Orders of $89.6 million for the first nine months of fiscal 2010 increased $16.5 million, or 23 percent, from orders of $73.1 million for the same period in fiscal 2009.  As a percentage of total orders, orders from the semiconductor, research and education, precision electronics and wireless customers represented approximately 35 percent, 25 percent, 25 percent and 5 percent, respectively.  Geographically, orders increased across all regions during the first nine months of fiscal 2010 compared with the year-ago period.  Orders from the Americas rose 20 percent, Europe increased five percent, with the strongest increase, 45 percent, coming from customers in Asia.  Included in orders for the first nine months of fiscal 2010 were approximately $7.0 million for final purchases of S600 products.  

The Company recorded tax expense of $0.5 million for the first nine months of fiscal 2010, an effective rate of 3.1 percent.  The effective tax rate is lower than the U.S. statutory rate because the Company recognized income in the U.S. with no corresponding tax expense as a result of fully reserved tax assets.  This compared to tax expense of $31.1 million for the first nine months of fiscal 2009, which included a charge of $30.0 million, recorded in the first quarter of fiscal 2009, to fully reserve the Company's U.S. deferred tax assets.  

Net income for the first nine months of fiscal 2010 was $15.8 million, or $0.98 per share, compared to a net loss of $46.1 million, or $2.95 per share, in the same period last year.  

Balance Sheet and Cash Flow

Cash and short-term investments totaled $42.1 million at June 30, 2010, an increase of $2.3 million from March 31, 2010 and a $15.1 million increase from year-ago levels.

The Company generated $3.1 million in cash from operations during the third quarter and $9.2 million during the first nine months of fiscal 2010.  The Company contributed $2.0 million to its pension plan in June 2010.  Total debt was less than $0.1 million at June 30, 2010.  Inventory of $9.1 million increased $0.8 million during the third quarter of fiscal 2010, but decreased $1.2 million from year-ago levels.  Inventory turns were 5.0 at June 30, 2010, versus 4.1 a year ago.  Trade receivables were $14.7 million, up $1.3 million from March 31, 2010 and $3.9 million from year-ago levels.  Days sales outstanding were 43 at June 30, 2010, compared to 39 at March 31, 2010 and 42 days a year ago.

Operations Outlook

"We are encouraged that instrumentation orders for this quarter marked their fifth consecutive sequential increase since their low point reached in March 2009.  The global electronics industry appears to be recovering faster than other industries, led by increased demand for consumer electronics, automotive electronics and capital equipment spending by companies for computer hardware and software.  We believe the growth for our core business will be driven by the growth in the electronics industry during the near future.  While there is still uncertainty about the sustainability of the global economic recovery, given our current cost structure and the prospect of modest improvement in the markets we serve, we will be well positioned to continue to generate improved earnings performance as net sales increase," stated Keithley.

Based upon current expectations, the Company is estimating net sales for the fourth quarter of fiscal 2010, which will end September 30, 2010, to range between $29 and $34 million.  The Company expects gross margins as a percentage of net sales and operating costs to be similar to the levels incurred during the most recent quarter.  Gross margins will fluctuate depending upon geography and product mix and foreign currency rates.  The Company anticipates the pre-tax return on sales percentage to range in the low- to high-teens, excluding the anticipated gain on the sale of the Bainbridge Road building.  The Company expects the effective tax rate for the fourth quarter of fiscal 2010 to range in the low- to mid-teens, depending upon the level of pre-tax earnings.

Use of Non-GAAP Financial Measures

Non-GAAP gross profits and non-GAAP operating income (loss) are "non-GAAP" financial measures. The tables included in this release contain a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures.  Neither non-GAAP measure is a measurement of financial performance under GAAP and should not be considered as an alternative to gross profit, operating income (loss) or other measures of performance determined in accordance with GAAP.  The Company also discloses percentages of sales for these non-GAAP measures.

Non-GAAP gross profits and non-GAAP operating income (loss) reflect an additional way of viewing aspects of the Company's business, and when viewed with and reconciled to the corresponding GAAP measures,  management believes they provide a more complete understanding of the Company's results and help identify trends in the Company's business.  A general limitation of these non-GAAP measures is that use of these measures (as compared to the related GAAP measures) may reduce comparability with other companies that may calculate similar non-GAAP measures differently.

Forward Looking Statements

Statements in the "Third Quarter Fiscal 2010 Results" and "Operations Outlook" section of this release that are not historical facts, including those relating to sales, earnings, costs and tax rates are "forward-looking statements," as defined in the Private Securities Litigation Reform Act of 1995, that involve a number of risks and uncertainties. Actual results may differ materially from the results stated or implied in the forward-looking statements as a result of a number of factors that include, but are not limited to: worldwide economic conditions; uncertainties in the credit and capital markets including the ability of the Company's customers to access credit and the Company's risk to cash and short-term investments that are not backed by a government agency; business conditions in the semiconductor, wireless, precision electronics and other segments of the worldwide electronics industry, including the potential for any recovery to stall or for the industries to decline; the ability of the Company to effectively sell to its customers as a result of a reduction in force and a refocus of the Company's field sales organization; the estimated costs and proceeds relating to the sale of the Bainbridge Road building being more or less significant than expected; the timing of large orders from customers or canceling of orders in backlog; timing of recognizing shipments as revenue; changes in product and sales mix, and the related effects on gross margins; the Company's ability to develop new products in a timely fashion and gain market acceptance of those products to remain competitive and gain market share; the Company's ability to work with third parties; competitive factors, including pricing pressures, loss of key employees, technological developments and new products offered by competitors; the impact of the Company's fixed costs in a period of fluctuating sales; the Company's ability to adapt its production capacities to rapidly changing market conditions; the Company's ability to implement and effectively manage IT system enhancements without interruption to its business processes; the Company's ability to realize the benefits of planned cost savings without adversely affecting the Company's product development programs and strategic initiatives; the availability of parts and supplies from third-party suppliers on a timely basis and at reasonable prices; changes in the fair value of the Company's investments; the potential volatility of earnings as a result of the accounting for performance share awards; changes in effective tax rates due to changes in tax law, tax planning strategies, the levels and countries of pre-tax earnings, deferred tax assets, or levels of pretax earnings; potential changes in pension plan assumptions; foreign currency fluctuations which could affect worldwide operations; costs and other effects of domestic and foreign legal, regulatory and administrative proceedings; government actions which impact worldwide trade; and matters arising out of or related to the Company's stock option grants and procedures and related matters, including the outcome of the inquiry commenced by the U.S. Securities and Exchange Commission (SEC), the possibility that the SEC may disagree with the Special Committee's findings and may require a restatement of the Company's financial statements or additional or different remediation, any other proceedings which may be brought against the Company by the SEC or other governmental agencies.  Further information on factors that could cause actual results to differ from those anticipated is included in the Company's annual report on Form 10-K and quarterly reports on Form 10-Q which are filed with the SEC. In light of these uncertainties, the inclusion of forward-looking information should not be regarded as a representation by the Company that its plans or objectives will be achieved. Further, the Company undertakes no obligation to revise forward-looking statements contained herein to reflect events or circumstances after the date of this release or to reflect the occurrence of unanticipated events.