PALO ALTO, Calif. - May 14, 2007 - CPI International, Inc. (Nasdaq: CPII), the parent company of Communications & Power Industries, Inc., a leading provider of microwave, radio frequency, power and control solutions for critical defense, communications, medical, scientific and other applications, today announced financial results for its fiscal 2007 second quarter ended March 30, 2007.

Total sales of $88.4 million in the second quarter of fiscal 2007, the highest quarterly sales level since the company’s inception in 1995, increased approximately two percent from the $86.9 million generated in the second quarter of fiscal 2006. For the first six months of fiscal 2007, CPI generated orders totaling $184.2 million and sales totaling $172.2 million, resulting in a book-to-bill ratio of 1.07.

In the second quarter of fiscal 2007, net income of $5.8 million, or $0.32 per share on a diluted basis, increased from the $4.3 million, or $0.29 per share on a diluted basis, generated in the second quarter of fiscal 2006. EBITDA of $16.3 million increased approximately two percent from the $16.1 million generated in the comparable quarter of the previous year.

As compared to the same quarter of the previous fiscal year, CPI’s financial results in the second quarter of fiscal 2007 did not include certain material unusual charges. In the same quarter in the previous fiscal year, the company’s financial results were impacted by move-related expenses, including indirect expenses for unfavorable overhead absorption and manufacturing variances related to the relocation of the company’s Eimac operations; favorable foreign currency hedge contracts that expired in March 2006; higher debt levels, with resulting higher interest expense; and a higher effective tax rate.

“CPI’s solid financial performance in the first half of fiscal 2007 is in line with our expectations and our previously issued guidance, and we are pleased with the growth we are generating in our orders and sales,” said Joe Caldarelli, chief executive officer. “The first two quarters of fiscal 2007 were strong, straightforward quarters for CPI, laying a healthy foundation from which to launch the second half of the fiscal year.”

On a combined basis, in the radar and electronic warfare markets, sales decreased three percent from an aggregate of $37.6 million in the second quarter of fiscal 2006 to an aggregate of $36.3 million in the second quarter of fiscal 2007. This slight decrease was primarily due to timing. In prior periods, orders for certain U.S. and foreign defense programs were delayed, resulting in lower shipments of products for these programs in the most recent quarter. Although, the timing of orders for certain programs can result in fluctuations in sales from quarter to quarter, CPI believes that overall, long-term demand for its defense products remains robust. For the first six months of fiscal 2007, CPI’s orders and sales in the combined radar and electronic warfare markets totaled $76.3 million and $70.3 million, respectively, generating a book-to-bill ratio of 1.09 in these markets.

In the medical market, sales increased 21 percent to $17.0 million in the most recent quarter from $14.1 million in the second quarter of fiscal 2006. This increase was primarily driven by increases in sales of products used in magnetic resonance imaging (MRI) systems, x-ray generators for U.S. and foreign customers and products used in radiation therapy for the treatment of cancer.

In the communications market, sales decreased six percent from $28.6 million in the second quarter of fiscal 2006 to $27.0 million in the most recent quarter. In the second quarter of fiscal 2006, CPI had particularly strong sales of traditional satellite communications amplifiers, primarily due to large shipments of traditional amplifiers for direct-to-home broadcast applications. The decrease in communications sales in the second quarter of fiscal 2007 principally resulted from a decrease in sales of these traditional satellite communications amplifiers, including those used for direct-to-home broadcast applications. This decrease was partially offset by an increase in shipments of CPI’s newer satellite communications products, including Ka-band, or, 30 gigahertz, products used for direct-to-home broadcast and other applications.

Total orders for all of CPI’s markets increased seven percent to $184.2 million in the first six months of fiscal 2007 from $172.1 million in the first six months of fiscal 2006. Orders in five of CPI’s six markets increased during the period; orders in the electronic warfare market were essentially flat. The combined book-to-bill ratio for all of CPI’s markets in the first six months of fiscal 2007 was 1.07.

In conjunction with this announcement, CPI will hold a conference call on Tuesday, May 15, 2007 at 11:00 a.m. (EDT) that will be simultaneously broadcast live over the Internet on the company’s Web site. To participate in the conference call, please dial (866) 543-6405, or (617) 213-8897 for international callers, enter participant pass code 70008445 and ask for the CPI International Second Quarter 2007 Financial Results Conference Call. To access the call via the Web, please visit http://investor.cpii.com.

CPI International, Inc., headquartered in Palo Alto, California, is the parent company of Communications & Power Industries, Inc., a leading provider of microwave, radio frequency, power and control solutions for critical defense, communications, medical, scientific and other applications. Communications & Power Industries, Inc. develops, manufactures and distributes products used to generate, amplify and transmit high-power/high-frequency microwave and radio frequency signals and/or provide power and control for various applications. End-use applications of these systems include the transmission of radar signals for navigation and location; transmission of deception signals for electronic countermeasures; transmission and amplification of voice, data and video signals for broadcasting, Internet and other types of communications; providing power and control for medical diagnostic imaging; and generating microwave energy for radiation therapy in the treatment of cancer and for various industrial and scientific applications.

EBITDA, adjusted EBITDA, adjusted EBITDA margin, free cash flow and adjusted free cash flow presented above and in the financial information attached hereto are non-generally accepted accounting principles (GAAP) financial measures. EBITDA represents earnings before provisions for income taxes, net interest expense and depreciation and amortization. Adjusted EBITDA represents EBITDA further adjusted to exclude certain non-cash and non-recurring items. Adjusted EBITDA margin represents adjusted EBITDA divided by sales. Free cash flow represents net cash provided by operating activities minus capital expenditures. Adjusted free cash flow represents free cash flow further adjusted to exclude certain non-recurring items. For more information regarding these non-GAAP financial measures for the periods presented and a reconciliation of these measures to GAAP financial information, please see the attached financial information; this press release and the attached financial information are available in the investor relations section of the company’s Web site at http://investor.cpii.com.

CPI believes that GAAP-based financial information for leveraged businesses, such as the company’s business, should be supplemented by EBITDA, adjusted EBITDA, adjusted EBITDA margin, free cash flow and adjusted free cash flow so that investors better understand the company’s operating performance in connection with their analysis of the company’s business. In addition, CPI’s management team uses EBITDA and adjusted EBITDA to evaluate the company’s operating performance, to monitor compliance with certain covenants of its senior credit facility, to make day-to-day operating decisions and as a component in the calculation of management bonuses. Other companies may define EBITDA, adjusted EBITDA, adjusted EBITDA margin, free cash flow and adjusted free cash flow differently and, as a result, the company’s measures may not be directly comparable to EBITDA, adjusted EBITDA, adjusted EBITDA margin, free cash flow and adjusted free cash flow of other companies. Because EBITDA, adjusted EBITDA, adjusted EBITDA margin, free cash flow and adjusted free cash flow do not include certain material costs, such as interest and taxes, necessary to operate the company’s business, when analyzing the company’s business, these non-GAAP measures should be considered in addition to, and not as a substitute for, net income (loss), net cash provided by (used in) operating activities, net income margin or other statements of operations or statements of cash flows data prepared in accordance with GAAP.

Certain statements included above constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements provide our current expectations, beliefs or forecasts of future events. Forward-looking statements are subject to known and unknown risks and uncertainties, which could cause actual events or results to differ materially from the results projected, expected or implied by these forward looking statements. These factors include, but are not limited to, competition in our end markets; our significant amount of debt; changes or reductions in the U.S. defense budget; U.S. government contracts laws and regulations; changes in technology; the impact of unexpected costs; inability to obtain raw materials and components; and currency fluctuations. These and other risks are described in more detail in our periodic filings with the Securities and Exchange Commission. As a result of these uncertainties, you should not place undue reliance on these forward-looking statements. All future written and oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. New risks and uncertainties arise from time to time, and it is impossible for us to predict these events or how they may affect us. We undertake no duty or obligation to publicly revise any forward-looking statement to reflect circumstances or events occurring after the date hereof or to reflect the occurrence of unanticipated events or changes in our expectations.

	Three Months Ended
	March 30, 2007			March 31, 2006
Sales	$	88,444		$	86,929
Cost of sales		60,739			61,185
Gross profit		27,705			25,744
Operating costs and expenses:
Research and development		2,352			1,941
Selling and marketing		4,799			4,680
General and administrative		5,846			4,676
Amortization of acquisition-related intangible assets		546			546
Net loss on disposition of fixed assets		40			143
Total operating costs and expenses		13,583			11,986
Operating income		14,122			13,758
Interest expense, net		5,275			6,400
Income before income taxes		8,847			7,358
Income tax expense		3,087			3,013
Net income	$	5,760		$	4,345

Other comprehensive income, net of tax
Net unrealized loss on cash flow hedges		(17	)		(306	)
Comprehensive income	$	5,743		$	4,039

Earnings per share - Basic	$	0.35		$	0.33
Earnings per share - Diluted	$	0.32		$	0.29

Shares used to compute earnings per share - Basic		16,253,522			13,078,954
Shares used to compute earnings per share - Diluted		17,730,318			14,784,947

	Six Months Ended
	March 30, 2007			March 31, 2006
Sales	$	172,167		$	169,308
Cost of sales		117,881			118,356
Gross profit		54,286			50,952
Operating costs and expenses:
Research and development		4,243			3,851
Selling and marketing		9,628			9,704
General and administrative		10,250			11,978
Amortization of acquisition-related intangible assets		1,094			1,094
Net loss on disposition of fixed assets		58			208
Total operating costs and expenses		25,273			26,835
Operating income		29,013			24,117
Interest expense, net		10,614			12,464
Income before income taxes		18,399			11,653
Income tax expense		6,804			5,093
Net income	$	11,595		$	6,560

Other comprehensive income, net of tax
Net unrealized loss on cash flow hedges		(406	)		(489	)
Comprehensive income	$	11,189		$	6,071

Earnings per share - Basic	$	0.72		$	0.50
Earnings per share - Diluted	$	0.66		$	0.44

Shares used to compute earnings per share - Basic		16,161,149			13,078,954
Shares used to compute earnings per share - Diluted		17,646,457			14,776,514

	March 30,		September 29,
	2007		2006
Assets
Current Assets:
Cash and cash equivalents	$	27,605	$	30,153
Restricted cash		1,937		1,746
Accounts receivable, net		47,293		43,628
Inventories		56,910		54,031
Deferred tax assets		11,560		11,520
Prepaid and other current assets		3,658		3,080
Total current assets		148,963		144,158
Property, plant, and equipment, net		65,978		63,851
Deferred debt issue costs, net		8,917		9,644
Intangible assets, net		74,268		75,489
Goodwill		147,271		147,489
Other long-term assets		558		1,128
Total assets	$	445,955	$	441,759

Liabilities and stockholders’ equity
Current Liabilities:
Current portion of long-term debt	$	-	$	1,714
Accounts payable		20,629		19,101
Accrued expenses		23,312		23,269
Product warranty		5,525		5,958
Income taxes payable		6,050		10,693
Advance payments from customers		6,017		6,310
Total current liabilities		61,533		67,045
Deferred income taxes		29,613		29,933
Long-term debt, less current portion		241,808		245,067
Other long-term liabilities		60		41
Total liabilities		333,014		342,086
Commitments and contingencies
Stockholders’ equity
Common stock ($0.01 par value, 90,000,000 shares
authorized; 16,291,889 and 16,049,577 shares issued
and outstanding)		163		160
Additional paid-in capital		67,371		65,295
Accumulated other comprehensive income		273		679
Retained earnings		45,134		33,539
Total stockholders’ equity		112,941		99,673
Total liabilities and stockholders' equity	$	445,955	$	441,759

	Six Months Ended
	March 30,			March 31,
	2007			2006

Cash flows from operating activities
Net cash provided by (used in) operating activities	$	6,299		$	(4,515	)

Cash flows from investing activities
Expenses relating to sale of San Carlos property		-			(4	)
Capital expenditures		(5,347	)		(5,817	)
Expenses relating to potential business acquisition		(119	)		-
Net cash used in investing activities		(5,466	)		(5,821	)

Cash flows from financing activities
Proceeds from issuance of debt		-			10,000
Repayments of debt		(5,000	)		-
Proceeds from issuance of common stock to employees		398			-
Proceeds from exercise of stock options		542			-
Payment of IPO financing costs					(1,374	)
Stockholder distribution payments		-			(17,000	)
Excess tax benefit on stock option exercises		679			-
Net cash used in financing activities		(3,381	)		(8,374	)

Net decrease in cash and cash equivalents		(2,548	)		(18,710	)
Cash and cash equivalents at beginning of period		30,153			26,511
Cash and cash equivalents at end of period	$	27,605		$	7,801

Supplemental cash flow disclosures
Cash paid for interest	$	10,707		$	12,378
Cash paid for taxes, net of refunds	$	10,495		$	4,607

			Three Months Ended						Six Months Ended
			March 30,			March 31,			March 30,			March 31,
			2007			2006			2007			2006
Net income			$	5,760		$	4,345		$	11,595		$	6,560
Depreciation and amortization				2,188			2,295			4,382			4,451
Interest expense, net				5,275			6,400			10,614			12,464
Income tax expense				3,087			3,013			6,804			5,093
EBITDA				16,310			16,053			33,395			28,568

Add as defined adjustments:
Stock-based compensation expense	(1	)		287			-			493			1
Special bonus	(2	)		-			-			-			3,250
Move-related expenses	(3	)		-			1,400			-			2,523
Total adjustments				287			1,400			493			5,774
Adjusted EBITDA			$	16,597		$	17,453		$	33,888		$	34,342

Adjusted EBITDA margin	(4	)		18.8	%		20.1	%		19.7	%		20.3	%
Net income margin	(5	)		6.5	%		5.0	%		6.7	%		3.9	%

(3) Represents direct costs related to the relocation of the Eimac operations from the San Carlos, Calif. facility to CPI’s Palo Alto, Calif. and Mountain View, Calif. facilities. This adjustment does not include indirect costs for overhead absorption and manufacturing variances due to the accelerated delivery of products into fiscal year 2005 and the offsetting delivery reductions in fiscal year 2006 at CPI’s Eimac operations.

			Twelve
			Months Ended
			March 30,
			2007
Net cash provided by operating activities			$	21,711
Capital expenditures				(10,443	)
Free cash flow				11,268

Add as defined adjustments:
Move-related expenses, net of taxes	(1	)		3,551
Income tax payments related to gain on sale of San Carlos property	(2	)		4,500
Capital expenditures for expansion of Canadian facility	(3	)		5,526
Special bonus, net of taxes	(4	)		2,015
Total adjustments				15,592
Adjusted free cash flow			$	26,860

(1) Represents non-recurring expenditures, net of taxes, related to the Eimac relocation, including capital expenditures of $0.667 million. This adjustment does not include indirect costs for overhead absorption and manufacturing variances due to the accelerated delivery of products into fiscal year 2005 and the offsetting delivery reductions in fiscal year 2006 at CPI’s Eimac operations.