CSP Inc. Reports Second-Quarter Fiscal 2014 Financial Results

CSP Inc. Reports Second-Quarter Fiscal 2014 Financial Results

Announces Quarterly Dividend

BILLERICA, Mass., May 14, 2014 (GLOBE NEWSWIRE) -- CSP Inc. (Nasdaq:CSPI), a
provider of IT solutions, systems integration services and dense cluster
computing systems, today reported financial results for the second quarter of
fiscal 2014 ended March 31, 2014.

The Company also announced that its board of directors has voted to pay its
quarterly dividend of $0.11 per share to shareholders of record May 30, 2014
payable June 10, 2014.

Effective with the second-quarter financial results, the Company has renamed
its reporting segments to more accurately and clearly reflect the operating
businesses in those segments. The former "Systems" segment is now called the
"High Performance Products & Solutions" segment. This segment includes the
MultiComputer business as well as the newly acquired Myricom business. The new
name now better describes the new product composition and the future direction
of the segment following the integration of Myricom. The former "Service and
Systems Integration" segment, which includes the Modcomp business, is now
called "Information Technology Solutions segment (IT Solutions segment)."

Management Comments

"We continued to execute successfully on our growth strategy during what has
historically been the seasonally weakest quarter of the year," said President
and Chief Executive Office Victor Dellovo. "In the High Performance Products
and Solutions segment, we recorded $800,000 in royalty revenue related to the
E-2D. We have now received royalty revenues related to two planes thus far in
FY 2014 and continue to expect to receive total royalty revenues related to
five planes for the year. In addition, we completed the integration of our
Myricom acquisition ahead of schedule, and we are pleased with the sales from
that business in the second quarter. We look forward to capitalizing on the
opportunities created by Myricom."

"In our IT Solutions segment in Germany, we won two security-related projects
with a large telecommunications customer. We also, as previously announced,
signed our largest managed services contract to date. This new contract is a
three-year multi-million dollar agreement to provide end-to-end 24x7 on-site
managed security services to an international information technology services
company. We continue to be encouraged by our progress in the managed services
area and expect this effort to have a positive effect on our margins over the
long term."

"Going forward, we are looking forward to capitalizing on many exciting growth
prospects," said Dellovo. "In the High Performance Products and Solutions
Segment, we see significant opportunities from the E-2D as production
continues through fiscal year 2018 as well as from our Myricom acquisition. In
the IT Solutions segment, our managed services revenues are growing and we
also are making progress in cross selling our products and solutions across
the segment's geographic locations. We remain confident in our growth strategy
and continue to expect to report a profitable fiscal 2014."

Financial Results

For the second quarter of fiscal 2014, revenue was $20.9 million compared with
$25.8 million in the year-ago quarter. For the six-month period, revenue was
$42.2 million compared with $46.7 million in the six-month period of fiscal
2013. Foreign exchange had positive effects on revenue of $400,000 for the
three-month period and $600,000 for the six-month period.

Gross margin for the second quarter was 24% for three month period compared to
22% for the prior-year. Gross margin for the six-month period increased to 23%
from 21% in fiscal 2013 due to a greater mix of High Performance Products and
Solutions products, which carry higher margins.

Net income for the second quarter was $167,000, or $0.05 per diluted share,
compared with net income of $740,000, or $0.21 per diluted share, in the
second quarter of fiscal 2013. Net income for the first six months of fiscal
2014 was $513,000, or $0.14 per diluted share, compared with $855,000, or
$0.25 per diluted share, in the same period of fiscal 2013.

Cash and short-term investments decreased by $5.8 million from year-end fiscal
2013 primarily due to an increase in accounts receivable, which was largely
the result of significant orders received from a major customer with 90-day
payment terms. In addition, the Company paid $800,000 in dividends since year
end fiscal 2013. CSP's cash position may vary significantly from quarter to
quarter due to the high working capital requirements needed to fund large
projects at both its High Performance Products and Solutions and its IT
Solutions segments.

Conference Call Details

CSP Chief Executive Officer Victor Dellovo and Chief Financial Officer Gary W.
Levine will host a conference call at 10:00 a.m. (ET) today to review CSP's
financial results and provide a business update.To listen to a live webcast
of the call, please visit the "Investor Relations" section of the Company's
website at www.cspi.com.Individuals may also listen to the call via
telephone, by dialing (877) 407-5790 or (201) 689-8328.For interested parties
unable to participate in the live call, an archived version of the webcast
will be available for approximately one year on CSP's website.

About CSP Inc.

Based in Billerica, Massachusetts and founded in 1968, CSP Inc. and its
subsidiaries develop and market IT integration solutions and high-performance
computer systems to meet the diverse requirements of our industrial,
commercial, and defense customers worldwide.

CSP, Inc's High Performance Products & Solutions segment includes the
MultiComputer Division, which designs and manufactures commercial
high-performance computer signal processing systems for a variety of complex
real time applications in defense and commercial markets.The company recently
acquired Myricom, a pioneer in high performance computing interconnect
technology. Founded in 1970, Modcomp, Inc. is part of CSPI's Information
Technology Solutions segment, and has offices in North American and Europe.
Modcomp provides solutions and services for complex IT environments including
disaster recovery, mobility, managed services, security, data center
management, and collaboration. More information about CSP, Inc. is available
at www.cspi.com.To learn more about Myricom or Modcomp, Inc., please visit
www.myricom.com and www.modcomp.com.

Safe Harbor 

The Company wishes to take advantage of the "Safe Harbor" provisions of the
Private Securities Litigation Reform Act of 1995 with respect to statements
that may be deemed to be forward-looking under the Act.Such forward-looking
statements may include, but are not limited to, expectations that the Company
will receive total royalty revenues related to five E-2D planes in FY 2014,
growth prospects of Myricom, managed services and cross-selling opportunities,
and that the company will be profitable in Fiscal 2014. The Company cautions
that numerous factors could cause actual results to differ materially from
forward-looking statements made by the Company.Such risks include general
economic conditions, market factors, competitive factors and pricing
pressures, and others described in the Company's filings with the SEC.Please
refer to the section on forward-looking statements included in the Company's
filings with the Securities and Exchange Commission.


CSP INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
                                                    
                                                    
                                          March 31, September 30,
                                          2014       2013
                                                    
Assets                                               
                                                    
Current assets:                                      
Cash and short-term investments           $12,860  $18,619
Accounts receivable, net                  22,418     13,529
Inventories                               6,464      4,791
Other current assets                      4,299      3,979
                                                    
Total current assets                      46,041     40,918
Property, equipment and improvements, net  1,491      1,420
Other assets                               5,158      4,887
                                                    
Total assets                               $52,690  $47,225
                                                    
                                                    
Liabilities and Shareholders' Equity                 
                                                    
Current liabilities                        $20,461  $15,125
Pension and retirement plans               8,690      8,660
Non-current liabilities                    424        405
Shareholders' equity                       23,115     23,035
Total liabilities and shareholders' equity $52,690  $47,225



CSP INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data )
                                                                 
                                                                 
                                  /---------Three Months /---------Six Months
                                   Ended----------/       Ended----------/
                                  March 31,   March 31,  March 31,  March 31,
                                  2014        2013       2014       2013
Sales:                                                            
Product                           $14,319     $19,537    $29,068    $34,842
Services                          6,584       6,286      13,167     11,851
Total sales                       20,903      25,823     42,235     46,693
                                                                 
Cost of sales:                                                    
Product                           11,668      15,676     24,389     28,900
Services                          4,153       4,380      8,231      7,849
Total cost of sales               15,821      20,056     32,620     36,749
Gross Profit                      5,082       5,767      9,615      9,944
                                                                 
Operating expenses:                                               
Engineering and development      792         380        1,427      824
Selling, general & administrative 3,957       4,165      7,977      7,725
Total operating expenses          4,749       4,545      9,404      8,549
                                                                 
Bargain purchase gain on           --         --        462        --
acquisition, net of tax
                                                                 
Operating income                   333         1,222      673        1,395
                                                                 
Other income (expense), net        (48)        (25)       (74)       34
Incomebefore income taxes         285         1,197      599        1,429
Provisionfor income taxes        118         457        86         574
Net income                        $167        $740       $513       $855
Net income attributable to common  $161        $724       $495       $838
stockholders
Net incomeper share - basic       $0.05       $0.21      $0.14      $0.25
Weighted average shares            3,446       3,375      3,439      3,369
outstanding - basic
Net incomeper share- diluted     $0.05       $0.21      $0.14      $0.25
Weighted average shares            3,493       3,424      3,484      3,416
outstanding - diluted

CONTACT: Gary Levine
         Chief Financial Officer
         CSP Inc.
         Tel: 978.663.7598 ext. 1200
         Fax: 978.663.0150

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