CSP INC /MA/ - FORM 10-Q/A

United States

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________

FORM 10-Q/A

(Amendment No. 1)

______________________

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended March 31, 2011.

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to .

Commission File Number 0-10843

______________________

CSP Inc.

(Exact name of Registrant as specified in its Charter)

______________________

Massachusetts	04-2441294
(State of incorporation)	(I.R.S. Employer Identification No.)

43 Manning Road

Billerica, Massachusetts 01821-3901

(978) 663-7598

(Address and telephone number of principal executive offices)

______________________

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 x No ¨.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No ¨.

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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	¨	Accelerated filer	¨

Non-accelerated filer	¨ (Do not check if a smaller reporting company)	Smaller reporting company	x

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

As of May 2, 2011, the registrant had 3,486,510 shares of common stock issued and outstanding.

INDEX

		Page
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements

	Consolidated Balance Sheets as of March 31, 2011 (unaudited) and September 30, 2010	4

	Consolidated Statements of Operations (unaudited) for the three and six months ended March 31, 2011 and 2010	5

	Consolidated Statement of Shareholders’ Equity (unaudited) for the six months ended March 31, 2011	6

	Consolidated Statements of Cash Flows (unaudited) for the six months ended March 31, 2011 and 2010	7

	Notes to Consolidated Financial Statements (unaudited)	8-14

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15-25

Item 4.	Controls and Procedures	26

PART II. OTHER INFORMATION

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27

Item 6.	Exhibits	28

EXPLANATORY NOTE

This Amendment No. 1 on Form 10-Q/A to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2011, filed with the Securities and Exchange Commission (SEC) on May 9, 2011 is being filed to restate our consolidated financial statements and other financial information to give effect to adjustments resulting from the identification of sales that are maintenance and support services provided by third parties where the Company is not the primary obligor for the service, which requires presentation of the revenue reported by the Company net of the cost of the services as opposed to recognition as the gross sales value of the services. We have therefore reduced the product revenue and product cost of sales by the amount of the costs associated with these services. In addition, the Company identified certain other services provided pursuant to third party contracts for which the Company is the primary obligor and reported these services correctly at the gross sales value; however these services were reported as product revenue and should have been reported as service revenue. We have therefore, reclassified both the revenue and cost of sales for these services from product revenue and product cost of sales to service revenue and service cost of sales. The adjustments made to the restated financial statements referred to above did not affect gross profit, income before taxes, net income, cash flow, total assets, total liabilities, retained earnings or total shareholder equity as of or for the quarters and six-month periods ended March 31, 2011 and 2010.

We have added a disclosure in Note 2 to our Consolidated Financial Statements that explains the restatement and the impact to our Consolidated Financial Statements that were originally filed. This Form 10-Q/A (Amendment No. 1) amends and restates Part I – Items 1, 2 and 4 of the May 9, 2011 filing, in each case to reflect only the adjustments described herein and the filing of restated financial statements as discussed above, and no other information in our May 9, 2011 filing is amended hereby. Except for the foregoing amended information, this Form 10-Q/A (Amendment No. 1) filing does not reflect events occurring after May 9, 2011.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

CSP INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands, except par value)

	March 31, 2011			September 30, 2010
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	14,372		$	15,531
Accounts receivable, net of allowances of $322 and $288		12,610			12,190
Inventories		8,314			5,862
Refundable income taxes		228			721
Deferred income taxes		126			124
Other current assets		2,186			1,523
Total current assets		37,836			35,951

Property, equipment and improvements, net		920			873

Other assets:
Intangibles, net		631			687
Deferred income taxes		903			880
Cash surrender value of life insurance		2,867			2,689
Other assets		250			299
Total other assets		4,651			4,555
Total assets	$	43,407		$	41,379

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued expenses	$	10,577		$	10,049
Deferred revenue		3,678			3,078
Pension and retirement plans		454			441
Income taxes payable		508			380
Total current liabilities		15,217			13,948
Pension and retirement plans		9,199			8,928
Capital lease obligation		24			24
Total liabilities		24,440			22,900

Commitments and contingencies
Shareholders’ equity:
Common stock, $.01 par; authorized, 7,500 shares; issued and outstanding 3,485 and 3,520 shares, respectively		35			35
Additional paid-in capital		11,052			11,280
Retained earnings		13,191			12,516
Accumulated other comprehensive loss		(5,311	)		(5,352	)
Total shareholders’ equity		18,967			18,479
Total liabilities and shareholders’ equity	$	43,407		$	41,379

See accompanying notes to unaudited consolidated financial statements.

CSP INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except for per share data)

	For the three months ended						For the six months ended
	March 31, 2011			March 31, 2010			March 31, 2011			March 31, 2010
Sales:	(Restated)			(Restated)			(Restated)			(Restated)
Product	$	12,767		$	18,283		$	28,058		$	31,781
Services		4,862			4,568			10,198			8,878
Total sales		17,629			22,851			38,256			40,659

Cost of sales:
Product		9,961			13,986			23,376			26,028
Services		3,419			3,375			6,103			6,837
Total cost of sales		13,380			17,361			29,479			32,865

Gross profit		4,249			5,490			8,777			7,794

Operating expenses:
Engineering and development		508			430			1,018			902
Selling, general and administrative		3,310			3,411			6,685			6,468
Total operating expenses		3,818			3,841			7,703			7,370

Operating income		431			1,649			1,074			424

Other income (expense):
Foreign exchange gain (loss)		12			(3	)		8			(10	)
Other income (expense), net		(13	)		(13	)		(30	)		(26	)
Total other income (expense), net		(1	)		(16	)		(22	)		(36	)

Income before income taxes		430			1,633			1,052			388
Income tax expense		144			644			377			141
Net income	$	286		$	989		$	675		$	247

Net income attributable to common shareholders	$	282		$	979		$	666		$	245

Net income per share – basic	$	0.08		$	0.28		$	0.19		$	0.07

Weighted average shares outstanding – basic		3,437			3,552			3,455			3,544

Net income per share – diluted	$	0.08		$	0.27		$	0.19		$	0.07

Weighted average shares outstanding – diluted		3,471			3,581			3,491			3,573

See accompanying notes to unaudited consolidated financial statements.

CSP INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

For the Six Months Ended March 31, 2011

(Amounts in thousands)

	Shares			Amount			Additional Paid-in Capital			Retained Earnings		Accumulated other comprehensive loss			Total Shareholders’ Equity			Comprehensive Income
Balance as of September 30, 2010		3,520		$	35		$	11,280		$	12,516	$	(5,352	)	$	18,479
Comprehensive income (loss):
Net income		—			—			—			675		—			675		$	675
Other comprehensive loss:
Effect of foreign currency translation		—			—			—			—		41			41			41
Total comprehensive income																		$	716

Stock-based compensation		—			—			46			—		—			46
Issuance of shares under employee stock purchase plan		25			—			75			—		—			75
Restricted stock shares issued		37			1			45			—		—			46
Purchase of common stock		(97	)		(1	)		(394	)		—		—			(395	)

Balance as of March 31, 2011		3,485		$	35		$	11,052		$	13,191	$	(5,311	)	$	18,967

See accompanying notes to unaudited consolidated financial statements.

CSP INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

	For the six months ended
	March 31, 2011			March 31, 2010
Cash flows from operating activities:
Net income	$	675		$	247
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization		182			200
Amortization of intangibles		56			57
Loss on disposal of fixed assets, net		3			1
Foreign exchange loss (gain)		(8	)		10
Non-cash changes in accounts receivable		34			(21	)
Stock-based compensation expense on stock options and restricted stock awards		92			107
Deferred income taxes		-			(60	)
Increase in cash surrender value of life insurance		(41	)		(41	)
Changes in operating assets and liabilities:
Increase in accounts receivable		(202	)		(7,718	)
Increase in inventories		(2,442	)		(705	)
(Increase) decrease in refundable income taxes		502			(68	)
(Increase) decrease in other current assets		(601	)		175
Decrease in other assets		52			5
Increase in accounts payable and accrued expenses		386			1,445
Increase in deferred revenue		509			358
Increase in pension and retirement plans liability		83			110
Increase in income taxes payable		127			145
Decrease in other long term liabilities		-			(14	)
Net cash used in operating activities		(593	)		(5,767	)

Cash flows from investing activities:
Life insurance premiums paid		(137	)		(64	)
Purchases of property, equipment and improvements		(211	)		(172	)
Net cash used in investing activities		(348	)		(236	)

Cash flows from financing activities:
Proceeds from issuance of shares under employee stock purchase plan		75			61
Purchase of common stock		(395	)		(40	)
Net cash provided by (used in) financing activities		(320	)		21

Effects of exchange rate on cash		102			(636	)

Net decrease in cash and cash equivalents		(1,159	)		(6,618	)
Cash and cash equivalents, beginning of period		15,531			18,904

Cash and cash equivalents, end of period	$	14,372		$	12,286

Supplementary cash flow information:
Cash paid for income taxes	$	251		$	146

Cash paid for interest	$	85		$	89

See accompanying notes to unaudited consolidated financial statements.

CSP INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

THREE AND SIX MONTHS ENDED MARCH 31, 2011 AND 2010

Organization and Business

CSP Inc. was founded in 1968 and is based in Billerica, Massachusetts. To meet the diverse requirements of its industrial, commercial and defense customers worldwide, CSP Inc. and its subsidiaries (collectively “CSPI” or the “Company”) develop and market IT integration solutions and high-performance cluster computer systems. The Company operates in two segments, its Systems segment and its Service and System Integration segment.

1.	Basis of Presentation

The accompanying consolidated financial statements have been prepared by the Company, without audit, and reflect all adjustments which, in the opinion of management, are necessary for a fair statement of the results of the interim periods presented. All adjustments were of a normal recurring nature. Certain information and footnote disclosures normally included in the annual financial statements, which are prepared in accordance with accounting principles generally accepted in the United States, have been condensed or omitted. Accordingly, the Company believes that although the disclosures are adequate to make the information presented not misleading, the unaudited financial statements should be read in conjunction with the footnotes contained in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2010, and Form 8-K/A filed on January 11, 2012.

2.	Restatement

The Company has restated its Consolidated Statements of Operations for the three-month and six-month periods ended March 31, 2011 and 2010 to reflect adjustments and reclassifications of revenue and cost of sales, in connection with the identification of sales that are maintenance and support services provided by third parties where the Company is not the primary obligor of the service, which requires presentation of the revenue reported by the Company net of the cost of the services as opposed to recognition of the gross sales value of the services. In addition, the Company identified certain other services provided pursuant to third party contracts for which the Company is the primary obligor and reported these services correctly at the gross sales value; however these services were reported as product revenue and should have been included as service revenue. We have therefore, reclassified both the revenue and cost of sales for these services from product revenue and product cost of sales to service revenue and service cost of sales.

The adjustments made to the restated financial statements referred to above did not affect gross profit, income before taxes, net income, cash flow, total assets, total liabilities, retained earnings or total shareholder equity as of or for the quarters and six-month periods ended March 31, 2011 or 2010.

The tables below show the impact to the statements of operations for the restated periods.

	Three months ended March 31, 2011 (unaudited)									Three months ended March 31, 2010 (unaudited)
	As reported			Restatement Adjustment			Restated			As reported			Restatement Adjustment			Restated
	(Amounts in thousands except for per share data)
Sales:
Product	$	15,726		$	(2,959	)	$	12,767		$	20,551		$	(2,268	)	$	18,283
Services		3,483			1,379			4,862			3,370			1,198			4,568
Total sales		19,209			(1,580	)		17,629			23,921			(1,070	)		22,851

Cost of sales:
Product		12,457			(2,496	)		9,961			15,960			(1,974	)		13,986
Services		2,503			916			3,419			2,471			904			3,375
Total cost of sales		14,960			(1,580	)		13,380			18,431			(1,070	)		17,361
Gross profit		4,249			-			4,249			5,490			-			5,490

Operatingexpenses		3,818			-			3,818			3,841			-			3,841
Operating income		431			-			431			1,649			-			1,649
Other income (expense), net		(1	)		-			(1	)		(16	)		-			(16	)
Income before income taxes		430			-			430			1,633			-			1,633
Income tax expense		144			-			144			644			-			644
Net income	$	286			-		$	286		$	989			-		$	989

Net income per share – basic	$	0.08			-		$	0.08		$	0.28			-		$	0.28
Weighted average shares outstanding – basic		3,437			-			3,437			3,552			-			3,552
Net income per share – diluted	$	0.08			-		$	0.08		$	0.27			-		$	0.27
Weighted average shares outstanding – diluted		3,471			-			3,471			3,581			-			3,581

	Six months ended March 31, 2011 (unaudited)									Six months ended March 31, 2010 (unaudited)
	As reported			Restatement Adjustment			Restated			As reported			Restatement Adjustment			Restated
	(Amounts in thousands except for per share data)
Sales:
Product	$	33,150		$	(5,092	)	$	28,058		$	35,796		$	(4,015	)	$	31,781
Services		8,169			2,029			10,198			6,786			2,092			8,878
Total sales		41,319			(3,063	)		38,256			42,582			(1,923	)		40,659

Cost of sales:
Product		27,750			(4,374	)		23,376			29,576			(3,548	)		26,028
Services		4,792			1,311			6,103			5,212			1,625			6,837
Total cost of sales		32,542			(3,063	)		29,479			34,788			(1,923	)		32,865
Gross profit		8,777			-			8,777			7,794			-			7,794

Operatingexpenses		7,703			-			7,703			7,370			-			7,370
Operating income		1,074			-			1,074			424			-			424
Other income (expense), net		(22	)		-			(22	)		(36	)		-			(36	)
Income before income taxes		1,052			-			1,052			388			-			388
Income tax expense		377			-			377			141			-			141
Net income	$	675			-		$	675		$	247			-		$	247

Net income per share – basic	$	0.19			-		$	0.19		$	0.07			-		$	0.07
Weighted average shares outstanding – basic		3,455			-			3,455			3,544			-			3,544
Net income per share – diluted	$	0.19			-		$	0.19		$	0.07			-		$	0.07
Weighted average shares outstanding – diluted		3,491			-			3,491			3,573			-			3,573

3.	Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates under different assumptions or conditions.

4.	Earnings Per Share of Common Stock

Basic net income per common share is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted net income per common share reflects the maximum dilution that would have resulted from the assumed exercise and share repurchase related to dilutive stock options and is computed by dividing net income by the assumed weighted average number of common shares outstanding.

We are required to present earnings per share, or EPS, utilizing the two class method because we had outstanding, non-vested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents, which are considered participating securities.

Basic and diluted earnings per share computations for the Company’s reported net income attributable to common stockholders are as follows:

	For the Three Months Ended				For the Six Months Ended
	March 31, 2011		March 31, 2010		March 31, 2011		March 31, 2010
	(Amounts in thousands, except per share data)
Net income	$	286	$	989	$	675	$	247
Less: Net income attributable to nonvested common stock		4		10		9		2

Net income attributable to common stockholders		282		979		666		245

Weighted average total shares outstanding – basic		3,492		3,591		3,504		3,577
Less: weighted average non-vested shares outstanding		55		39		49		33
Weighted average number of common shares outstanding – basic		3,437		3,552		3,455		3,544
Potential common shares from non-vested stock awards and the assumed exercise of stock options		34		29		36		29
Weighted average common shares outstanding – diluted		3,471		3,581		3,491		3,573

Net income per share – basic	$	0.08	$	0.28	$	0.19	$	0.07

Net income per share – diluted	$	0.08	$	0.27	$	0.19	$	0.07

All anti-dilutive securities, including stock options, are excluded from the diluted income per share computation. For the three and six months ended March 31, 2011, 208,000 and 211,000 options, respectively, were excluded from the diluted income per share calculation because their inclusion would have been anti-dilutive.

5.	Inventories

Inventories consist of the following:

	March 31, 2011		September 30, 2010
	(Amounts in thousands)
Raw materials	$	1,162	$	1,029
Work-in-process		808		439
Finished goods		6,344		4,394
Total	$	8,314	$	5,862

Finished goods includes inventory that has been shipped, but for which all revenue recognition criteria has not been met of approximately $3.6 million and $2.4 million as of March 31, 2011 and September 30, 2010, respectively.

Total inventory balances in the table above are shown net of reserves for obsolescence of approximately $4.2 million and $4.1 million as of March 31, 2011 and September 30, 2010, respectively.

6.	Accumulated Other Comprehensive Loss

The components of comprehensive income (loss) are as follows:

	For the Three Months Ended					For the Six Months Ended
	March 31, 2011		March 31, 2010			March 31, 2011		March 31, 2010
	(Amounts in thousands)
Net income	$	286	$	989		$	675	$	247
Effect of foreign currency translation		102		(297	)		41		(356	)
Minimum pension liability		—		—			—		—
Comprehensive income (loss)	$	388	$	692		$	716	$	(109	)

The components of Accumulated Other Comprehensive Loss are as follows:

	March 31, 2011			September 30, 2010
	(Amounts in thousands)
Cumulative effect of foreign currency translation	$	(2,092	)	$	(2,133	)
Additional minimum pension liability		(3,219	)		(3,219	)
Accumulated Other Comprehensive Loss	$	(5,311	)	$	(5,352	)

7.	Pension and Retirement Plans

The Company has defined benefit and defined contribution plans in the United Kingdom, Germany and the U.S. In the United Kingdom and Germany, the Company provides defined benefit pension plans and defined contribution plans for the majority of its employees. In the U.S., the Company provides benefits through supplemental retirement plans to certain current and former employees. The domestic supplemental retirement plans have life insurance policies which are not plan assets but were purchased by the Company as a vehicle to fund the costs of the plan. Domestically, the Company also provides for officer death benefits through post-retirement plans to certain officers. All of the Company’s defined benefit plans are closed to newly hired employees and have been for fiscal years 2009, 2010 and for the six months ended March 31, 2011.

The Company funds its pension plans in amounts sufficient to meet the requirements set forth in applicable employee benefits laws and local tax laws. Liabilities for amounts in excess of these funding levels are accrued and reported in the consolidated balance sheets.

Our pension plan in the United Kingdom is the only plan with plan assets. The plan assets consist of an investment in a commingled fund which in turn comprises a diversified mix of assets including corporate equity securities, government securities and corporate debt securities.

The components of net periodic benefit costs related to the U.S. and international plans are as follows:

	For the Three Months Ended March 31
	2011								2010
	Foreign			U.S.		Total			Foreign			U.S.		Total
	(Amounts in thousands)
Pension:
Service cost	$	18		$	2	$	20		$	15		$	2	$	17
Interest cost		172			25		197			168			30		198
Expected return on plan assets		(126	)		—		(126	)		(111	)		—		(111	)
Amortization of:
Prior service gain		—			—		—			—			—		—
Amortization of net gain		17			8		25			11			7		18
Net periodic benefit cost	$	81		$	35	$	116		$	83		$	39	$	122

Post Retirement:
Service cost	$	—		$	5	$	5		$	—		$	5	$	5
Interest cost		—			17		17			—			17		17
Amortization of net gain		—			12		12			—			16		16
Net periodic benefit cost	$	—		$	34	$	34		$	—		$	38	$	38

	For the Six Months Ended March 31
	2011								2010
	Foreign			U.S.		Total			Foreign			U.S.		Total
	(Amounts in thousands)
Pension:
Service cost	$	36		$	4	$	40		$	31		$	4	$	35
Interest cost		342			50		392			345			58		403
Expected return on plan assets		(251	)		—		(251	)		(227	)		—		(227	)
Amortization of:
Prior service gain		—			—		—			—			—		—
Amortization of net gain		34			16		50			22			15		37
Net periodic benefit cost	$	161		$	70	$	231		$	171		$	77	$	248

Post Retirement:
Service cost	$	—		$	10	$	10		$	—		$	9	$	9
Interest cost		—			34		34			—			34		34
Amortization of net gain		—			24		24			—			33		33
Net periodic benefit cost	$	—		$	68	$	68		$	—		$	76	$	76

8.	Segment Information

The following table presents certain operating segment information.

			Service and System Integration Segment
Three Months Ended March 31,	Systems Segment		Germany		United Kingdom		U.S.		Total		Consolidated Total
	(Amounts in thousands)
2011
Sales:
Product	$	1,931	$	2,785	$	61	$	7,990	$	10,836	$	12,767
Service		368		3,401		364		729		4,494		4,862
Total sales		2,299		6,186		425		8,719		15,330		17,629

Profit from operations		72		39		15		305		359		431
Assets		13,335		13,150		3,847		13,075		30,072		43,407
Capital expenditures		77		11		1		11		23		100
Depreciation and amortization		21		45		7		45		97		118

2010
Sales:
Product	$	4,136	$	2,407	$	25	$	11,715	$	14,147	$	18,283
Service		432		3,056		460		620		4,136		4,568
Total sales		4,568		5,463		485		12,335		18,283		22,851

Profit from operations		1,431		47		18		153		218		1,649
Assets		13,926		10,340		4,001		13,475		27,816		41,742
Capital expenditures		5		103		4		10		117		122
Depreciation and amortization		30		44		6		50		100		130

			Service and System Integration Segment
Six Months Ended March 31,	Systems Segment		Germany		United Kingdom			U.S.		Total		Consolidated Total
	(Amounts in thousands)
2011
Sales:
Product	$	2,240	$	6,251	$	72		$	19,495	$	25,818	$	28,058
Service		1,884		6,022		696			1,596		8,314		10,198
Total sales		4,124		12,273		768			21,091		34,132		38,256

Profit (loss) from operations		186		151		(15	)		752		888		1,074
Assets		13,335		13,150		3,847			13,075		30,072		43,407
Capital expenditures		133		47		3			28		78		211
Depreciation and amortization		41		92		14			91		197		238

2010
Sales:
Product	$	4,529	$	5,762	$	51		$	21,439	$	27,252	$	31,781
Service		493		6,314		845			1,226		8,385		8,878
Total sales		5,022		12,076		896			22,665		35,637		40,659

Profit from operations		136		48		14			226		288		424
Assets		13,926		10,340		4,001			13,475		27,816		41,742
Capital expenditures		15		135		9			13		157		172
Depreciation and amortization		64		79		12			102		193		257

Profit (loss) from operations is sales less cost of sales, engineering and development, selling, general and administrative expenses but is not affected by either non-operating charges/income or by income taxes. Non-operating charges/income consists principally of investment income and interest expense. All intercompany transactions have been eliminated.

The following table lists customers from which the Company derived revenues in excess of 10% of total revenues for the three and six month periods ended March 31, 2011 and 2010.

	For the Three Months Ended										For the Six Months Ended
	March 31, 2011					March 31, 2010					March 31, 2011					March 31, 2010
	Amount		% of Revenues			Amount		% of Revenues			Amount		% of Revenues			Amount		% of Revenues
	(Dollar amounts in millions)
Vodafone	$	3.2		18	%	$	2.3		10	%	$	4.8		13	%	$	4.9		12	%
Verio	$	1.8		10	%	$	5.8		25	%	$	4.3		11	%	$	7.8		19	%
Raytheon	$	0.1		―	%	$	3.7		16	%	$	0.1		―	%	$	3.8		9	%

9.	Fair Value Measures

Assets and Liabilities measured at fair value on a recurring basis are as follows:

Fair Value Measurements Using

Quoted Prices in

Active

Markets for Identical

Instruments

(Level 1)

Significant

Other

Observable

Inputs

(Level 2)

Significant

Unobservable

Inputs

(Level 3)

Total

Balance

Gain

(loss)

As of March 31, 2011

(Amounts in thousands)

Assets:

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CSP INC /MA/ - FORM 10-Q/A - March 2, 2012