UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

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

Commission file number 0-6072

EMS TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)

Georgia		58-1035424
(State or other jurisdiction of incorporation or organization)		(IRS Employer ID Number)

660 Engineering Drive, Norcross, Georgia		30092
(Address of principal executive offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code: (770) 263-9200

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act: Large accelerated filer o Accelerated filer þ Non-accelerated filer o Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

The number of shares outstanding of each of the issuer’s classes of common stock, as of the close of business on May 7, 2010:

Class		Number of Shares
Common Stock, $.10 par value		15,307,081

 

 

TABLE OF CONTENTS

		Page
PART I – FINANCIAL INFORMATION			2
Item 1. Financial Statements			2
Consolidated Statements of Operations (unaudited)			2
Consolidated Balance Sheets (unaudited)			3
Consolidated Statements of Cash Flows (unaudited)			5
Notes to Consolidated Financial Statements (unaudited)			6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			15
Item 3. Quantitative and Qualitative Disclosures about Market Risk			26
Item 4. Controls and Procedures			29
PART II – OTHER INFORMATION			30
Item 1A. Risk Factors			30
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			30
Item 6. Exhibits			31
SIGNATURES			32
Exhibit 4.1
Exhibit 10.1
Exhibit 31.1
Exhibit 31.2
Exhibit 32

PART I

FINANCIAL INFORMATION

Item 1.		Financial Statements

EMS Technologies, Inc. and Subsidiaries

		Three Months Ended
		April 3				April 4
		2010				2009
Product net sales		$	66,656				68,791
Service net sales			16,246				23,487
Net sales			82,902				92,278
Product cost of sales			44,538				47,414
Service cost of sales			8,744				16,571
Cost of sales			53,282				63,985
Selling, general and administrative expenses			21,674				21,934
Research and development expenses			5,421				4,406
Impairment loss on goodwill related charges			384				—
Acquisition-related items			217				3,895
Operating income (loss)			1,924				(1,942	)
Interest income			181				62
Interest expense			(477	)			(621	)
Foreign exchange loss, net			(693	)			(467	)
Earnings (loss) before income taxes			935				(2,968	)
Income tax expense			344				—
Net earnings (loss)		$	591				(2,968	)
Net earnings (loss) per share:
Basic		$	0.04				(0.20	)
Diluted			0.04				(0.20	)
Weighted-average number of common shares outstanding:
Basic			15,179				15,146
Diluted			15,206				15,146

See accompanying notes to interim unaudited consolidated financial statements.

EMS Technologies, Inc. and Subsidiaries

		April 3				December 31
		2010				2009
ASSETS
Current assets:
Cash and cash equivalents		$	53,723				47,174
Trade accounts receivable, net of allowance for doubtful account of $1,162 in 2010 and $1,208 in 2009			60,369				60,959
Costs and estimated earnings in excess of billings on long-term contracts			24,518				25,290
Inventories			42,697				40,655
Deferred income taxes			4,234				4,306
Other current assets			19,556				19,117
Total current assets			205,097				197,501
Property, plant and equipment:
Land			1,150				1,150
Buildings and leasehold improvements			18,809				18,792
Machinery and equipment			109,849				107,712
Furniture and fixtures			10,560				10,542
Total property, plant and equipment			140,368				138,196
Less accumulated depreciation			93,199				90,256
Net property, plant and equipment			47,169				47,940
Deferred income taxes			9,426				9,421
Goodwill			60,403				60,336
Other intangible assets, net of accumulated amortization of $21,170 in 2010 and $18,817 in 2009			47,304				49,256
Costs and estimated earnings in excess of billings on long-term contracts			10,462				7,711
Other assets			1,910				1,920
Total assets		$	381,771				374,145

See accompanying notes to interim unaudited consolidated financial statements.

Consolidated Balance Sheets (Unaudited), continued
(in thousands, except share data)

		April 3				December 31
		2010				2009
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current installments of long-term debt		$	1,423				1,398
Accounts payable			29,472				27,333
Billings in excess of contract costs and estimated earnings on long-term contracts			9,952				9,597
Accrued compensation and retirement costs			14,461				13,946
Deferred service revenue			10,875				9,588
Contingent consideration arrangement liability			13,946				13,729
Other current liabilities			23,492				23,763
Total current liabilities			103,621				99,354
Long-term debt, excluding current installments			26,486				26,352
Deferred income taxes			5,324				5,757
Other liabilities			6,445				5,591
Total liabilities			141,876				137,054
Shareholders’ equity:
Preferred stock of $1.00 par value per share; Authorized 10,000 shares; none issued			—				—
Common stock of $.10 par value per share; Authorized 75,000 shares, issued and outstanding 15,307 in 2010 and 15,249 in 2009			1,525				1,525
Additional paid-in capital			136,514				136,112
Accumulated other comprehensive income — foreign currency translation adjustment			7,877				6,066
Retained earnings			93,979				93,388
Total shareholders’ equity			239,895				237,091
Commitments and contingencies
Total liabilities and shareholders’ equity		$	381,771				374,145

See accompanying notes to interim unaudited consolidated financial statements.

Consolidated Statements of Cash Flows (Unaudited)
(in thousands)

		Three Months Ended
		April 3				April 4
		2010				2009
Cash flows from operating activities:
Net earnings (loss)		$	591				(2,968	)
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:
Depreciation and amortization			5,040				4,607
Stock-based compensation expense			400				497
Change in fair value of contingent consideration liability			217				388
Changes in operating assets and liabilities, net of effects of acquisitions:
Trade accounts receivable			327				1,063
Costs and estimated earnings in excess of billings on long-term contracts			(1,276	)			7,893
Inventories			(1,691	)			(979	)
Accounts payable			1,741				1,197
Deferred service revenue			2,580				2,259
Other			(350	)			18
Net cash provided by operating activities			7,579				13,975
Cash flows from investing activities:
Purchases of property, plant and equipment			(1,787	)			(4,505	)
Payments for acquisitions of businesses, net of cash acquired			—				(83,814	)
Proceeds from sales of assets			18				1
Net cash used in investing activities			(1,769	)			(88,318	)
Cash flows from financing activities:
Net borrowings under revolving credit facility			500				33,759
Repayment of other debt			(340	)			(315	)
Deferred financing costs paid			(28	)			(251	)
Proceeds from exercise of stock options			—				153
Net cash provided by financing activities			132				33,346
Effect of changes in exchange rates on cash and cash equivalents			607				(38	)
Net change in cash and cash equivalents			6,549				(41,035	)
Cash and cash equivalents at beginning of period			47,174				86,979
Cash and cash equivalents at end of period		$	53,723				45,944

See accompanying notes to interim unaudited consolidated financial statements.

EMS Technologies, Inc. and Subsidiaries

1. Basis of Presentation

EMS Technologies, Inc. (“EMS”) is a leading provider of wireless connectivity solutions over satellite and terrestrial networks. EMS keeps people and systems connected, wherever they are — on land, at sea, in the air or in space. Serving the aeronautical, asset-tracking, defense, and mobile computing industries, EMS products and services enable universal mobility, visibility and intelligence.

The consolidated financial statements include the accounts of EMS Technologies, Inc. and its subsidiaries, each of which is a wholly owned subsidiary of EMS (collectively, the “Company”). All significant intercompany balances and transactions have been eliminated in consolidation. There are no other entities controlled by the Company, either directly or indirectly. Certain reclassifications have been made to the 2009 consolidated financial statements to conform to the 2010 presentation.

The accompanying unaudited consolidated financial statements included herein have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial statements and are based on the Securities and Exchange Commission’s (“SEC”) Regulation S-X and its instructions to Form 10-Q. They do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, the accompanying unaudited consolidated financial statements reflect all adjustments, consisting of normal recurring items, necessary to present fairly the financial condition, results of operations and cash flows for the interim periods presented. We have performed an evaluation of subsequent events through the date the financial statements were issued. These interim consolidated financial statements should be read in conjunction with the financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009.

— Management’s Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make a number of estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities as of the balance sheet date and reporting of revenue and expenses during the period. Actual future results could differ materially from those estimates.

— Accounting Changes

In January 2010, the Financial Accounting Standards Board (“FASB”) issued guidance amending and clarifying requirements for fair value measurements and disclosures in the FASB issued Accounting Standards Update (“ASU”) 2010-06, Improving Disclosures About Fair Value Measurements. The new guidance requires disclosure of transfers in and out of Level 1 and Level 2 and a reconciliation of all activity in Level 3. The guidance also requires detailed disaggregation disclosure for each class of assets and liabilities in all levels, and disclosures about inputs and valuation techniques for Level 2 and Level 3. The guidance is effective at the start of interim or annual reporting periods beginning after December 15, 2009 and the disclosure reconciliation of all activity in Level 3 is effective at the start of annual reporting periods beginning after December 15, 2010. The adoption of ASU 2010-06 did not have a material impact on the Company’s consolidated financial statements.

— Recently Issued Pronouncements Not Yet Adopted

In October 2009 the FASB issued two accounting standards updates that could result in revenue being recognized earlier in certain revenue arrangements with multiple deliverables. Both updates are effective for the Company in the first quarter of 2011. Early adoption is permitted. If the Company adopts this standard in a period other than the beginning of its fiscal year, the Company will be required to apply this standard retrospectively to beginning of its fiscal year, and disclose certain financial information as revised for all interim periods previously reported in the fiscal year adopted. The Company is evaluating when to adopt the updates and the effect the adoption will have on its consolidated financial statements.

ASU 2009-13, Revenue Recognition — Multiple-Deliverable Revenue Arrangements, amends the accounting for revenue arrangements with multiple deliverables. Among other things, ASU 2009-13:

	•		Eliminates the requirement for objective evidence of fair value of an undelivered item for treatment of the delivered item as a separate unit of accounting;
	•		Requires use of the relative selling price method for allocating total consideration to elements of the arrangement instead of the relative-fair-value method or the residual method;
	•		Allows the use of an estimated selling price for any element within the arrangement to allocate consideration to individual elements when vendor-specific objective evidence or other third party evidence of selling price do not exist; and
	•		Expands the required disclosures.

ASU 2009-14, Software — Certain Revenue Arrangements That Include Software Elements, amends the guidance for revenue arrangements that contain tangible products and software elements. ASU 2009-14 redefines the scope of arrangements that fall within software revenue recognition guidance by specifically excluding tangible products that contain software components that function together to deliver the essential functionality of the tangible product.

Under current guidance, products that contain software that is more than incidental to the product as a whole fall within the scope of software revenue recognition guidance, which requires, among other things, the existence of vendor-specific objective evidence of fair value of all undelivered items to allow a delivered item to be treated as a separate unit of accounting. Such tangible products excluded from the requirements of software revenue recognition requirements under ASU 2009-14 would follow the revenue recognition requirements for other revenue arrangements, including the new requirements for multiple-deliverable arrangements contained in ASU 2009-13.

2. Business Combinations

During the three months ended April 4, 2009, the Company completed the acquisitions of two businesses that expanded its technology base. The Company completed the acquisition of all of the equity interest in Formation, Inc. (“Formation”), of Moorestown, New Jersey, and Satamatics Global Limited (“Satamatics”), of Tewkesbury, UK, on January 9, 2009 and February 13, 2009, respectively.

The Company was required to adopt Statement of Financial Accounting Standards (“SFAS”) No. 141(R), Business Combinations, which is included in FASB Accounting Standards Codification^TM (“ASC”) Topic 805, Business Combinations, effective January 1, 2009, and these acquisitions were reflected in the consolidated financial statements in accordance with these revised standards.

The aggregate cash purchase price for these two entities was approximately $90.7 million. Of this amount, $88.8 million was paid in the first quarter of 2009, and the remaining $1.9 million was paid in the second quarter of 2009 upon resolution of working capital and cash provisions in the purchase agreements. In addition, the acquisition arrangement with Formation included contingent consideration of up to $15 million. The final payment amount under the contingent consideration arrangement has been determined and a total of $13.9 million is due to the sellers, payable in cash in 2010. Subsequent to April 3, 2010, $7.2 million was paid. The remaining $6.7 million is due December 31, 2010.

For the acquired companies, the results for the first quarter of 2010 included net sales of $14.3 million and no earnings before taxes, and the results for the first quarter of 2009 included net sales of $14.9 million and earnings before taxes of $0.6 million. The Company recognized charges of $0.2 million and $3.9 million related to the acquisitions in the first quarter of 2010 and first quarter of 2009, respectively, which are included in acquisition-related items in the consolidated statements of operations. The acquisition-related charges included in the first quarter of 2010 were primarily due to a change in the amount of the contingent consideration liability. The acquisition-related charges recorded in the first quarter of 2009 included acquisition-related expenses as a result of the adoption of SFAS 141(R), and accretion of the contingent consideration liability. The first quarter of 2009 also included a $1.4 million foreign exchange loss related to the funding of the Satamatics acquisition, which was required to be paid in British pounds sterling. The loss resulted from changes in foreign currency exchange rates from the date the Company funded the transaction to the date the acquisition was completed.

3. Goodwill and Other Intangible Assets

As discussed in Note 2, the Company completed two business combinations during the three months ended April 4, 2009. The consolidated financial statements include the identifiable intangible assets and goodwill resulting from these business combinations in addition to amounts from acquisitions of businesses completed in prior periods.

The following table presents the changes in the carrying amount of goodwill by reportable operating segment during the three months ended April 3, 2010 (in thousands):

						Global
		Aviation				Tracking				LXE				Total
Balance as of December 31, 2009		$	35,108				23,429				1,799				60,336
Foreign currency translation adjustment			—				—				67				67
Balance as of April 3, 2010		$	35,108				23,429				1,866				60,403

The Company had $19.6 million of accumulated impairment losses recorded on LXE’s goodwill as of April 3, 2010.

The following table presents the gross carrying amounts and accumulated amortization, in total and by major intangible asset class, for the Company’s intangible assets subject to amortization as of April 3, 2010 and December 31, 2009 (in thousands):

		As of April 3, 2010
		Gross								Net
		Carrying				Accumulated				Carrying
		Amount				Amortization				Amount
Developed technology		$	40,797				15,017				25,780
Customer relationships			19,045				3,046				15,999
Trade names and trademarks			6,204				1,261				4,943
Other			2,428				1,846				582
		$	68,474				21,170				47,304

		As of December 31, 2009
		Gross								Net
		Carrying				Accumulated				Carrying
		Amount				Amortization				Amount
Developed technology		$	40,385				13,460				26,925
Customer relationships			19,052				2,493				16,559
Trade names and trademarks			6,208				1,052				5,156
Other			2,428				1,812				616
		$	68,073				18,817				49,256

Amortization expense related to these intangible assets for the three months ended April 3, 2010 and for the three months ended April 4, 2009 was $2.1 million and $2.3 million, respectively. Expected amortization expense for the remainder of 2010 and for each of the five succeeding years is as follows: 2010 — $6.1 million, 2011 — $7.6 million, 2012 — $7.8 million, 2013 — $7.1 million, 2014 — $3.8 million and 2015 — $3.6 million.

In-process research and development assets of $0.3 million are not subject to amortization until the projects are completed or abandoned.

4. Fair Value Measurements

The Company measures financial and non-financial assets and liabilities in accordance ASC Topic 820, Fair Value Measurements and Disclosures. This guidance clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, this guidance establishes a three-tier fair-value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

	•		Level 1 – Observable inputs consisting of quoted prices in active markets;
	•		Level 2 – Inputs, other than quoted prices in active markets, that are observable either directly or indirectly; and
	•		Level 3 – Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

The carrying amounts of cash and cash equivalents, trade accounts receivable, accounts payable and accrued expenses approximate their fair values because of the short-term maturity of these instruments.

The Company uses derivative financial instruments, primarily in the form of foreign currency forward contracts, in order to mitigate the risks associated with currency fluctuations on future fair values of foreign denominated assets and liabilities. The fair values of foreign currency contracts of $469,000 at April 3, 2010 and $39,000 at December 31, 2009 are based on quoted market prices for similar instruments using the income approach (a level 2 input per the provisions of ASC Topic 820) and are recorded in other current assets in the consolidated balance sheets.

The Company has two fixed-rate mortgages and has borrowings under its revolving credit facility. One mortgage has an 8.0% rate and a carrying amount as of April 3, 2010 and December 31, 2009 of $6.2 million and $6.4 million, respectively. The other mortgage has a 7.1% rate and a carrying amount as of April 3, 2010 and December 31, 2009 of $2.7 million and $2.9 million, respectively. The Company’s outstanding borrowings under its revolving credit facility were $19.0 million as of April 3, 2010. The estimated fair value of the Company’s total debt was $26.6 million at April 3, 2010 and is based on quoted market prices for similar instruments (a level 2 input). Mortgage debt and borrowings under the Company’s credit facility are recorded in current and long-term debt on the Company’s consolidated balance sheets, but not at fair value.

Management believes that these assets and liabilities can be liquidated without restriction.

5. Interim Segment Disclosures

The Company is organized into four reportable segments: Aviation, Defense & Space (“D&S”), LXE and Global Tracking. The Company determines operating segments in accordance with the Company’s internal management structure, which is organized based on products and services that share distinct operating characteristics. Each segment is separately managed and is evaluated primarily upon operating income and EBITDA.

The Aviation segment designs and develops satellite-based communications solutions through a broad array of terminals and antennas for the aeronautical market that enable end-users in aircraft and other mobile platforms to communicate over satellite and air-to-ground links. This segment also designs and builds aircraft cabin equipment to process data on board aircraft, including rugged data storage, cabin-wireless connectivity, and air-to-ground connectivity.

The LXE segment manufactures mobile terminals and wireless data collection equipment for logistics management systems. The manufacturing cycle for each order is generally just a few days. Products are marketed directly to end-users, through distributors, and integrators (such as value-added resellers who provide inventory management software) that incorporate it with their products and services for sale and delivery to end users. LXE operates mainly in three markets; the Americas market, which is comprised of North, South and Central America, the international market which is comprised of all other geographic areas with the highest concentration in Europe, and direct sales to original equipment manufacturers (“OEM”).

The D&S segment manufactures custom-designed, highly engineered subsystems for use in space, airborne, and terrestrial applications for communications, radar, surveillance, precision tracking and electronic countermeasures. Orders typically involve development and production schedules that can extend a year or more. Products are typically sold to prime contractors or systems integrators rather than to end-users.

The Global Tracking segment provides satellite-based machine-to-machine mobile communications equipment and services to track, monitor and control remote assets, regardless of whether they are fixed, semi-fixed or mobile. Additionally, Global Tracking provides equipment for the Cospas-Sarsat search-and-rescue system and incident-management software for rescue coordination worldwide.

Prior to 2010, the Company operated under three reportable operating segments: Communications & Tracking, D&S and LXE. The Aviation and Global Tracking segments were previously included in our Communications and Tracking segment. The Company’s historical financial data has been recast in this Quarterly Report on Form 10-Q to conform to its 2010 segment presentation.

Following is a summary of the Company’s interim segment data (in thousands):

		Three Months Ended
		April 3				April 4
		2010				2009
Net sales:
Aviation		$	26,186				34,513
LXE			30,573				23,944
Defense & Space			16,534				26,908
Global Tracking			9,860				6,913
Less intercompany sales			(251	)			—
Global Tracking external sales			9,609				6,913
Total		$	82,902				92,278
Operating income (loss):
Aviation		$	309				5,066
LXE			892				(5,061	)
Defense & Space			918				2,892
Global Tracking			154				(759	)
Corporate & Other			(349	)			(4,080	)
Total		$	1,924				(1,942	)
Earnings (loss) before income taxes:
Aviation		$	(72	)			5,556
LXE			783				(5,138	)
Defense & Space			922				2,892
Global Tracking			46				(407	)
Corporate & Other			(744	)			(5,871	)
Total		$	935				(2,968	)

The results before income taxes for Corporate & Other for the first quarter of 2009 includes $3.9 million of acquisition-related charges, a $1.4 million foreign exchange loss related to the funding of the Satamatics acquisition and other expenses that are not allocated to operating segments in the financial data reviewed by the chief operating decision maker.

		April 3				December 31
		2010				2009
Assets:
Aviation		$	146,155				144,483
LXE			79,285				71,632
Defense & Space			55,133				53,883
Global Tracking			76,641				75,922
Corporate & Other			24,557				28,225
Total		$	381,771				374,145
Concentration of net assets by geographic region:
United States		$	63,202				72,826
Canada			65,982				62,239
Europe			106,284				97,216
Other			4,427				4,810
Total		$	239,895				237,091

Sales to no individual customer exceeded 10% of our net sales during the three months ended April 3, 2010, or April 4, 2009.

6. Earnings Per Share

Following is a reconciliation of the denominators for basic and diluted earnings (loss) per share calculations (in thousands):

		Three Months Ended
		April 3				April 4
		2010				2009
Basic weighted-average number of common shares outstanding			15,179				15,146
Dilutive potential shares using the treasury share method			27				—
Diluted weighted-average number of common shares outstanding			15,206				15,146
Shares that were not included in computation of diluted earnings per share that could potentially dilute future basic earnings per share because their effect on the periods were antidilutive			1,081				1,016

Dilutive potential shares are not included in the computation of diluted per-share amounts when a net loss exists because their effect is antidilutive. The first quarter of 2009 results were a net loss and therefore the diluted loss per share computation did not include dilutive potential shares.

7. Comprehensive Income

Following is a summary of comprehensive income (loss) (in thousands):

		Three Months Ended
		April 3				April 4
		2010				2009
Net earnings (loss)		$	591				(2,968	)
Other comprehensive income (loss):
Foreign currency translation adjustment			1,811				(1,180	)
		$	2,402				(4,148	)

8. Inventories

Inventories as of April 3, 2010 and December 31, 2009 include the following (in thousands):

		April 3				December 31
		2010				2009
Parts and materials		$	26,839				25,221
Work-in-process			5,419				5,142
Finished goods			10,439				10,292
		$	42,697				40,655

Costs included in inventories related to long-term programs or contracts are primarily for materials and work performed on programs awaiting funding, or on contracts not yet finalized. Such costs were $1.6 million at April 3, 2010, and $1.1 million at December 31, 2009.

9. Revolving Credit Facility

During the first three months of 2009, the Company completed two acquisitions and used borrowings under its revolving credit facility to fund a portion of the transactions. As of April 3, 2010, the Company had $19.0 million of borrowings outstanding under its revolving credit facility.

The Company has $2.5 million of standby letters of credit to satisfy performance guarantee requirements under certain customer contracts. While these obligations are not normally called, they could be called by the beneficiaries at any time before the expiration date should the Company fail to meet certain contractual requirements. After deducting outstanding letters of credit, at April 3, 2010 the Company had $41.0 million available for borrowing in the U.S. and $12.5 million available for borrowing in Canada under the revolving credit agreement.

10. Warranty Liability

The Company provides a limited warranty for a variety of its products. The specific terms and conditions of the warranties vary depending upon the specific products and markets. The Company records a liability at the time of sale for the estimated costs to be incurred under warranties, which is included in other current liabilities on the consolidated balance sheets. The amount of this liability is based upon historical, as well as expected, experience.

The warranty liability is periodically reviewed for adequacy and adjusted as necessary. Following is a summary of the activity for the periods presented related to the Company’s liability for limited warranties (in thousands):

		Three Months Ended
		April 3				April 4
		2010				2009
Balance at beginning of the period		$	4,085				2,789
Additions at dates of acquisition for businesses acquired during period			—				516
Accruals for warranties issued during the period			762				975
Settlements made during the period			(337	)			(900	)
Balance at end of period		$	4,510				3,380

11. Stock-Based Compensation

The Company has granted nonvested restricted stock and nonqualified stock options to key employees and directors under several stock award plans. The Company granted stock awards with an aggregate fair value of approximately $2.0 million and $1.3 million during the first quarter of 2010 and the first quarter of 2009, respectively. Stock based compensation is recognized on a straight line basis over the requisite service period for each separately vesting portion of an award as if the award was, in substance, multiple awards. The Company recognized expense in the three months ended April 3, 2010 and April 4, 2009 of $0.4 million and $0.5 million, respectively, before income tax benefits, for all the Company’s stock plans.

12. Income Taxes

The Company’s effective income tax rate is generally less than the amounts computed by applying the U.S. federal income tax rate of 34% due to a portion of earnings being earned in Canada, where the Company’s effective rate is much lower than the rate in the U.S. due to research-related tax benefits. However, in the first quarter of 2010, the rate was slightly higher than 34% since tax benefits for certain loss jurisdictions have not been recognized. In addition, the effective rate in 2010 is higher than 2009 since the earnings in Canada in 2010 are expected to be subject to higher rates due to provincial taxes and the rate used for U.S. taxable income is higher since certain key provisions of the U.S. tax law, including the research and development credit, have not been extended to be in effect for tax year 2010.

The Company settled a Canada federal audit for the years 2002 through 2004 in the first quarter 2010. The settlement did not affect any amounts reflected in the consolidated financial statements as of and for the period ended April 3, 2010. The Company is still under audit in Canada at the federal level for the years 2006 and 2007. The Company expects the audits to be completed in the next twelve months. Any related unrecognized tax benefits could be adjusted based on the results of the audits. The Company cannot estimate the range of the change that is reasonably possible at this time.

13. Discontinued Operations

Prior to 2009, the Company disposed of its S&T/Montreal, SatNet, and EMS Wireless divisions. The sales agreements for each of these disposals contained standard indemnification provisions for various contingencies that could not be resolved before the dates of closing and for various representations and warranties provided by the Company and the purchasers. The purchaser of EMS Wireless asserted claims under such representations and warranties. The parties agreed to arbitration, which commenced in the third quarter of 2009. In March of 2010, the Company received an interim decision from the arbitrator on these claims awarding the purchaser a total of approximately $9.2 million under the warranty provisions of the purchase agreement. As a result, the Company accrued a liability for the award costs, based on the interim decision, in discontinued operations in the fourth quarter of 2009. On April 30, 2010, the arbitrator issued the final decision awarding the purchaser of the Company’s former EMS Wireless division $8.6 million. Based on this final award the Company reduced its estimated liability by $0.6 million in the first quarter of 2010. This favorable adjustment in discontinued operations in the three months ended April 3, 2010 was offset by additional charges related to estimated contingent liabilities associated with other divisions disposed of prior to 2009. Discontinued operations had no net effect on the Company’s net earnings in the first quarter of 2010 or the first quarter of 2009.

In conjunction with the sale of S&T/Montreal in 2005, an existing contractual requirement for the Company to post approximately $3 million to secure in-orbit incentive performance of the Radarsat-2 payload was eliminated, but the Company continues to warrant that amount in the event of specified in-orbit payload failures. Based upon the available information, management believes that the outcome for this particular contingency is not probable and cannot be estimated. As a result, the Company has not incurred any costs to date, and has not recorded a liability as of April 3, 2010, with respect to this contingency. The Company incurred no additional costs related to this disposition through the first quarter of 2010.

The Company has an agreement with the purchaser of the former S&T/Montreal division to acquire a license for $8 million in payments over a seven-year period, beginning in December 2008, for the rights to a certain satellite territory. The Company and the purchaser have a corresponding sublicense agreement that granted the territory rights back to the purchaser, under which the Company is to receive a portion of the satellite service revenues from the specific market territory over the same period. The purchaser had previously guaranteed that the revenues derived under the sublicense would equal or exceed the acquisition cost of the license. As part of the agreement to sell the net assets of S&T/Montreal, the Company released the purchaser from this guarantee. Without the guarantee, the Company estimates that its portion of the satellite service revenues will be less than the acquisition cost, and the Company has accordingly reflected a liability for the net cost in its consolidated balance sheet. As of April 3, 2010, no payments have been made by the Company under this license agreement. The satellite service revenues from the specific market territory included under the sublicense agreement are considerably lower than expected. The Company believes that sufficient efforts are not being made by the purchaser of the former S&T/Montreal division to market this satellite service. The parties are in discussions of a possible settlement under these agreements. The Company believes that the net liability recorded in its consolidated balance sheet is its best estimate of the settlement amount. If a settlement is reached, it is expected to be paid in the following twelve months, and therefore the net liability is recorded as a current liability in the Company’s consolidated balance sheet as of April 3, 2010.

14. Repurchases of Common Shares

On July 29, 2008, the Company’s Board of Directors authorized a stock repurchase program for up to $20 million of the Company’s common shares. As of April 3, 2010, the Company had repurchased 495,000 common shares for approximately $10.1 million. Further repurchases are no longer permitted under the terms of the Company’s principal credit agreements. There were no repurchases of common shares under this program during the three months ended April 3, 2010.

15. Litigation

The Company is involved in various claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the Company’s consolidated financial position, results of operations or cash flows.

Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with our consolidated financial statements and related notes included in Item 1 of Part 1 of this Quarterly Report and the audited consolidated financial statements and notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the year ended December 31, 2009.

We are a leading provider of wireless connectivity solutions over satellite and terrestrial networks. We keep people and systems connected, wherever they are — on land, at sea, in the air or in space. Serving the aeronautical, asset-tracking, defense, and mobile computing industries, our products and services enable universal mobility, visibility and intelligence. Our operations include the following four reportable operating segments:

	•		Aviation — Designs and develops satellite-based communications solutions through a broad array of terminals and antennas for the aeronautical market that enable end-users in aircraft and other mobile platforms to communicate over satellite and air-to-ground links. This segment also designs and builds aircraft cabin equipment to process data on board aircraft, including rugged data storage, cabin-wireless connectivity, and air-to-ground connectivity;
	•		LXE — Provides rugged mobile terminals and wireless data networks used for logistics applications such as distribution centers, warehouses and container ports. LXE operates mainly in three markets: the Americas market, which is comprised of North, South and Central America; the International market, which is comprised of all other geographic areas, with the highest concentration in Europe; along with direct sales to original equipment manufacturers (“OEM”);
	•		Defense & Space (“D&S”) — Supplies highly engineered subsystems for defense electronics and sophisticated satellite applications from military communications, radar, surveillance and countermeasures to commercial high-definition television, satellite radio, and live TV for innovative airlines; and
	•		Global Tracking — Provides satellite-based machine-to-machine mobile communications equipment and services to track, monitor and control remote assets, regardless of whether they are fixed, semi-fixed or mobile. Additionally, Global Tracking provides equipment for the Cospas-Sarsat search-and-rescue system and incident-management software for rescue coordination worldwide.

Prior to 2010, we operated under three reportable operating segments: Communications & Tracking, D&S and LXE. The Aviation and Global Tracking segments were previously included in our Communications and Tracking segment. Our historical financial data has been recast in this Quarterly Report on Form 10-Q to conform to our 2010 segment presentation.

Following is a summary of significant factors affecting or related to our results of operations for the three months ended April 3, 2010:

	•		Consolidated net sales were 10.2% lower in the first quarter of 2010, compared with same period in 2009. Lower net sales at D&S and Aviation offset higher net sales at LXE and Global Tracking in the first quarter of 2010. Net sales at D&S were lower due to the completion of a significant military project that was included in D&S’s net sales in the first quarter of 2009. The decline in net sales at Aviation reflects the impact of the global economic slow-down in the air-transport, military, and business jet markets. Higher product shipments to the Americas market and a new source of revenue from sales made directly to OEMs increased net sales at LXE. Net sales improved at Global Tracking mainly due to strong product sales in the security market and higher airtime revenues.
	•		Our net earnings for the first quarter of 2010 were $0.6 million compared with a net loss of $3.0 million in the first quarter of 2009. This improvement was mainly due to an increase in operating income at LXE and Global Tracking of $6.0 million and $0.9 million, respectively, and lower acquisition-related charges of $3.7 million partially offset by a decrease in operating income at Aviation and D&S of $4.8 million and $2.0 million, respectively.
	•		Our markets continue to be impacted by the economy in certain markets and they are not immune to increasing pressures and risks. We expect that we will continue to be faced with these economic pressures through 2010. These and other factors could cause a decline in expected future cash flows for one or more of our business units (including our recently acquired businesses), and as a result it is reasonably possible that we may be required to recognize an impairment loss related to goodwill or other long-lived assets in the future.

Results of Operations

The following table sets forth items from the consolidated statements of operations as reported and as a percentage of net sales (or product net sales and service net sales for product cost of sales and service cost of sales, respectively) for each period (in thousands, except percentages):

		Three Months Ended
		April 3								April 4
		2010								2009
Product net sales		$	66,656				80.4	%		$	68,791				74.5	%
Service net sales			16,246				19.6				23,487				25.5
Net sales			82,902				100.0				92,278				100.0
Product cost of sales			44,538				66.8				47,414				68.9
Service cost of sales			8,744				53.8				16,571				70.6
Cost of sales			53,282				64.3				63,985				69.3
Selling, general and administrative expenses			21,674				26.1				21,934				23.8
Research and development expenses			5,421				6.5				4,406				4.8
Impairment loss on goodwill related charges			384				0.5				—				—
Acquisition-related items			217				0.3				3,895				4.2
Operating income (loss)			1,924				2.3				(1,942	)			(2.1	)
Interest income			181				0.2				62				0.1
Interest expense			(477	)			(0.6	)			(621	)			(0.7	)
Foreign exchange loss, net			(693	)			(0.8	)			(467	)			(0.5	)
Earnings (loss) before income taxes			935				1.1				(2,968	)			(3.2	)
Income tax expense			344				(0.4	)			—				—
Net earnings (loss)		$	591				0.7	%		$	(2,968	)			(3.2	)%

Three Months ended April 3, 2010 and April 4, 2009:

Net sales decreased by 10.2% to $82.9 million from $92.3 million in the first quarter of 2010 compared with the same period in 2009. Lower net sales from our D&S and Aviation segments were partially offset by higher net sales from our LXE and Global Tracking segments. Net sales were lower at D&S mainly due to the conclusion of work performed on a significant military communications research project in the fourth quarter of 2009, and therefore not included in the 2010 results. Net sales were lower at Aviation primarily due to a lower volume of net sales of high-speed-data aeronautical products, and in-cabin connectivity products reflecting a continued slow-down in its air-transport, military, and business jet markets in the first quarter of 2010. LXE’s net sales in the first quarter of 2010 were $6.6 million higher than in the same period in 2009, an increase of 27.7%, with higher net sales in the Americas market. The increase in net sales at Global Tracking was primarily a result of additional net sales generated from our asset-tracking product line acquired in February 2009.

Product net sales decreased by 3.1% to $66.7 million in the first three months of 2010 compared with the first three months of 2009. This was primarily due to lower net sales of high-speed-data aeronautical products from the organic product lines and newly acquired aviation product line at our Aviation segment, partially offset by an increase in product net sales from a higher number of terminals shipped by LXE in the Americas market, and additional product net sales generated from our asset-tracking product lines at Global Tracking acquired during the first quarter of 2009. Service net sales decreased by 30.8% to $16.2 million in the first three months of 2010 compared with the same period in 2009, mainly due to the conclusion of significant work performed on a military communications research project by D&S partially offset by an increase in airtime revenue generated from our asset-tracking product line acquired during the first quarter of 2009 at Global Tracking. As a result, product net sales comprised a higher percentage of total net sales in the first three months of 2010 compared with the first three months of 2009.

Overall cost of sales as a percentage of consolidated net sales was lower in the first quarter of 2010 compared with the same period of 2009 due to lower cost-of-sales percentages reported by three of the four reportable operating segments. Product cost of sales, and service cost of sales, as a percentage of their respective net sales were also lower in the first three months of 2010 compared with the same period in 2009. The decrease in product cost of sales as a percentage of its respective net sales was mainly due to a higher percentage of net sales generated by our LXE and Global Tracking divisions, which had lower cost-of-sales percentages than the other two operating segments, and as a result of management’s cost reduction efforts at LXE and D&S. This decrease in product cost-of-sales percentage of sales was partially offset by an increase in product cost-of-sales percentage at Aviation due to a lower production volume over which fixed costs were absorbed, and an unfavorable effect of changes in foreign currency exchange rates. The decrease in the service cost-of-sales percentage was mainly due to a lower proportion of service revenues generated from our D&S segment, which has a higher service cost-of-sales percentage than our other three reportable operating segments.

SG&A expenses as a percentage of consolidated net sales increased for the first quarter of 2010 compared with the first quarter in 2009. Actual expenses decreased by $0.3 million in the first quarter of 2010 compared with the same period in 2009 mainly due to management’s cost reduction efforts, lower severances charges by approximately $0.6 million, and the favorable effect of changes in foreign currency exchange rates on our LXE international operations. These decreased in costs were partially offset by the additional costs related to the acquired product lines, and the unfavorable effect of changes in foreign currency exchange rates on Aviation’s international operations.

R&D expenses were $1.0 million higher in the first quarter of 2010 than in the comparable period in 2009 mainly due to additional R&D expenses at Aviation, D&S and Global Tracking for the expansion of our technology base, and unfavorable effects of changes in foreign currency exchange rates on our Canadian operations. These increases offset lower R&D expenses at LXE.

Charges for impairment loss on goodwill were $0.4 million in the first quarter of 2010. The charges included in this category represent the costs of engaging outside professionals for valuation and audit services related to the goodwill impairment analysis conducted in the first quarter of 2010.

Acquisition-related items included charges of $0.2 million in the first quarter of 2010. These costs were primarily related to an increase in the earn-out liability for changes in payments to be made for one of the acquisitions completed in the first quarter of 2009. Acquisition-related charges were $3.9 million in the first quarter of 2009. These costs were primarily related to professional fees for legal, due-diligence, valuation, and integration services for the acquisition of our Formation and Satamatics businesses (see Note 2 to the consolidated financial statements in the Quarterly Report for additional information on these business acquisitions).

The first quarter of 2010 included a $0.7 million foreign exchange net loss related to the conversion of assets and liabilities not denominated in the functional currency and to changes in the fair value of forward contracts used to hedge against currency exposure. The first quarter of 2009 included a $1.4 million foreign exchange loss related to the funding of the Satamatics acquisition, which was required to be paid in British pounds sterling. The loss resulted from changes in foreign currency exchange rates from the date we funded the transaction to the date the acquisition was completed. Partially offsetting this loss in the first quarter of 2009 were net gains from the conversion of assets and liabilities not denominated in the functional currency and forward contracts.

We recognized income tax expense of $0.3 million in the first quarter of 2010 equal to 37% of earnings before income taxes. The Company’s effective income tax rate is generally less than the amounts computed by applying the U.S. federal income tax rate of 34% due to a portion of earnings being earned in Canada, where the Company’s effective rate is much lower than the rate in the U.S. due to research-related tax benefits. However, in the first quarter of 2010, the rate was slightly higher than 34% since tax benefits for certain loss jurisdictions were not recognized. In addition, the effective rate in 2010 was higher than 2009 since the earnings in Canada in 2010 are expected to be subject to higher rates due to provincial taxes and the rate used for U.S. taxable income is higher since certain key provisions of the U.S. tax law, including the research and development credit, have not been extended to be in effect for 2010 as of the end of the first quarter.

Segment Analysis

Our segment net sales, cost of sales as a percentage of respective segment net sales, and segment operating income (loss) and Adjusted EBITDA were as follows (in thousands, except percentages):

		Three Months Ended								Percentage
		April 3				April 4				Increase
		2010				2009				(Decrease)
Net sales:
Aviation		$	26,186				34,513				(24.1	)%
LXE			30,573				23,944				27.7
Defense & Space			16,534				26,908				(38.6	)
Global Tracking			9,860				6,913				42.6
Less intercompany sales			(251	)			—				(2)
Global Tracking external sales			9,609				6,913				39.0
Total		$	82,902				92,278				(10.2	)
Cost of sales percentage:
Aviation			67.2	%			61.2
LXE			58.3				67.3
Defense & Space			77.5				78.4
Global Tracking			52.5				76.1
Total			64.3				69.3
Operating income (loss):
Aviation		$	309				5,066				(93.9	)
LXE			892				(5,061	)			(117.6	)
Defense & Space			918				2,892				(68.3	)
Global Tracking			154				(759	)			(120.3	)
Corporate & Other			(349	)			(4,080	)			91.4
Total		$	1,924				(1,942	)			(199.1	)
Adjusted EBITDA (1)
Aviation		$	2,096				7,602				(72.4	)
LXE			1,638				(4,087	)			(140.1	)
Defense & Space			1,767				3,698				(52.2	)
Global Tracking			940				140				571.4
Corporate & Other			612				172				(255.8	)
Total		$	7,053				7,525				(6.3	)

Aviation: Net sales decreased by $8.3 million in the first quarter of 2010 as compared with the same period in 2009. The decrease was mainly due to lower net sales of high-speed-data aeronautical products into the air transport, business jet, and military markets in the first quarter of 2010. Net sales of in-cabin connectivity products into the air transport market were also lower in the first quarter of 2010 as compared with the first quarter of 2009.

Cost of sales as a percentage of net sales was higher for the first quarter of 2010 as compared with the first quarter of 2009. The cost-of-sales percentage was higher mainly due to lower production volume over which fixed costs were absorbed, and an unfavorable effect of changes in foreign currency exchange rates that affected our reported international costs in the first quarter of 2010.

Operating income decreased by $4.8 million in the first quarter of 2010 as compared with the same period in 2009, primarily as a result of lower net sales, and a higher cost-of-sales percentage in the first quarter of 2010. In addition, operating income was lower due to the unfavorable effects of foreign currency exchange rates in the first quarter of 2010. Operating income, as a percentage of net sales, was 1.2% and 14.7% in the first quarter of 2010 and 2009, respectively.

Adjusted EBITDA decreased by $5.5 million in the first quarter of 2010 as compared with the first quarter of 2009, due to a decrease in operating income and to a $0.9 million unfavorable change in foreign currency gains and losses.

LXE: Net sales in the first quarter of 2010 was higher than each of the preceding four quarters, and increased by $6.6 million as compared with the same period in 2009. An increase in net sales in the Americas market offset a slight decline in net sales in the International market in the first quarter of 2010, as compared with the same period in 2009. The increase in net sales in the Americas market resulted primarily from a higher volume of terminals shipped in that market. The slight decrease in net sales in the International market was mainly due to the unfavorable effect of changes in foreign currency exchange rates on the reported net sales from LXE’s International market, and lower service revenue resulting from the adoption of a fully indirect sales model in 2009, partially offset by a higher volume of terminals shipped in that market. Sales to the OEM market began in the fourth quarter of 2009 and represents $2.5 million or 8.2% of first-quarter sales.

Cost of sales as a percentage of net sales was lower in the first quarter of 2010 as compared with the same period in 2009 mainly due to a higher production volume over which fixed costs were absorbed, and lower product costs from efforts made throughout 2009 and in the first quarter of 2010 to redesign and simplify product offerings. Cost of sales as a percentage of net sales was also lower in the first quarter of 2010 due to a $0.5 million reduction in cost of sales for purchased items previously included in accounts payable that were determined to no longer be liabilities. Additional items are being reviewed and are expected to be resolved in future periods, which could result in further reductions to cost of sales. The effects of these reductions in cost of sales as a percentage of net sales were partially offset by an unfavorable effect of changes in foreign currency exchange rates that affected our reported International net sales, and a higher percentage of net sales generated from indirect channels, which have a higher cost-of-sales percentage than net sales generated from direct sales channels. Revenues are denominated in the local functional currency but product costs are denominated in the U.S. dollar, which was stronger in the first quarter of 2010 compared with the same period in 2009.

LXE generated operating income of $0.9 million in the first quarter of 2010 as compared with an operating loss of $5.1 million in the first quarter of 2009. This increase in operating income of $6.0 million was mainly a result of higher net sales. In addition, operating income increased as a result of a more favorable cost-of-sales percentage and lower SG&A and R&D expenses. SG&A and R&D expenses were lower in the first quarter of 2010 as compared with the same period in 2009 by $1.1 million, reflecting the impact of management’s cost-reduction efforts. Lower SG&A expenses were primarily a result of staff reductions to reduce LXE’s cost structure, the favorable effect of changes in foreign currency exchange rates on reported costs, and lower severance charges. Severance charges were lower by approximately by $0.6 million in the first quarter of 2010 as compared with the same period in 2009.

Adjusted EBITDA increased by $5.7 million in the first quarter of 2010 as compared with the first quarter of 2009, mainly due to an increase in operating income in 2010.

Defense & Space: Net sales decreased by $10.4 million in the first quarter of 2010 as compared with the same period of 2009, mainly due to work performed on military programs that were included in the first quarter of 2009, including a large military satellite communications research project, but that were completed in 2009 and will not contribute to net sales in future quarters. Order backlog of long-term contracts was $87.2 million at April 3, 2010, a decrease of $2.4 million from December 31, 2009.

Cost of sales as a percentage of net sales was lower in the first quarter of 2010 as compared with the same period in 2009, mainly due to a favorable mix of contracts and improved contract performance on certain defense-related projects in the first quarter of 2010.

Operating income was lower by $2.0 million in the first quarter of 2010 as compared with the first quarter of 2009. The lower operating income was mainly due to the decrease in net sales generated in the first quarter of 2010, and higher R&D expenses, partially offset by lower SG&A expenses. The lower SG&A costs reflect the impact of management’s cost reduction efforts initiated in 2009. Operating income as a percentage of net sales was 5.6% and 10.7% in the first quarter of 2010 and 2009, respectively.

Adjusted EBITDA decreased by $1.9 million in the first quarter of 2010 as compared with the first quarter of 2009, mainly due to a decrease in operating income in 2010.

Global Tracking: Net sales increased by $2.9 million in the first quarter of 2010 as compared with the same period in 2009. The increase was mainly due to the net sales generated from our new asset-tracking product lines acquired on February 13, 2009, which contributed $2.3 million of additional net sales in the first quarter of 2010 compared to the first quarter of 2009. Net sales included a higher concentration of product shipments to the security market in the first quarter of 2010 as compared with the first quarter of 2009, reflecting growth in that market. Net sales also were higher due to an increase in airtime revenue as a result of a higher number of terminals in use, and the first quarter of 2010 included approximately 40 additional billing days.

Cost of sales as a percentage of net sales was lower for the first quarter of 2010 as compared with the same period in 2009. The cost-of-sales percentage for the first quarter of 2010 included a more favorable product mix, and an increase in service revenue, which has a lower cost-of-sales percentage than product net sales.

Operating income increased by $0.9 million in the first quarter of 2010 as compared with the same period in 2009, primarily as a result of higher net sales and a lower cost-of-sales percentage, partially offset by higher SG&A and R&D costs. These higher costs were primarily a result of the timing of the acquisition of our new product lines in the first quarter of 2009; the costs related to the newly acquired product lines were included in the operating results of our Global Tracking segment for the first quarter of 2009 from the date of acquisition, but were included from the beginning of the first quarter of 2010. Operating income, as a percentage of net sales, was 1.6% and a negative 11.0% in the first quarter of 2010 and 2009, respectively.

Adjusted EBITDA increased by $0.8 million in the first quarter of 2010 as compared with the first quarter of 2009, due to an increase in operating income partially offset by a $0.5 million unfavorable change in foreign currency gains and losses year over year.

Adjusted EBITDA

We also measure our performance based on the non-GAAP financial measure of earnings before interest expense, income taxes, depreciation and amortization, and before discontinued operations, impairment loss on goodwill and related charges, acquisition-related items and acquisition-related foreign exchange adjustments (“Adjusted EBITDA”). The following table is a reconciliation of net earnings (loss) (which is the most directly comparable GAAP operating performance measure) to Adjusted EBITDA and earnings (loss) before income taxes by segment, for the first quarters of 2010 and 2009 (in thousands):

										Defense &				Global				Corp
		Aviation				LXE				Space				Tracking				& Other				Total
Three Months Ended April 3, 2010
Net earnings																						$	591
Income tax expense																							344
(Loss) earnings before income taxes		$	(72	)			783				922				46				(744	)			935
Interest expense			—				17				—				—				460				477
Depreciation and amortization			2,168				838				845				894				295				5,040
Impairment loss related charges			—				—				—				—				384				384
Acquisition-related items			—				—				—				—				217				217
Adjusted EBITDA		$	2,096				1,638				1,767				940				612			$	7,053
Three Months Ended April 4, 2009
Net loss																						$	(2,968	)
Income tax expense																							—
Earnings (loss) before income taxes		$	5,556				(5,138	)			2,892				(407	)			(5,871	)			(2,968	)
Interest expense			43				85				—				—				493				621
Depreciation and amortization			2,003				966				806				547				285				4,607
Acquisition-related items			—				—				—				—				3,895				3,895
Acquisition-related foreign exchange adjustment			—				—				—				—				1,370				1,370
Adjusted EBITDA		$	7,602				(4,087	)			3,698				140				172			$	7,525

We believe that earnings that are based on this non-GAAP financial measure provide useful information to investors, lenders and financial analysts because (i) this measure is more comparable with the results for prior fiscal periods, and (ii) by excluding the potential volatility related to the timing and extent of nonoperating activities, such as acquisitions or revisions of the estimated value of post-closing earn-outs, such results provide a useful means of evaluating the success of our ongoing operating activities. Also, we use this information, together with other appropriate metrics, to set goals for and measure the performance of our operating businesses, and to assess our compliance with debt covenants. Management further considers Adjusted EBITDA an important indicator of operational strengths and performance of our businesses. EBITDA measures are used historically by investors, lenders and financial analysts to estimate the value of a company, to make informed investment decisions and to evaluate performance. Management believes that Adjusted EBITDA facilitates comparisons of our results of operations with those of companies having different capital structures. In addition, a measure similar to Adjusted EBITDA is a component of our bank lending agreement, which requires certain levels of Adjusted EBITDA to be achieved. This information should not be considered in isolation or in lieu of our operating and other financial information determined in accordance with generally accepted accounting principles (“GAAP”). In addition, because EBITDA and adjustments to EBITDA are not determined consistently by all entities, Adjusted EBITDA as presented may not be comparable to similarly titled measures of other companies.

Backlog

Backlog is very important for our D&S segment due to the long delivery cycles for its projects. Many customers of our LXE segment typically require short delivery cycles. As a result, LXE usually converts orders into revenues within a few weeks, and it generally does not build up an order backlog that extends substantially beyond one fiscal quarter except for annual or multi-year maintenance service agreements. Our Aviation and Global Tracking businesses have projects with both short delivery cycles and delivery cycles that extend beyond the next twelve months. Our segment backlog as of April 3, 2010 and December 31, 2009 was as follows (in millions):

		April 3				December 31
		2010				2009
Aviation		$	42.1				49.4
LXE			21.1				22.0
Defense & Space			87.3				89.6
Global Tracking			22.2				17.2
Total		$	172.7				178.2

Included in the backlog of firm orders for our D&S segment was approximately $15.9 million and $22.5 million of unfunded orders, mainly for military contracts, as of April 3, 2010, and December 31, 2009, respectively. Of the orders in backlog as of April 3, 2010, the following are expected to be filled in the following twelve months: Aviation – 70%; LXE – 75%; D&S – 60%; and Global Tracking – 75%. LXE’s backlog as of April 3, 2010 was lower than as of December 31, 2009, but was nearly double that of April 4, 2009, mainly due to a shortage of certain component parts from LXE’s suppliers which caused a delay in the fulfillment of LXE’s orders received in the first quarter of 2010. LXE is working closely with suppliers to identify and implement ways to resolve the sourcing issues. LXE is expecting to further increase critical parts inventories in 2010 to avoid continued delays.

Liquidity and Capital Resources

During the first quarter of 2010, net cash and cash equivalents increased by $6.5 million. Operating activities contributed $7.6 million in positive cash flow mainly due to earnings generated by LXE and Global Tracking, an increase in accounts payable due to the timing of supplier payments, and deferred service revenue at LXE. This was partially offset by an increase in inventory balances mainly at LXE and Aviation, and an increase in costs and estimated earnings in excess of billings on long-term contracts at Aviation and D&S in the first quarter of 2010. The cash flow generated from operating activities was partially offset by $1.8 million used for capital expenditures during the first quarter of 2010.

During the first three months of 2009, cash and cash equivalents decreased by $41.0 million to $45.9 million at April 4, 2009. The primary factor contributing to the decrease during the period was cash utilized for our Formation and Satamatics acquisitions, net of borrowings under our credit facility.

Operating activities contributed $14.0 million in positive cash flows in the first quarter of 2009. Although we reported a net loss for the period, we nevertheless generated positive cash flow due to the level of noncash charges for depreciation and amortization, and decreases in working capital. Acquisition-related charges of $1.7 million were also paid during the quarter ended April 4, 2009 and were included as a reduction of cash provided by operating activities in the consolidated statement of cash flows.

During the first quarter of 2009, we used $83.8 million of cash to acquire our Formation and Satamatics businesses, net of cash acquired, which was partially funded by borrowings under our revolving credit facility. We borrowed $33.8 million under our revolving credit facility, and spent $4.5 million on capital expenditures, during the first quarter of 2009.

We have a revolving credit facility with a syndicate of banks with a $60 million total capacity for borrowing in the U.S. and $15 million total capacity for borrowing in Canada. The agreement also has a provision permitting an increase in the total borrowing capacity of up to an additional $50 million, subject to additional commitments from the current lenders or from new lenders. The existing lenders have no obligation to increase their commitments. The credit agreement provides for borrowings through February 28, 2013, with no principal payments required prior to that date. The credit agreement is secured by substantially all of our tangible and intangible assets, with certain exceptions for real estate that secures existing mortgages, for other permitted liens, and for certain assets outside the U.S.

As of April 3, 2010, we had $19.0 million of borrowings outstanding, $2.5 million of outstanding letters of credit, and $53.5 million available borrowing capacity under the revolving credit facility. At April 3, 2010, we were in compliance with all the covenants under the credit agreement.

We expect that capital expenditures in 2010 will range from $12 million to $14 million, excluding acquisitions of businesses. These expenditures are being used to purchase equipment that increases or enhances capacity and productivity, and to upgrade the enterprise reporting system of our LXE division.

Management believes that existing cash and cash equivalent balances, cash provided from operations, and borrowings available under our credit agreement will provide sufficient liquidity to meet the operating and capital expenditure needs for existing operations during the next twelve months.

Our Board of Directors has authorized a stock repurchase program for up to $20 million of our common shares. As of April 3, 2010, we had repurchased approximately 495,000 of our common shares for approximately $10.1 million. Further repurchases are no longer permitted under the terms of the Company’s principal credit agreements. There were no repurchases under the program during the three months ended April 3, 2010.

Additional cash payments of $13.9 million will be made in 2010 related to acquisitions completed in 2009 based upon the achievement of performance targets in 2009, and an agreement to settle the 2010 earn-out amount, $7.2 million of which was paid subsequent to April 3, 2010. The remaining $6.7 million is due December 31, 2010. Refer to Note 2 of the consolidated financial statement for additional information on these acquisitions.

On April 30, 2010, the arbitrator issued the final award related to claims made by the purchaser of our former EMS Wireless division. The final award of $8.6 million is to be paid to the purchaser in the second quarter of 2010.

Off-Balance Sheet Arrangements

We have $2.5 million of standby letters of credit outstanding under our revolving credit facility to satisfy performance guarantee requirements under certain customer contracts. While these obligations are not normally called, they could be called by the beneficiaries at any time before the expiration date, if we failed to meet certain contractual requirements. After deducting the outstanding letters of credit, at April 3, 2010 we had $41.0 million available for borrowing in the U.S. and $12.5 million available for borrowing in Canada under the revolving credit facility.

During 2009, we completed acquisitions of two entities. Of the total purchase price of these businesses, $9.8 million of cash is in escrow accounts and is payable to the sellers within specified periods following the respective dates of acquisition, subject to claims we may make against the sellers.

We have an agreement with the purchaser of our former S&T/Montreal division to warrant approximately $3 million in the event of specified in-orbit failures of the Radarsat-2 payload. Based upon the available information, management believes that the outcome for this particular contingency is not probable and cannot be estimated. As a result, we have not incurred any costs to date, and have not recorded a liability as of April 3, 2010, with respect to this contingency.

We also have an agreement with the purchaser of our former S&T/Montreal division to acquire a license for $8 million in payments over a seven-year period, beginning in December 2008, for the rights to a certain satellite territory. We have a corresponding sublicense agreement with the purchaser that granted the territory rights back to the purchaser, under which we are to receive a portion of the satellite service revenues from the specific market territory over the same period. The purchaser had previously guaranteed that the revenues derived under the sublicense would equal or exceed the acquisition cost of the license. As part of the agreement to sell the net assets of S&T/Montreal, we released the purchaser from this guarantee. Without the guarantee, we estimate that our portion of the satellite service revenues will be less than the acquisition cost, and we have accordingly reflected a liability for the net cost in our consolidated balance sheet. As of April 3, 2010, we have made no payments under this license agreement. The satellite service revenues from the specific market territory included under the sublicense agreement are considerably lower than expected. We believe that sufficient efforts are not being made by the purchaser of the former S&T/Montreal division to market this satellite service. The parties are in discussions of a possible settlement under these agreements. We believe that the net liability recorded in our consolidated balance sheet is our best estimate of the settlement amount. If a settlement is reached, it is expected to be paid in the following twelve months, and therefore the net liability is recorded as a current liability in our consolidated balance sheet as of April 3, 2010.

Commitments and Contractual Obligations

As of April 3, 2010, our material contractual cash commitments and material other commercial commitments have not changed significantly from those disclosed in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Annual Report on Form 10-K for the year ended December 31, 2009, other than an increase in purchase commitments of $6.6 million due to an increase in critical parts inventory at LXE to avoid continued delays in fulfillment of orders caused by a shortage of certain component parts from LXE’s suppliers.

Critical Accounting Policies

Our consolidated financial statements have been prepared in accordance with U.S. GAAP, which often require the judgment of management in the selection and application of certain accounting principles and methods. We discuss our critical accounting policies in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Annual Report on Form 10-K for the year ended December 31, 2009. There have been no significant changes in our critical accounting policies since the end of 2009.

Risk Factors and Forward-Looking Statements

The Company has included forward-looking statements in management’s discussion and analysis of financial condition and results of operations. All statements, other than statements of historical fact, included in this report that address activities, events or developments that we expect or anticipate will or may occur in the future, or that necessarily depend upon future events, including such matters as our expectations with respect to future financial performance, future capital expenditures, business strategy, competitive strengths, goals, expansion, market and industry developments, and the growth of our businesses and operations, are forward-looking statements. Actual results could differ materially from those suggested in any forward-looking statements as a result of a variety of factors. Such factors include, but are not limited to:

	•		economic conditions in the U.S. and abroad and their effect on capital spending in our principal markets;
	•		difficulty predicting the timing of receipt of major customer orders, and the effect of customer timing decisions on our results;
	•		our successful completion of technological development programs and the effects of technology that may be developed by, and patent rights that may be held or obtained by, competitors;
	•		U.S. defense budget pressures on near-term spending priorities;
	•		uncertainties inherent in the process of converting contract awards into firm contractual orders in the future;
	•		volatility of foreign currency exchange rates relative to the U.S. dollar and their effect on purchasing power by international customers, and on the cost structure of our operations outside the U.S., as well as the potential for realizing foreign exchange gains and losses associated with assets or liabilities denominated in foreign currencies;
	•		successful resolution of technical problems, proposed scope changes, or proposed funding changes that may be encountered on contracts;
	•		changes in our consolidated effective income tax rate caused by the extent to which actual taxable earnings in the U.S., Canada and other taxing jurisdictions may vary from expected taxable earnings, and the extent to which determined tax assets are considered realizable;
	•		successful transition of products from development stages to an efficient manufacturing environment;

	•		changes in the rate at which our products are returned for repair or replacement under warranty;
	•		customer response to new products and services, and general conditions in our target markets (such as logistics, and space-based communications), and whether these responses and conditions develop according to our expectations;
	•		the increased potential for asset impairment charges as unfavorable economic or financial market conditions, or other developments, might affect the fair value of one or more of our business units;
	•		the success of certain of our customers in marketing our line of high-speed commercial airline communications products as a complementary offering with their own lines of avionics products;
	•		the continued availability of financing for various mobile and high-speed data communications systems;
	•		risk that the recent turmoil in the credit markets may make it more difficult for some customers to obtain financing and adversely affect their ability to pay, which in turn could have an adverse impact on our business, operating results, and financial condition;
	•		development of successful working relationships with local business and government personnel in connection with the distribution and manufacture of products in foreign countries;
	•		the demand growth for various mobile and high-speed data communications services;
	•		our ability to attract and retain qualified senior management and other personnel, particularly those with key technical skills;
	•		our ability to effectively integrate our acquired businesses, products or technologies into our existing businesses and products, and the risk that any such acquired businesses, products or technologies do not perform as expected, are subject to undisclosed or unanticipated liabilities, or are otherwise dilutive to our earnings;
	•		the potential effects, on cash and results of discontinued operations, of final resolution of potential liabilities under warranties and representations that we made, and obligations assumed by purchasers, in connection with our dispositions of discontinued operations;
	•		the availability, capabilities and performance of suppliers of basic materials, electronic components and sophisticated subsystems on which we must rely in order to perform according to contract requirements, or to introduce new products on the desired schedule;
	•		uncertainties associated with U.S. export controls and the export license process, which restrict our ability to hold technical discussions with customers, suppliers and internal engineering resources and can reduce our ability to obtain sales from customers outside the U.S. or to perform contracts with the desired level of efficiency or profitability; and
	•		our ability to maintain compliance with the requirements of the Federal Aviation Administration and the Federal Communications Commission, and with other government regulations affecting our products and their production, service and functioning.

Further information concerning relevant factors and risks are identified under the caption “Risk Factors” in Part II Item 1A. of this Form 10-Q, and in our Annual Report on Form 10-K for the year ended December 31, 2009.

Effect of New Accounting Pronouncements

— Recently Issued Pronouncements Not Yet Adopted

In October 2009 the FASB issued two accounting standards updates that could result in revenue being recognized earlier in certain revenue arrangements with multiple deliverables. Both updates are effective for the Company in the first quarter of 2011. Early adoption is permitted. If the Company adopts this standard in a period other than the beginning of its fiscal year, the Company will be required to apply this standard retrospectively to beginning of its fiscal year, and disclose certain financial information as revised for all interim periods previously reported in the fiscal year adopted. The Company is evaluating when to adopt the updates and the effect the adoption will have on its consolidated financial statements.

ASU 2009-13, Revenue Recognition — Multiple-Deliverable Revenue Arrangements, amends the accounting for revenue arrangements with multiple deliverables. Among other things, ASU 2009-13:

	•		Eliminates the requirement for objective evidence of fair value of an undelivered item for treatment of the delivered item as a separate unit of accounting;
	•		Requires use of the relative selling price method for allocating total consideration to elements of the arrangement instead of the relative-fair-value method or the residual method;
	•		Allows the use of an estimated selling price for any element within the arrangement to allocate consideration to individual elements when vendor-specific objective evidence or other third party evidence of selling price do not exist; and
	•		Expands the required disclosures.

ASU 2009-14, Software — Certain Revenue Arrangements That Include Software Elements, amends the guidance for revenue arrangements that contain tangible products and software elements. ASU 2009-14 redefines the scope of arrangements that fall within software revenue recognition guidance by specifically excluding tangible products that contain software components that function together to deliver the essential functionality of the tangible product.

Under current guidance, products that contain software that is more than incidental to the product as a whole fall within the scope of software revenue recognition guidance, which requires, among other things, the existence of vendor-specific objective evidence of fair value of all undelivered items to allow a delivered item to be treated as a separate unit of accounting. Such tangible products excluded from the requirements of software revenue recognition requirements under ASU 2009-14 would follow the revenue recognition requirements for other revenue arrangements, including the new requirements for multiple-deliverable arrangements contained in ASU 2009-13.

Item 3.		Quantitative and Qualitative Disclosures about Market Risk

As of April 3, 2010, we had the following market-risk sensitive instruments (in thousands):

Government-obligations money market funds, other money market instruments, and interest-bearing time deposits, with maturity dates of less than 3 months interest payable monthly at variable rates (a weighted-average rate of 0.2% at April 3, 2010)		$	18,837
Revolving credit agreement with U.S. and Canadian banks, maturing in February 2013, interest payable quarterly at a variable rate (4.0% at April 3, 2010)		$	19,000

A 100 basis-point change in the interest rates of our market-risk sensitive instruments would have changed interest income by approximately $46,000 for the first quarter of 2010 based upon their respective average outstanding balances.

Our revolving credit agreement includes variable interest rates based on the lead bank’s prime rate or the then-published LIBOR for the applicable borrowing period. As of April 3, 2010, we had approximately $19.0 million of borrowings outstanding in the U.S., and no borrowings outstanding in Canada under our revolving credit agreement. A 100 basis-point change in the interest rate on our revolving credit agreement would have changed interest expense by approximately $47,000 for the first quarter of 2010 based upon the average outstanding borrowings under these obligations.

At April 3, 2010, we also had intercompany accounts that eliminate in consolidation but that are considered market-risk sensitive instruments because they are denominated in a currency other than the local functional currency. These include short-term amounts due to the parent (payable by international subsidiaries arising from purchase of the parent’s products for sale), intercompany sales of products from foreign subsidiaries to a U.S. subsidiary, and cash advances to foreign subsidiaries as follows:

		Exchange Rate				USD
		(USD per unit of				in thousands
		local currency)				(reporting currency)
Australia		0.9193 /AUD				$	2,801
Belgium		1.3491 /EUR					1,664
Canada		0.9917 /CAD					1,045
Germany		1.3491 /EUR					886
Netherlands		1.3491 /EUR					383
United Kingdon		1.5026 /GBP					284
Sweden		0.1391 /SEK					179
France		1.4316 /EUR					176
Italy		1.3491 /EUR					60
Total amount subject to foreign currency risk						$	7,478

We had accounts receivable and accounts payable balances denominated in currencies other than the functional currency of the local entity at April 3, 2010 as follows:

						Exchange Rate
						Functional
						Currency per				USD
Currency		Functional				Denominated				Equivalent
Denomination		Currency				Currency				(in thousands)
Accounts Receivable
USD		CAD					1.0084			$	11,188
USD		EUR					0.7412				1,147
USD		GBP					0.6576				117
Other currencies											268
										$	12,720
Accounts Payable
USD		CAD					1.0084			$	1,429
EUR		GBP					0.8875				516
GBP		USD					1.5207				436
EUR		USD					1.3479				233
EUR		SEK					9.7305				161
Other currencies											123
										$	2,898

We also had cash accounts denominated in currencies other than the functional currency of the local entity at April 3, 2010 as follows:

Exchange Rate

Functional

Currency per

USD

Currency

Functional

Denominated

Equivalent

Denomination

Currency

Currency

(in thousands)

USD

CAD

1.0084

$

8,074

GBP

CAD

1.5404

1,337

GBP

USD

1.5206

1,092

USD

GBP

0.6576

1,216

USD

EUR

0.7412

2,167

Other currencies

585

$

14,471

We enter into foreign currency forward contracts in order to mitigate the risks associated with currency fluctuations on future fair values of foreign denominated assets and liabilities. At April 3, 2010, we had forward contracts as follows (in thousands, except average contract rate):

Average

Fair

Notional

Contract

Value

Amount

Rate

(USD)

Foreign currency forward contracts:

U.S. dollars (sell for Canadian dollars)

14,500USD

1.0439

$

469

Item 4.		Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures

The Company has established and maintains disclosure controls and procedures (as defined in Securities Exchange Act Rules 13a-15(e)). The objective of these controls and procedures is to ensure that information relating to the Company, including its consolidated subsidiaries, and required to be filed by it in reports under the Securities Exchange Act, as amended, is effectively communicated to the Company’s CEO and CFO, and is recorded, processed, summarized and reported on a timely basis.

The CEO and CFO have evaluated the Company’s disclosure controls and procedures as of the end of the period covered in this report. Based upon this evaluation, the CEO and CFO have concluded that the Company’s disclosure controls and procedures were effective as of April 3, 2010.

(b) Changes in Internal Control Over Financial Reporting

During the first quarter of 2010, there were no changes that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting (as defined in Rule 13a – 15(f) under the Exchange Act).

PART II

OTHER INFORMATION

Item 1A.		Risk Factors

In addition to the other information set forth in this Quarterly Report on Form 10-Q, carefully consider the factors discussed in Part I, Item 1A. “Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2009, which could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K, and this Quarterly Report on Form 10-Q, are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently believe are immaterial also may materially adversely affect our business, financial condition and/or operating results.

Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds

The following table summarizes the Company’s purchases of its common shares for the three months ended April 3, 2010:

ISSUER PURCHASES OF EQUITY SECURITIES

(d) Maximum Number

(c) Total Number

(or Approximate

of Shares

Dollar Value) of

Purchased as

Shares that May Yet

Part of Publicly

Be Purchased

(a) Total Number

(b) Average

Announced

Under the Plans or

of Shares

Price Paid

Plans or

Programs (3)

Period

Purchased (1)

Per Share

Program (2)

(in millions)

Period 1 2010 (January 1 to January 30)

—

—

—

Period 2 2010 (January 31 to February 27)

980

$

12.92

—

Period 3 2010 (February 28 to April 3)

—

—

—

Total

980

$

12.92

—

$

9.9

Item 6.		Exhibits

The following exhibits are filed as part of this report:

	3.1			Second Amended and Restated Articles of Incorporation of EMS Technologies, Inc., effective March 22, 1999 (incorporated by reference to Exhibit 3.1 to our Quarterly Report on Form 10-Q for the quarter ended April 4, 2009).
	3.2			Bylaws of EMS Technologies, Inc. as amended through December 21, 2009 (incorporated by reference to Exhibit 3.2 to our Annual Report on Form 10-K for the year ended December 31, 2009).
	4.1			Waiver agreement, dated March 31, 2010, to Credit Agreement among EMS Technologies, Inc. and EMS Technologies Canada, Inc. and Bank of America as Domestic and Canadian Administrative Agent. *
	10.1			Compensation Arrangements with Certain Officers. *
	31.1			Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
	31.2			Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. *
	32			Certification of the Company’s Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. *

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

EMS TECHNOLOGIES, INC.
By:		/s/ Neilson A. Mackay		Date: May 13, 2010
		Neilson A. Mackay
		President, and Chief Executive Officer
		(Principal Executive Officer)
By:		/s/ Gary B. Shell		Date: May 13, 2010
		Gary B. Shell
		Senior Vice President, Chief Financial
		Officer and Treasurer (Principal Financial Officer)

AVAILABLE INFORMATION

EMS Technologies, Inc. makes available free of charge, on or through its website at www.ems-t.com, its annual, quarterly and current reports, and any amendments to those reports, as soon as reasonably practicable after electronically filing such reports with the Securities and Exchange Commission. Information contained on the Company’s website is not part of this report.