Gary Levine
Chief Financial Officer 
CSP Inc.
Tel: (978) 663-7598 ext. 1200 
Fax: (978) 663-0150
glevine@cspi.com

For the fourth quarter of fiscal 2003, CSP Inc. reported sales of $11.0 million compared with $7.6 million for the year-earlier quarter. The Company reported a fourth-quarter net loss of $445,000, or $(0.13) per share, compared with a net loss of $3.7 million, or $(1.06) per share, for the fourth quarter of fiscal 2002. During the fourth-quarter 2003 the Company recorded an impairment charge for goodwill of $480,000. The fourth-quarter 2002 net loss includes a non- cash charge of $3.3 million relating to the establishment of a valuation allowance against its deferred tax asset.

For the fiscal year ended September 30, 2003, the Company reported sales of $32.5 million, compared with sales of $28.1 million for fiscal 2002. For fiscal 2003, the Company reported a net loss of $1.4 million, or $(0.39) per share. This compares with net loss of $5.7 million, or $(1.61) per share, for the prior year.

Chairman, President and CEO Alexander R. Lupinetti stated, "We achieved several key accomplishments in the fourth quarter, including winning a major multicomputer defense contract and taking actions to position MODCOMP for growth when IT spending begins to rebound."

"As we previously announced, during the quarter we won a multimillion-dollar contract from Lockheed Martin Systems Integration to produce our advanced 2000 SERIES MultiComputers for the design and development phase of the next-generation radar in the U.S. Navy's E-2C Hawkeye aircraft," stated Lupinetti. This next-generation radar is slated to replace the Hawkeye's current airborne radar system. During the design and development phase, Lockheed Martin is scheduled to produce five radar systems that the Navy will use for qualification, reliability and flight-testing. The Navy then plans a full-scale production program to outfit all 75 aircraft in the E-2C fleet by 2020.

"Lockheed Martin chose our 2000 SERIES MultiComputers because they deliver the high-speed processing and mission-critical performance that make them ideally suited to the U.S. Navy's exacting specifications," continued Lupinetti. "We are greatly encouraged that our multicomputers were chosen for this important program, and we continue to move forward in the acquisition process on additional defense-related opportunities for our Linux-based multicomputers."

"At our MODCOMP Division, the integration of Technisource hardware has been completed," added Lupinetti. "Technisource, a reseller of software and hardware products for IT infrastructure requirements and a provider of system integration services, now operates as the Systems and Solutions Division of MODCOMP. During the quarter, that division signed three new reseller agreements. We will offer security appliances from CyberGuard and SteelCloud, both technology leaders in network security, and provide turn-key CRM integration and customization services for TeamScope Software, a CRM software provider."

"We expect that our domestic expertise in high-value IT systems integration provided by our newly created Systems and Solutions Division will enable us to capitalize on opportunities created by the trend toward open IT systems. To this end, we expect to incrementally add sales force professionals as the year progresses. We are cautiously optimistic as we enter fiscal 2004 with improved prospects for sales growth and a lower cost structure across the organization," concluded Lupinetti.

Safe Harbor Statement
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 statements under the Act. Such forward-looking statements may include, but are not limited to, the company's contract with Lockheed Martin for the U.S. Navy's E-2C Hawkeye aircraft, the success of new reseller agreements for MODCOMP, the ability to capitalize on opportunities created by the trend toward open systems in IT, the incremental addition of sales force professionals at MODCOMP, and improved prospects for sales growth. 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.