CSP Inc Reports Fourth-Quarter and Fiscal 2004 Year-End Financial Results

For the fourth quarter of fiscal 2004, CSP Inc. reported that sales
increased 33 percent to $14.6 million from $11.0 million for the year-earlier
quarter. The Company reported fourth-quarter net income of $523,000, or $0.14
per share diluted, compared with a net loss of $(445,000), or $(0.13) per
share diluted, for the fourth quarter of fiscal 2003.
For the fiscal year ended September 30, 2004, the Company reported sales
of $52.8 million, an increase of 62 percent from sales of $32.5 million for
fiscal 2003. This includes twelve months of sales from the Technisource
acquisition compared to four months in fiscal year 2003. For fiscal 2004, the
Company reported net income of $1.2 million, or $0.32 per share diluted,
compared with a net loss of $1.4 million, or $(0.39) per share diluted, for
the prior year.
"We continued to execute well across all of our businesses in the fourth
quarter, culminating in a very strong financial performance for full-year
fiscal 2004," stated Chairman, President and Chief Executive Officer,
Alexander R. Lupinetti. "For fiscal 2004, we reported a 62 percent increase in
revenues and achieved full-year profitability for the first time since fiscal
year 2000."

Systems
"Our Multicomputer Group's stellar fourth-quarter performance reflected
shipments of equipment from previous contract wins for our open system
multicomputers. For example, during the quarter we shipped FastCluster 2942
blades to Lockheed Martin for the System Development and Demonstration (SD&D)
phase of the Advanced Hawkeye (AHE) program. During the SD&D phase, the Navy
will use five radar systems for qualification, reliability and flight testing.
We are working with Lockheed Martin to develop a ruggedized version of the
2942 blades to meet the environmental conditions required for airborne radar."
"We continue to see international and domestic interest in our
multicomputers for military applications and we will seek to capitalize on
these opportunities in fiscal 2005," continued Lupinetti. "During the year, we
will remain focused on new product development in order to deliver
architecturally superior multicomputers that lead the market in price-
performance. In 2005, we expect to launch follow-on products to our Series
2000 MultiComputers as well as other products."

Service and Systems Integrations
"The continued demand for servers, storage and associated services,
coupled with our excellent value proposition and reputation for service, drove
sales growth at our MODCOMP subsidiary in the fourth quarter," added
Lupinetti. "MODCOMP's Systems and Solutions Division in Florida, which
provides best-of-class integration solutions for multi-vendor IT environments,
is taking market share in an improved environment for IT spending in the
United States. MODCOMP's European offices also performed very well during the
fourth quarter."
"Going forward, we will strive to maintain our competitive edge and
continue to gain market share by providing superior customer service,"
continued Lupinetti. "In addition, we plan to increase our sales staff at our
Systems and Solutions Division to better enable us to take advantage of
opportunities in this market."

Going Forward
"One year ago, we outlined our strategy to position CSP with the right
products and services across our businesses to capitalize on a rebound in our
global markets. We skillfully executed on that strategy in 2004 and we now
look forward to pursuing opportunities for growth in each of our businesses in
fiscal 2005," concluded Lupinetti.

Safe Harbor
The Company wishes to take advantage of the "Safe Harbor" provisions of
the Private Securities Litigation Reform Act of 1995 with respect to
statements that may be deemed to be forward-looking under the Act. Such
forward-looking statements may include, but are not limited to, those relating
to the Company's work with Lockheed Martin to develop a ruggedized version of
the 2942 blades, its ability to capitalize on Multicomputer opportunities, the
Company's plan to deliver architecturally superior multicomputers that lead
the market in price-performance, its plans to launch follow-on products to the
Series 2000 MultiComputers as well as other products, its ability to take
market share and to grow its sales staff at the Systems and Solutions
Division. The Company cautions that numerous factors could cause actual
results to differ materially from any forward-looking statements made by the
Company. Such risks include general economic conditions, market factors,
competitive factors and pricing pressures, and others described in the
Company's filings with the SEC. Please refer to the section on forward-
looking statements included in the Company's filings with the Securities and
Exchange Commission.

About CSP Inc.
Based in Billerica, Massachusetts and founded in 1968, CSP Inc. and its subsidiaries develop and market best-of-breed IT
solutions, image processing software, systems integration services, and high-
performance computer systems. Our Systems segment includes the MultiComputer
Division which supplies high-performance Linux cluster systems for a broad
array of defense applications, including radar, sonar and surveillance signal
processing. The Company's MODCOMP, Inc. subsidiary, also part of our Service
and Systems Integration segment founded in 1970 and which includes our fiscal
2003 acquisition of Technisource, is a leading provider of IT solutions and
systems integration services. MODCOMP works with third parties to develop
customized solutions in the global IT markets and has offices in the U.S.,
U.K., and Germany.

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