CPI International (CPII)

Investing Activities

For the first quarter of fiscal year 2008, net cash used in investing activities was $1.8 million, compared to $2.9 million for the first quarter of fiscal year 2007.

Investing activities for the first quarter of fiscal year 2008 consisted primarily of $1.7 million capital expenditures and $0.1 million payment of patent application fees.

Net cash used in investing activities for the first quarter of fiscal year 2007 was $2.9 million of capital expenditures, of which $2.0 million was for the building expansion project for our Canadian manufacturing facility.

Investing Activities

        For fiscal year 2007, net cash used in investing activities was $30.3 million, compared to $0.2 million and $35.7 million for fiscal years 2006 and 2005, respectively.

        Investing activities for fiscal year 2007 consisted primarily of $22.2 million for the acquisition of Malibu, net of cash acquired, and capital expenditures of $8.2 million, including $4.1 million to complete the building expansion project at our Canadian facility. We funded the acquisition of Malibu out of cash on hand generated from operations.

        Investing activities for fiscal year 2006 consisted primarily of $10.9 million for capital expenditures, including $4.7 million for capital equipment, building and land lease improvements in Palo Alto, California related to the Eimac relocation and $2.3 million for a building expansion project at our Canadian facility. The capital expenditures were almost entirely offset by the net proceeds from the sale of the San Carlos, California property of $10.7 million ($11.3 million gross proceeds less expenses for the sale of $0.6 million). We generally fund ongoing capital expenditures with cash generated from operating activities. However, capital expenditures for the improvements to our Palo Alto facility were funded with proceeds from the sale of the San Carlos property.

        Investing activities for fiscal year 2005 consisted primarily of $18.3 million for the purchase of Econco and $17.1 million for capital expenditures, including $13.1 million for capital equipment, building and land lease improvements related to the Eimac relocation. We funded the purchase of Econco out of cash on hand generated from operations and funded our capital expenditures out of cash flows from operations and the $13.5 million advance payment received in fiscal year 2004 in connection with the sale of the San Carlos property.

Investing Activities.

Net cash used in investing activities was $6.8 million for the nine months ended June 29, 2007 and $8.6 million for the nine months ended June 30, 2006. The primary investing activity in each of these periods was for capital expenditures. For the nine months ended June 29, 2007, capital expenditures included $3.7 million for a building expansion project for our Canadian manufacturing facility which was substantially completed in June 2007. Capital expenditures for the nine months ended June 30, 2006 included $4.4 million for capital equipment, building and land lease improvements in Palo Alto, California related to the relocation of our Eimac division and $1.2 million for a building expansion project at our Canadian facility.

Our continuing operations typically do not have large recurring capital expenditure requirements. Capital expenditures are generally made to replace existing assets, increase productivity, facilitate cost reductions or meet regulatory requirements. In fiscal year 2007, ongoing capital expenditures are expected to be approximately $4.5 million, excluding costs incurred for our Canadian facility expansion.

Investing Activities.

Net cash used in investing activities was $5.5 million for the first six months of fiscal year 2007 and $5.8 million for the first six months of fiscal year 2006; the primary investing activity was for capital expenditures. Capital expenditures in the first six months of fiscal year 2007 included $3.5 million for a building expansion project for our Canadian manufacturing facility. Capital expenditures for the first six months of fiscal year 2006 included $4.0 million to purchase capital equipment, building and land lease improvements related to the consolidation of Eimac into our Palo Alto facility, and $0.2 million for the building expansion project for our Canadian manufacturing facility.

Our continuing operations typically do not have large recurring capital expenditure requirements. Capital expenditures are generally made to replace existing assets, increase productivity, facilitate cost reductions or meet regulatory requirements. In fiscal year 2007, ongoing capital expenditures are expected to be approximately $4.5 million, excluding expenditures of approximately $4.5 million for completion of the Canadian facility expansion, of which $3.5 million was incurred in the first six months of fiscal year 2007.

Investing Activities.

Net cash used in investing activities was $2.9 million for the first quarter of both fiscal year 2007 and 2006; the primary investing activity was for capital expenditures.  Capital expenditures in the first quarter of fiscal year 2007 included $2.0 million for a building expansion project for our Canadian manufacturing facility.  Capital expenditures for the first quarter of fiscal year 2006 included $2.3 million to purchase capital equipment, building and land lease improvements, related to the consolidation of Eimac into our Palo Alto facility.

Our continuing operations typically do not have large recurring capital expenditure requirements. Capital expenditures are generally made to replace existing assets, increase productivity, facilitate cost reductions or meet regulatory requirements.  In fiscal year 2007, ongoing capital expenditures, excluding

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expenditures of approximately $4.5 million for completion of the Canadian facility expansion, of which $2.0 million was spent in the first quarter of fiscal year 2007, are expected to be approximately $4.5 million.

Investing Activities.

For fiscal year 2006, net cash used in investing activities was $0.2 million, compared to $35.7 million for fiscal year 2005 and $103.9 million for fiscal year 2004.

Investing activities for fiscal year 2006 consisted primarily of $10.9 million for capital expenditures, including $4.7 million for capital equipment, building and land lease improvements in Palo Alto, California related to the Eimac relocation and $2.3 million for a building expansion project at our Canadian facility. The capital expenditures were almost entirely offset by the net proceeds from the sale of the San Carlos property of $10.7 million ($11.3 million gross proceeds less expenses for the sale of $0.6 million). We generally fund ongoing capital expenditures with cash generated from operating activities. However, capital expenditures for the improvements to our Palo Alto facility were funded with proceeds from the sale of the San Carlos property.

Investing activities for fiscal year 2005 consisted primarily of $18.3 million for the purchase of Econco and $17.1 million for capital expenditures, including $13.1 million for capital equipment, building and land lease improvements related to the Eimac relocation. We funded the purchase of Econco out of cash on hand from operations and funded our capital expenditures out of cash flows from operations and the $13.5 million advance payment received in fiscal year 2004 in connection with the sale of the San Carlos property.

Investing activities for fiscal year 2004 consisted primarily of $113.1 million used to acquire the predecessor in connection with our January 2004 merger, which was offset by the receipt of $13.5 million as an advance payment for the sale of the San Carlos property.