North & Webster Responds to CSP Inc.'s Letter to Stockholders

        North & Webster Responds to CSP Inc.'s Letter to Stockholders

Highlights Misleading Statements Regarding CSP's Fourth Quarter Results

Questions Whether CSP Distorted its Fourth Quarter Results to Help Win Votes
in Proxy Contest

PR Newswire

NEW YORK, Feb. 5, 2013

NEW YORK, Feb. 5, 2013 /PRNewswire/ -- North & Webster, LLC ("North &
Webster") issued a statement today expressing its disappointment with the
Board of Directors of CSP Inc. (NasdaqGM: CSPI) ("CSP" or the "Company") for
its apparent attempt to paint a rosier picture than reality of CSP's Fiscal
2012 fourth quarter results in a letter sent to the Company's stockholders on
February 4, 2013. In the letter, CSP claims to have achieved $4.9 million in
fourth quarter net income, but North & Webster believes these numbers do not
hold up to scrutiny when you consider that:

  o$2.6 million, or more than half, of this $4.9 million number was merely
    the non-cash write-up of a deferred tax asset, not actual earned income,
    and is thus misleading for the Company to use in its attempt to boost
    management's performance and credibility;
  o$1.1 million of this $4.9 million came directly from life insurance
    proceeds, as stated by CFO Gary Levine on the December 13, 2012 earnings
    conference call; and
  oNorth & Webster estimates that at least $1.34 million of this $4.9 million
    came from "stuffing the channel" as the Company freely admitted in a
    December 13, 2012 press release where President and Chief Executive
    Officer, Victor Dellovo, stated, "Looking ahead, we expect that the
    recording of royalties for nine E-2D planes in 2012 versus only five that
    we had expected for fiscal 2012 will create a difficult year-over-year
    comparison in fiscal 2013." The Company booked revenues from nine planes
    in 2012, and two in the 4^th quarter.

North & Webster estimates that the real income number for the 4^th quarter was
more like a loss of $140,000 and earnings for the full Fiscal 2012 were more
like $1.1 million. To throw more salt on stockholder wounds, the CSP Board
granted management approximately $1,314,693 in bonuses (ranging from 150-367%
of targeted bonuses)based on what North & Webster believes were inflated
numbers. These Board-approved bonuses doubled management's yearly
compensation.

North & Webster would also like to correct the misleading statements by CSP
about our practices. North & Webster has run three proxy contests and has
successfully achieved board representation and pro-shareholder change in all
three situations.These statements about us are a continuation of CSP's
strategy to mislead stockholders and distract from the long history of poor
performance at the Company.

We urge stockholders not to be misled by the CSP Board's home-spun financial
results and misleading statements and to instead vote for a slate of directors
who will seek, if elected, to maximize stockholder value by selling the
Company to the highest bidder. Vote your Gold Proxy Card Today.

Please note, any shares voted on the Company's proxy card, even if you vote
against every item, will count as a vote against our slate. If you have
already voted on the Company's proxy card please see the instructions in the
proxy statement or call our proxy solicitor, whose information is listed
below.

If you have any questions or require any assistance with your vote, please
contact Steve Balet at SCB Advising, Inc., who is assisting us, at
1-877-786-3323 or 1-646-290-5243.

Contact:
North & Webster
Sam Kidston, 617-395-8121

SOURCE North & Webster, LLC
 
Press spacebar to pause and continue. Press esc to stop.