High Performance Embedded High Performance Embedded SystemsSystems

IT Integration SolutionsIT Integration Solutions

1Investor Presentation

February, 2011

CSP Inc.

The Company wishes to take advantage of the ‘safe harbor’ provisions of the Private Securities Litigation Reform Act of 1995 with respect to statements that may be deemed to be forward-l ki d h A S h f d l kilooking statements under the Act. Such forward-looking statements may include, but are not limited to, statements regarding the future growth of the CSP Inc., and the success of the Company’s and its subsidiary’s products and services Thethe Company s and its subsidiary s products and services. The Company cautions that numerous factors could cause actual results to differ materially from any forward-looking statements made by the Company. Please refer to the section on forward-made by the Company. Please refer to the section on forwardlooking statements included in the Company’s filings with the Securities and Exchange Commission.

2

Corporate Overview

• Diversified multinational technology company founded in 1968:• Leading supplier of cutting edge IT Integration solutions and rugged

high performance cluster computer systems.– 2 Segments2 Segments

• Service and Systems Integration• Systems

– 139 People• Businesses Include:• Businesses Include:

MODCOMPMultiComputer

91%9%

3

91%9%

Investment Highlights

• Differentiated Systems Integration business model with ability to grow and increase market share when the market rebounds.

• Open systems technology based high performance cluster systems with the ability to meet the unique requirements of military applications.

• Financial Strength: Strong balance sheet - no debt

• Experienced Management with proven acquisition integration success.

• Positioned to grow profitably.g p y

4

CSP Inc.

95 0

76.8 83.4

95.0

60

80

100 $

Mil

lion

s

22.1 20

40

60

Rev

enu

e -

$

0

FY 2008 FY 2009 FY 2010 FY 2011 Q1

1.00

1.25

d

$0.25 $0.11

0 00

0.25

0.50

0.75

00

har

e -

Dil

ute

d

($0.11)

(0.75)

(0.50)

(0.25)

0.00

1 2 3 4

arn

ings

per

Sh

5

($1.05)(1.25)

(1.00)Ea

Strategy

d d l f l T• Provide cutting edge integration solutions for complex IT environments.

• Develop architecturally superior high performance cluster systems p y p g p ybased on open systems technologies for military applications.

• Leverage core competencies to extend key technologies to new growth markets like unified communications and “value added”growth markets like unified communications and value added cluster systems.

• Attract a greater percentage of higher margin consulting, solutions d d i b iand managed services business.

• Provide pipeline of innovative products and services to maintain strong customer relationships.g p

• Seek opportunities for growth through acquisitions and strategic partners.

6

Partnerships

Dense Clusters

Systems Integration Services

7

MODCOMP

A leading provider of solutions and services for complex IT environments that include storage and servers, network security, unified communications, unified computing and managed and consulting services.

NetworkCloud

ComputeCloud

8

The Security Landscape

VulnerabilityScanning

IntrusionDetection

PatchManagement

FirewallMonitoring

Pene

trat

ion

tion

Exte

rior

trus

ion

Det

ect

External Access

Int

Anti-Virus

9

Network Operations Center for Managed Services

• The NOC monitors key T e N C o o s eyelements of a customer’s network infrastructure on a 24x7x365 basis

• Value proposition to customers is to “leverage the skill of a team of experts for less than the cost of one high-level employee”

• Recurring revenue model

10

The Big IT Story:“New” IT Spending

11

Source: IDC Directions 2007

MultiComputer DivisionA leading supplier of High-Performance dense and rugged ClusterA leading supplier of High Performance dense and rugged Cluster computing systems based on open systems technologies for military applications.

HighlightsHighlights– Excellent Customer references– 40 years experience– Technology leadership in open systems software model

Sonar Systems

Blades Rugged

12

Systems

Defense Market

• Environments– Air, Land and Sea Platforms– Extended Temperature, Humidity,

Sand, Dust, Shock, Vibration and

• Programs– E2-D

• Digital Signal Processing Applications– Radar

Corrosive Elements

– GASS– HYDRA– SAPPS– C4ISR/AJCN

d– Sonar– C4ISR

• Command, Control, Communications, Computers, Intelligence, Surveillance and Reconnaissance

– Raytheon

• CSPI MultiComputer– Dense / High Performance Clustersg– Open – Linux / VxWorks– Commercial (VME), Rugged and Conduction Cooled

Solutions• Preserve customer software investment• E i i ti d d t t t ’ i

13

• Engineering expertise needed to meet customer’s unique requirements

The Challenges of Today’s Warfare

14

COTS Defense Market

COTS in Defense

Defense ElectronicsMarket

COTS

$27.0

$0.7

$2 3$3.0

(Boards)

$2.3(Systems)

All amounts are in Billions of dollars

15

Sources: Venture Development Corp. Embedded COTS in Military, Aerospace and Defense Study, 2008 COTS Journal October 2008

DoD program example: E-2D Advanced Hawkeye

$70.0 $10.0

Revenue Stream

$50.0

$60.0

$7.0

$8.0

$9.0

Mill

ions

)

Mill

ions

)

$20.0

$30.0

$40.0

$3.0

$4.0

$5.0

$6.0

ativ

e R

even

ue (i

n $

nual

Rev

enue

(in

$ M

Pilot Production

LRIP

$3 - 10MEDM and

SD&D

$3.5M

$-

$10.0

$-

$1.0

$2.0

Y05

Y06

Y07

Y08

Y09

Y10 Y11

Y12

Y13

Y14

Y15

Y16

Y17

Y18

Y19

Y20

Cum

ula

Ann $3.5M

$4M$2M$1 5MFY FY FY FY FY FY FY FY FY FY FY FY FY FY FY FY

Note: Revenue opportunity in 2012 and beyond is subject to DoD funding  and schedule decisions

$4M$2M$1.5M

16

Financial Review- Strong Balance Sheet- Leverageable model

17

Annual Sales

83.4

95.0 100

76.8 80

illi

ons

40

60

enu

e -$

Mi

22.1 20

Rev

e

0 FY 2008 FY 2009 FY 2010 FY 2011 Q1

Fi l Y

18

Fiscal Year

Annual Earnings per Share (Diluted)

1 25

0.75

1.00

1.25 d

$0.25 $0.110.25

0.50

0.75

e -

Dil

ute

d

($0.11)

$0.11

(0.25)

0.00

gs

per

Sh

are

(0.75)

(0.50)

Ear

nin

g

($1.05)(1.25)

(1.00)

FY 2008 FY 2009 FY 2010 FY 2011 Q1Fiscal Year

19

Fiscal Year

Net Income (loss)

3.00 3.50 4.00 4.50

0.91

0.390 501.00 1.50 2.00 2.50

Mil

lion

s

(0.41)

0.39

(1 50)(1.00)(0.50)0.00 0.50

nco

me

-$

(3 80)(3 50)(3.00)(2.50)(2.00)(1.50)

Net

I

(3.80)(4.00)(3.50)

FY 2008 FY 2009 FY 2010 FY 2011 Q1Fiscal Year

20

Fiscal Year Ended September 30, 2010Sales by Geography

71%

AmericasEuropeAsia

28%1%

Asia

21

Fiscal Year Ended September 30, 2010 Sales by Segment & Gross Margin

91%Service and Systems

Integration

(GM @ 13%) Blended GM of 18 %

9%

Systems

(GM @ 67%)

22

Balance Sheet Highlights

Dollars in Millions 9/30/2009 9/30/2010 12/31/2010Dollars in Millions 9/30/2009 9/30/2010 12/31/2010

Assets

Cash & Short Term Investments 18 9$ 15 5$ 16 0$ Cash & Short Term Investments 18.9$ 15.5$ 16.0$ Accounts Receivable 7.4$ 12.2$ 11.5$ Inventory 5.9$ 5.9$ 6.2$ Other current assets 3.7$ 2.4$ 2.4$

C A 35 9$ 36 0$ 36 1$ Current Assets 35.9$ 36.0$ 36.1$ Long-term assets 4.6$ 5.4$ 5.4$

Total Assets 40.5$ 41.4$ 41.5$

Liabilities & Shareholders' Equity

Current Liabilities 13.2$ 13.9$ 13.9$ Pensions & Other Long Term Liabilities 8.6$ 9.0$ 8.9$ Shareholders' equity 18.7$ 18.5$ 18.7$

Total Liabilities & Shareholders' Equity 40.5$ 41.4$ 41.5$

23

Working Capital 22.7$ 22.1$ 22.2$

Goals

Increase Market Share– MODCOMP

• Expand “solution” offerings to growth markets like network security management and unifiedlike network security management and unified communications

• Increase sales force and forge new supplier partnerships to leverage success in infrastructure solutions

• Increase higher margin consulting services and leverage NOC to expand managed services

– CSPI MultiComputerCSPI MultiComputer• Win a Deployment phase from a current program• Ramp up sales of FastCluster 4000 SERIES and

OpenVPX 3000 SERIES product lines.

– Evaluate acquisition opportunities

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Investment Highlights

• Differentiated Systems Integration business model with ability to grow and increase market share when the market rebounds.

• Open systems technology based high performance cluster systems with the ability to meet the unique requirements of military applications.

• Financial Strength: Strong balance sheet - no debt

• Experienced Management with proven acquisition integration success.

• Positioned to grow profitablyg p y

25