">
<FONT SIZE=3><P>Net income per share - diluted</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$0.09</U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$0.07</U></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$0.17</U></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$0.33</U></FONT></TD>
</TR>
</TABLE>

<FONT SIZE=3>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<B><P>8.&nbsp;&nbsp;&nbsp;&nbsp;Comprehensive Income:</P>
</B>
<P>The Company's comprehensive income is as follows:</P>
<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;/----Three months ended-----/&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;/------Nine months ended--------/</P></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=649>
<TR><TD WIDTH="40%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">May 31,</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">May 28,</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">May 31,</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">May 28,</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">2000</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">1999</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">2000</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">1999</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP">
<FONT SIZE=3><P>Net income</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$321</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$269</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$616</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$1,180</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP">
<FONT SIZE=3><P>Other comprehensive income:</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="16%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;Foreign translation adjustment</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">645</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(239)</FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">254</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(348)</FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP">
<FONT SIZE=3><P>   Unrealized gain (loss) on investments</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">(9)</U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">(24)      </U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">44   </U></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4</U></FONT></TD>
</TR>
<TR><TD WIDTH="40%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total comprehensive income</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$957</U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;$6</U></FONT></TD>
<TD WIDTH="16%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$914</U></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$836</U></FONT></TD>
</TR>
</TABLE>

<FONT SIZE=3>
<P>&nbsp;</P>
<B><P>9.&nbsp;&nbsp;&nbsp;&nbsp;Segment Information:</P>

</B><P>The following table presents certain operating segment information (Amounts in thousands).</P></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=649>
<TR><TD WIDTH="29%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">System and</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">Service</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">E-Commerce</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">Other</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="CENTER">Systems</U></FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="CENTER">Integration</U></FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="CENTER">Software</U></FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="CENTER">Software</U></FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="CENTER">Total</U></FONT></TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">
<U><FONT SIZE=3><P>Quarter ended 5/31/00</U></FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">
<FONT SIZE=3><P>Net Sales</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$3,231</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$12,298</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$415</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$359</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$16,303</FONT></TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">
<FONT SIZE=3><P>Profit(loss) from operations</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">674</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">405</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(479)</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(7)</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">593</FONT></TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">
<FONT SIZE=3><P>Identifiable assets</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">22,326</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">16,735</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">786</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">1,667</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">41,514</FONT></TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">
<FONT SIZE=3><P>Capital expenditures</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">106</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">41</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">2</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">5</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">154</FONT></TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">
<FONT SIZE=3><P>Depreciation</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">177</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">79</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">4</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">7</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">267</FONT></TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">
<U><FONT SIZE=3><P>Quarter ended 5/28/99</U></FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">
<FONT SIZE=3><P>Net Sales</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$3,258</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$8,124</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$354</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$1,650</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$13,386</FONT></TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">
<FONT SIZE=3><P>Profit from operations</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">499</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(319)</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">153</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(40)</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">293</FONT></TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">
<FONT SIZE=3><P>Identifiable assets</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">21,910</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">13,066</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">304</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">2,107</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">37,387</FONT></TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">
<FONT SIZE=3><P>Capital expenditures</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">115</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">162</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">7</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">26</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">310</FONT></TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">
<FONT SIZE=3><P>Depreciation</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">143</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">108</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">4</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">10</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">265</FONT></TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">
<U><FONT SIZE=3>
<P>Nine months ended 5/31/00</U></FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">
<FONT SIZE=3><P>Net Sales</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$9,478</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$38,187</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$1,302</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$1,430</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$50,397</FONT></TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">
<FONT SIZE=3><P>Profit(loss) from operations</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">693</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">2,136</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(1,596)</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(227)</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">1,006</FONT></TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">
<FONT SIZE=3><P>Identifiable assets</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">22,326</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">16,735</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">786</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">1,667</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">41,514</FONT></TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">
<FONT SIZE=3><P>Capital expenditures</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">234</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">284</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">10</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">22</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">550</FONT></TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">
<FONT SIZE=3><P>Depreciation</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">554</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">253</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">9</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">8</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">824</FONT></TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">
<U><FONT SIZE=3><P>Nine months ended 5/28/99</U></FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">
<FONT SIZE=3><P>Net Sales</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$12,318</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$24,118</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$700</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$3,350</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$40,486</FONT></TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">
<FONT SIZE=3><P>Profit(loss) from operations</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">1,425</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">137</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">373</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">27</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">1,962</FONT></TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">
<FONT SIZE=3><P>Identifiable assets</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">21,910</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">13,066</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">304</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">2,107</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">37,387</FONT></TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">
<FONT SIZE=3><P>Capital expenditures</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">433</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">411</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">11</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">38</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">893</FONT></TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">
<FONT SIZE=3><P>Depreciation</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">492</FONT></TD>
<TD WIDTH="14%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">259</FONT></TD>
<TD WIDTH="15%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">7</FONT></TD>
<TD WIDTH="13%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">30</FONT></TD>
<TD WIDTH="17%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">788</FONT></TD>
</TR>
<TR><TD WIDTH="29%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="14%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="15%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="13%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="17%" VALIGN="TOP">&nbsp;</TD>
</TR>
</TABLE>

<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>
<P>Each segment is broken down by related business activities, which crosses different business operations.  These segments are based on the different customer activity of the Company.  CSPI has four major segments: systems which includes company
manufactured hardware products, systems integration and services which includes maintenance of the Company and other systems sold and integration and sale of third party hardware products and services, E-Commerce software, and other software products
which are deve

<P>Profit from operations is sales less cost of sales, engineering and development, selling, general and administrative expenses but is not affected by either non-operating charges/income or by income taxes.  Non operating charges/income consists
principally of investment income and interest expense.</P>

<P>In calculating profit from operations for individual operating segments, substantial administration expenses incurred at the operating level are common to more than one segment and are allocated based on a sales basis except for those related to
E-Commerce software which is allocated based upon employee headcount.</P>

<P>All intercompany transactions have been eliminated.</P>

<P>Identifiable assets include deferred income tax assets and other financial instruments managed by the Company.  Capital expenditures common to more than one segment are allocated on a sales basis.</P>

<P>&nbsp;</P>
<B><P>8.     Restructuring Expense</P>

</B><P>In April 2000 and March 1999, MODCOMP had a reduction of 2 and 15 individuals, respectively, in its domestic workforce.  The expenses related to the action were approximately $64,000 and $310,000 for severance costs. </P>

<P>The actions contemplated by the above described workforce reductions have been completed as planned.  There was a $53,000 accrual remaining at May 31, 2000, related to the April 2000 restructure program which will be paid in full by October 2000.  The
amounts accrued approximated the amounts paid under the March 1999 restructuring program.</P>
</FONT><FONT FACE="Courier">
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<P>&nbsp;</P>
</FONT><B><FONT SIZE=3><P>MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS</B>:</P>

<P>A summary of the period to period changes in principal items included in the Statements of Operations is shown in Schedules I and II (pages 15 and 16). </P>
<P> </P>
<P>The discussion below contains certain forward-looking statements related to, among others but not limited to, among other things, statements concerning future revenues and future business plans. Actual results may vary from those contained in such
forward-looking statements. </P>

<B><P>Results of Operation - 2000 Compared to 1999:</P>
</B>
<B><P>Revenue:</P>
</B>
<P>The Company's sales were $16,303,000 and $50,397,000 for the three and nine-month periods ended May 31, 2000, compared to $13,386,000 and $40,486,000 for the same periods in fiscal 1999. The increase in revenue was due primarily to the continued
success of the outsourcing and integration services sales of MODCOMP's German subsidiary. The sales were primarily to customers in the telecommunication market.  Service and system integration sales increased by 51% and 58% for the three and nine- month
periods c
<P>E-commerce software sales increased by 17% and 86% for three and nine-month periods of fiscal 2000, compared to fiscal 1999. During the quarter, MODCOMP signed a marketing alliance with Ainsworth &amp; Associates, a UK management consulting firm, to
sell ViewMax web to host software product and WAP-66 host to WAP server for the financial sector.   Systems sales decreased less than 1% for the three-month period and 23% for the nine-month period ended May 31, 2000. The decrease was due to the decline
in th

<P>Scanalytics revenues were 2% and 3% of total sales for the three and nine-month periods, compared to 5% and 5% for the prior fiscal year.   </P>
<P>  </P>
<P>MODCOMP continues to ship its real-time process control classic product line to it's existing customers which represented 17% of systems revenue for the one nine-month period ended May 31, 2000, compared to 12%for the comparative period of fiscal 1999.
 </P>
<P>  </P>
<P>Other software sales represented 2% and 3% of sales for the three and nine-month periods ended May 31,2000, compared to 12% and 8% of sales for the same periods of the prior fiscal year.  Scanalytics accounted for most of the software sales for the
three and nine- month periods during fiscal 2000. Scanalytics sales decreased by 21% for the first nine months of the current fiscal year, compared to the prior year. The decreased sales were due to the decline in equipment hardware sales with a decline
in the
e products.</P>

<P>European sales accounted for 71% of the total revenue for both the quarter and nine- month periods. The rest of the geographic revenue breakdown was 25% and 26% for the Americas, and 4% and 3% for the rest of the world (primarily Asia) for the three
and nine- month periods ended May 31, 2000. </P>

<B><P>Cost of Sales:</P>

</B><P>Cost of sales as a percentage of sales were 70% and 72% for the three and nine-month periods ended May 31, 2000. This compared to 63% and 62% for the same periods of the prior fiscal year.  The increase in the cost of sales for the three and
nine-month period was due to the change in product mix with increased sales of service and systems integration which has a higher cost of goods due to the large amount of third-party products.  Outsourcing and integration systems sales remain a large
percentage o

<B><P>Operating Expense</B>:</P>

<P>Engineering and development expenses for the three-month period ended May 31, 2000 increased approximately $49,000 or 5% from the same period of fiscal 1999.  The nine- month period of fiscal 2000 amount remained consistent compared with the prior
fiscal year. Increased expense relates primarily to increases experienced by MODCOMP for the development of the WAP-66 and Palm based ViewMax product and improvements to the ViewMax product, which was offset by decreases in expense in the MultiComputer
Division

<P>Sales, general and administrative expenses decreased $358,000 (10%) and $523,000 (5%) for the three and nine-month periods ended May 31, 2000, compared to the same periods of fiscal 1999.  The nine-month decrease relates primarily to reductions in
sales and administrative personnel at MODCOMP and Scanalytics.  Scanalytics expenses decreased $202,000 and $501,000 for the three and nine-month periods compared to the prior year. MODCOMP expenses decreased $240,000 (12%) and decreased $395,000 (6%) for
the t

<P>During the third quarter of fiscal 2000, MODCOMP had a reduction in staff of two domestic employees and expenses of $64,000 for severance pay. This will save the Company approximately $140,000 annually.</P>

<B><P>Other Income Expenses and Taxes</B>:</P>

<P>Other income decreased by $93,000 and $180,000 for the three and nine-month periods ended May 31, 2000. Last year the company had realized gains on the sale of investments during the quarter ended May 28, 1999.  This represented approximately 68% of
the decrease.  </P>
<P> </P>
<P>The Company had an effective tax rate of approximately 53% for the nine-month period ended May 31, 2000, which is above the normal US statutory rate. This was due to the large portion of foreign-based revenue and profits from Germany and France, which
have high statutory tax rates. The Company has continued to review with advisors, the most effective tax strategy to reduce the effective rate.  </P>

<B><P>&nbsp;</P>
<P>Financial Position, Capital Resources and Liquidity:</P>

</B><P>The Company has a solid financial position, with working capital of $22.9 million at May 31, 2000, compared to $23.4 million at August 27, 1999.  Accounts receivable increased to $12.6 million at May 31, 2000, compared to $7.4 million at August 27,
1999. The increase in account receivable was due to the timing of shipments and not collection issues.  Accounts payable and accrued expenses increased to $9.5 million at May 31, 2000, from $6.2 million on August 27, 1999. The increase was due to the purch
<P>During the quarter the Company invested $2 million in Vertical Buyer Inc., which is a holding company for a network of internet sites formed to capitalize on business to business e-commerce opportunities initially in the global commercial lighting and
electrical markets. The Company announced that it would distribute 1 share of Vertical Buyer Inc. common stock for every 5 shares of CSPI stock owned for shareholders of record on July 7, 2000.</P>

<P>Management believes that all the Company's current and foreseeable needs can be met through working capital generated by operations and investments.</P>

<B><P>Inflation and Changing Prices</B>:</P>

<P>Management does not believe that inflation and changing prices had significant impact on sales, revenues or operating income during fiscal 2000 or 1999.  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.</P>

<B><P>Factors That May Affect Future Performance</B>:</P>

<P>This document contains forward-looking statements based on current expectations that involve a number of risks and uncertainties.  The factors that could cause actual results to differ materially include the following: general economic conditions and
growth rates in the peripherals and computer products, biological imaging software and instruments and machine code readers industries; competitive factors and pricing pressures; changes in product mix; the timely development and acceptance of new
products;

<P>Markets for the Company's products are characterized by rapidly changing technology, new products introduction and short product life cycles.  These changes can adversely affect the business and operating results. The Company's success will depend upon
its ability to enhance its existing products and to develop and introduce, on a timely and cost effective basis, new products that keep pace with technological developments and address increasing customer requirements. The inability to meet these demands c
<P> <B>Year 2000:</P>

</B><P>Historically, certain computer programs have been written using two digits rather than four digits to define the year.  This could result in computers recognizing a date of &quot;00&quot; as the year 1900 rather than the year 2000, resulting in
potential major system failures or miscalculations.  This problem is referred to as &quot;Year 2000&quot;.</P>
<P>&nbsp;&nbsp;&nbsp;&nbsp;</P>
<P>The Company reviewed both its internal computer systems and its products that could have been affected by the &quot;Year 2000&quot; issue and has updated some systems and a few products which were affected.  With the modification to existing software
and conversion to new software, the &quot;Year 2000&quot; issues related to internal computer systems and products did not cause any significant operational or computer problems.  Furthermore, the cost of implementing these solutions has been fully
expensed
<P>&nbsp;&nbsp;&nbsp;&nbsp;</P>
<P>The Company has not experienced any problems related to the "Year 2000" issue as of July 12, 2000.</P>

<P>&nbsp;</P>
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<P>&nbsp;</P>
<P>&nbsp;</P>
<B><P>PART II.  OTHER INFORMATION</P>

<P>&nbsp;</P>
<P>Item 4.  Submissions of Matters to a vote of Security Holders</P>

</B><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None</P>

<B><P>Item 6.  Exhibit and Reports on Form 8-K</P>
</B>
<OL TYPE="a">

<OL TYPE="a">

<LI>Exhibits</LI>
<P>27.0 Financial Data Schedule</P>

<LI>Reports on Form 8-K</LI></OL>
</OL>


<P>    </P>

<P>&nbsp;</P>
<B><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SIGNATURES</P>
</B>
<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.</P>

<P>&nbsp;</P>
<P>&nbsp;</P>
<B><U><P>CSP Inc.</B></U><BR>
(Registrant)</P>

<P>&nbsp;</P>
<P>Date:  July 12, 2000&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>By:  /s/  Alexander R. Lupinetti</U><BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;Ch
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;Pr

<P>&nbsp;</P>
<P>Date:  July 12, 2000&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>By:  /s/  Gary W. Levine</U><BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&n
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&n

<P>&nbsp;</P>
<P>&nbsp;</P>
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<B><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&n
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CSP INC. AND SUBSIDIARIES<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CONSOLIDATED STATEMENTS OF OPERATIONS<BR>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PERCENTAGE OF SALES</P>
<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Dollars in thousands)<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Unaudited)</P>

<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;</B>/----------------Three months ended--------/&nbsp;/------Nine months ended-----------/</P></FONT>
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=693>
<TR><TD WIDTH="24%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">May 31,</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">May 28,</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">May 31,</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">May 28,</FONT></TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="24%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">2000</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">%</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">1999</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">%</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">2000</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">%</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">1999</FONT></TD>
<TD WIDTH="7%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">%</FONT></TD>
</TR>
<TR><TD WIDTH="24%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="24%" VALIGN="TOP">
<FONT SIZE=3><P>Sales</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$16,303</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">100%</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$13,386</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">100%</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">50,397</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">100%</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$40,486</FONT></TD>
<TD WIDTH="7%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">100%</FONT></TD>
</TR>
<TR><TD WIDTH="24%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="24%" VALIGN="TOP">
<FONT SIZE=3><P>Cost of sales</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">11,392</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">70%</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">8,466</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">63%</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">36,342</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">72%</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">24,946</FONT></TD>
<TD WIDTH="7%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">62%</FONT></TD>
</TR>
<TR><TD WIDTH="24%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="8%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="10%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="10%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=8><P></P></TD>
</TR>
<TR><TD WIDTH="24%" VALIGN="TOP">
<FONT SIZE=3><P>Engineering and </FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="24%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;development</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">1,057</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">6%</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">1,008</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">8%</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">3,107</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">6%</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">3,113</FONT></TD>
<TD WIDTH="7%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">8%</FONT></TD>
</TR>
<TR><TD WIDTH="24%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="8%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="10%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="10%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=8><P></P></TD>
</TR>
<TR><TD WIDTH="24%" VALIGN="TOP">
<FONT SIZE=3><P>Selling, general and</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="24%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;administrative</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">3,197</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">20%</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">3,309</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">25%</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">9,878</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">20%</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">10,155</FONT></TD>
<TD WIDTH="7%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">25%</FONT></TD>
</TR>
<TR><TD WIDTH="24%" VALIGN="TOP">
<FONT SIZE=3><P>Restructuring</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;64</U></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">--</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">310</U></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">2%</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">&nbsp;&nbsp;&nbsp;&nbsp;64</U></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">--</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">310</U></FONT></TD>
<TD WIDTH="7%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">1%</FONT></TD>
</TR>
<TR><TD WIDTH="24%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="12%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="8%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="10%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="9%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="10%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="7%" VALIGN="TOP" HEIGHT=8><P></P></TD>
</TR>
<TR><TD WIDTH="24%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total costs and</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="24%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;expenses</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">15,710</U></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">96%</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">13,093</U></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">98%</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">49,391</U></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">92%</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">38,524</U></FONT></TD>
<TD WIDTH="7%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">95%</FONT></TD>
</TR>
<TR><TD WIDTH="24%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="24%" VALIGN="TOP">
<FONT SIZE=3><P>Operating income</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">593</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">4%</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">293</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">2%</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">1,006</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">2%</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">1,962</FONT></TD>
<TD WIDTH="7%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">5%</FONT></TD>
</TR>
<TR><TD WIDTH="24%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="24%" VALIGN="TOP">
<FONT SIZE=3><P>Other income</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">175</U></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">1%</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">268</U></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">2%</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">317</U></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">1%</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">497</U></FONT></TD>
<TD WIDTH="7%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">1%</FONT></TD>
</TR>
<TR><TD WIDTH="24%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="24%" VALIGN="TOP">
<FONT SIZE=3><P>Income before</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="24%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;taxes</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">768</FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">5%</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">561</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">4%</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">1,323</FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">3%</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">2,459</FONT></TD>
<TD WIDTH="7%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">6%</FONT></TD>
</TR>
<TR><TD WIDTH="24%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="24%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="24%" VALIGN="TOP">
<FONT SIZE=3><P>Income tax expense</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">447</U></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">3%</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">292</U></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">2%</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">707</U></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">1%</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">1,279</U></FONT></TD>
<TD WIDTH="7%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">3%</FONT></TD>
</TR>
<TR><TD WIDTH="24%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="24%" VALIGN="TOP">
<FONT SIZE=3><P>Net income</FONT></TD>
<TD WIDTH="12%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$321</U></FONT></TD>
<TD WIDTH="8%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">2%</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$269</U></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">2%</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$616</U></FONT></TD>
<TD WIDTH="9%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">1%</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<U><FONT SIZE=3><P ALIGN="RIGHT">$1,180</U></FONT></TD>
<TD WIDTH="7%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">3%</FONT></TD>
</TR>
<TR><TD WIDTH="24%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="24%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="24%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="12%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="8%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="9%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="7%" VALIGN="TOP">&nbsp;</TD>
</TR>
</TABLE>

<FONT SIZE=3>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<P>&nbsp;</P>
<B><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&n
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CSP INC. AND SUBSIDIARIES<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;CONSOLIDATED STATEMENTS OF OPERATIONS<BR>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PERIOD TO PERIOD DOLLAR AND PERCENTAGE CHANGE</P>
<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Dollars in thousands)<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Unaudited)</P>

<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B>&nbsp;&nbsp;&nbsp;/--For the three months ended---/&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;/---For the nine months ended----/<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
&nbsp;&n
<TABLE CELLSPACING=0 BORDER=0 CELLPADDING=7 WIDTH=693>
<TR><TD WIDTH="27%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">$</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">%</FONT></TD>
<TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">$</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">%</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="27%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">Change</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">Change</FONT></TD>
<TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">Change</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="CENTER">Change</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="27%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="27%" VALIGN="TOP">
<FONT SIZE=3><P>Sales</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$2,917</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">22%</FONT></TD>
<TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">$9,911</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">24%</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="27%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="27%" VALIGN="TOP">
<FONT SIZE=3><P>Cost of sales</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">2,926</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">35%</FONT></TD>
<TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">11,396</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">46%</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="27%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="5%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="10%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=8><P></P></TD>
</TR>
<TR><TD WIDTH="27%" VALIGN="TOP">
<FONT SIZE=3><P>Engineering and </FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="27%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;development</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">49</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">5%</FONT></TD>
<TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(6)</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">--</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="27%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="3%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="18%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="11%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="5%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="19%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="10%" VALIGN="TOP" HEIGHT=8><P></P></TD>
<TD WIDTH="4%" VALIGN="TOP" HEIGHT=8><P></P></TD>
</TR>
<TR><TD WIDTH="27%" VALIGN="TOP">
<FONT SIZE=3><P>Selling, general, </FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="27%" VALIGN="TOP">
<FONT SIZE=3><P>     administrative                                          </FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(112)</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(3%)</FONT></TD>
<TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(277)</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(3%)</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="27%" VALIGN="TOP">
<FONT SIZE=3><P>Restructuring</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(246)</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(79%)</FONT></TD>
<TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(246)</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(79%)</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="27%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total costs and</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="27%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;expenses</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">2,617</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">20%</FONT></TD>
<TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">10,867</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">28%</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="27%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="27%" VALIGN="TOP">
<FONT SIZE=3><P>Operating income</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">300</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">102%</FONT></TD>
<TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(956)</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(49%)</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="27%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="27%" VALIGN="TOP">
<FONT SIZE=3><P>Other income</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(93)</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(35%)</FONT></TD>
<TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(180)</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(36%)</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="27%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="27%" VALIGN="TOP">
<FONT SIZE=3><P>Income before</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="27%" VALIGN="TOP">
<FONT SIZE=3><P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;taxes</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">207</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">37%</FONT></TD>
<TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(1,136)</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(46%)</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="27%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="27%" VALIGN="TOP">
<FONT SIZE=3><P>Income tax expense</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">155</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">53%</FONT></TD>
<TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(572)</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(45%)</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="27%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="27%" VALIGN="TOP">
<FONT SIZE=3><P>Net income</FONT></TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">52</FONT></TD>
<TD WIDTH="11%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">19%</FONT></TD>
<TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(564)</FONT></TD>
<TD WIDTH="10%" VALIGN="TOP">
<FONT SIZE=3><P ALIGN="RIGHT">(48%)</FONT></TD>
<TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="27%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="27%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
</TR>
<TR><TD WIDTH="27%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="18%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="11%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="5%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="19%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="10%" VALIGN="TOP">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="TOP">&nbsp;</TD>
</TR>
</TABLE>

<FONT SIZE=3><P>    </P></FONT></BODY>
</HTML>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-27
<SEQUENCE>2
<FILENAME>0002.txt
<DESCRIPTION>FINANCIAL DATA SCHEDULE
<TEXT>

<TABLE> <S> <C>

<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Form 10-Q
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000

<S>                             <C>                     <C>
<PERIOD-TYPE>                   3-MOS                   9-MOS
<FISCAL-YEAR-END>                          AUG-31-2000             AUG-31-2000
<PERIOD-START>                             MAR-01-2000             AUG-28-1999
<PERIOD-END>                               MAY-31-2000             MAY-31-2000
<CASH>                                           2,551                   2,551
<SECURITIES>                                    11,321                  11,321
<RECEIVABLES>                                   12,980                  12,980
<ALLOWANCES>                                       402                     402
<INVENTORY>                                      5,942                   5,942
<CURRENT-ASSETS>                                32,493                  32,493
<PP&E>                                           9,932                   9,932
<DEPRECIATION>                                   6,709                   6,709
<TOTAL-ASSETS>                                  41,514                  41,514
<CURRENT-LIABILITIES>                            9,544                   9,544
<BONDS>                                              0                       0
<PREFERRED-MANDATORY>                                0                       0
<PREFERRED>                                          0                       0
<COMMON>                                            41                      41
<OTHER-SE>                                      28,292                  28,292
<TOTAL-LIABILITY-AND-EQUITY>                    41,514                  41,514
<SALES>                                         16,303                  50,397
<TOTAL-REVENUES>                                16,303                  50,397
<CGS>                                           11,392                  36,342
<TOTAL-COSTS>                                   15,710                  49,391
<OTHER-EXPENSES>                                 (187)                   (409)
<LOSS-PROVISION>                                     0                       0
<INTEREST-EXPENSE>                                  12                      92
<INCOME-PRETAX>                                    768                   1,323
<INCOME-TAX>                                       447                     707
<INCOME-CONTINUING>                                321                     616
<DISCONTINUED>                                       0                       0
<EXTRAORDINARY>                                      0                       0
<CHANGES>                                            0                       0
<NET-INCOME>                                       321                     616
<EPS-BASIC>                                        .09                     .17
<EPS-DILUTED>                                      .09                     .17


</TABLE>
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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