CHEMISTRY

CSP Inc., a provider of IT Solutions, systems integration services and dense cluster computing systems, today reported financial results for the fourth quarter and fiscal 2004 year ended September 30, 2004. 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.