KEITHLEY INSTRUMENTS, INC. 10-Q

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Uy+kRfy7VW/u+EjOGcoutw+4OZ2S37mO1DxHfQOMTLumxcfnvvRxxiffP+1V+7/w dvoHq91peuQRdgjw1Rw4iQ== 0000950152-08-003849.txt : 20080512 0000950152-08-003849.hdr.sgml : 20080512 20080512164310 ACCESSION NUMBER: 0000950152-08-003849 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20080331 FILED AS OF DATE: 20080512 DATE AS OF CHANGE: 20080512 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KEITHLEY INSTRUMENTS INC CENTRAL INDEX KEY: 0000054991 STANDARD INDUSTRIAL CLASSIFICATION: INSTRUMENTS FOR MEAS & TESTING OF ELECTRICITY & ELEC SIGNALS [3825] IRS NUMBER: 340794417 STATE OF INCORPORATION: OH FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09965 FILM NUMBER: 08823641 BUSINESS ADDRESS: STREET 1: 28775 AURORA RD CITY: SOLON STATE: OH ZIP: 44139 BUSINESS PHONE: 2162480400 10-Q 1 l31543ae10vq.htm KEITHLEY INSTRUMENTS, INC. 10-Q KEITHLEY INSTRUMENTS, INC. 10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q


þ		Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2008

Commission File Number 1-9965

KEITHLEY INSTRUMENTS, INC.

(Exact name of registrant as specified in its charter)


Ohio		34-0794417
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

28775 Aurora Road, Solon, Ohio 44139
(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (440) 248-0400

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES þ NO o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer o		Accelerated filer þ		Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller Reporting Company o

Indicate by check whether the registrant is a shell Company (as defined in Rule 12b-2 of the Exchange Act).

YES o NO þ

As of May 6, 2008 there were outstanding 13,633,810 Common Shares (net of shares repurchased held in treasury), without par value, and 2,150,502 Class B Common Shares, without par value.

TABLE OF CONTENTS


PART I. FINANCIAL INFORMATION
	ITEM 1. Financial Statements
	ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
	ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
	ITEM 4. Controls and Procedures
PART II. OTHER INFORMATION
	ITEM 1. Legal Proceedings
	ITEM 1A. Risk Factors
	ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
	Item 4. Submission of Matters to a Vote of Security Holders
	Item 6. Exhibits
SIGNATURES
EX-3(A)
EX-31.1
EX-31.2
EX-32.1
EX-32.2

Forward-Looking Statements

Statements and information included in this Quarterly Report on Form 10-Q by Keithley Instruments, Inc. (“Keithley,” “the Company,” “we,” “us” or “our”) that are not purely historical are forward-looking statements within the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995.

Forward-looking statements in this Report include statements regarding Keithley’s expectations, intentions, beliefs, and strategies regarding the future, including recent trends, cyclicality and growth in the markets Keithley sells into, conditions of the electronics industry, deployment of our own sales employees throughout the world, investments to develop new products, the potential impact of adopting new accounting pronouncements, our future effective tax rate, liquidity position, ability to generate cash, expected growth, obligations under our retirement benefit plans, and the consequences of investigations and litigation related to our stock option practices.

When used in this report, the words “believes,” “expects,” “anticipates,” “intends,” “assumes,” “estimates,” “evaluates,” “opinions,” “forecasts,” “may,” “could,” “future,” “forward,” “potential,” “probable,” and similar expressions are intended to identify forward-looking statements.

These forward-looking statements involve risks and uncertainties. We may make other forward-looking statements from time to time, including in press releases and public conference calls and webcasts. All forward-looking statements made by Keithley are based on information available to us at the time the statements are made, and we assume no obligation to update any forward-looking statements. It is important to note that actual results are subject to a number of risks and uncertainties that could cause actual results to differ materially from those included in such forward-looking statements. Some of these risks and uncertainties are discussed in reports we have filed with the Securities and Exchange Commission, including but not limited to, our Form 10-K for the fiscal year ended September 30, 2007.

PART I. FINANCIAL INFORMATION

ITEM 1. Financial Statements.

KEITHLEY INSTRUMENTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands of Dollars)
(Unaudited)


	March 31, 2008			September 30, 2007
Assets
Current assets:
Cash and cash equivalents	$	18,604		$	12,888
Short-term investments		11,707			32,340
Refundable income taxes		678			136
Accounts receivable and other, net		22,494			19,510
Inventories:
Raw materials		11,693			9,599
Work in process		2,071			984
Finished products		6,014			4,092

Total inventories		19,778			14,675
Deferred income taxes		3,920			3,961
Prepaid expenses		2,373			2,026

Total current assets		79,554			85,536

Property, plant and equipment, at cost		53,951			51,955
Less-Accumulated depreciation		40,134			38,256

Property, plant and equipment, net		13,817			13,699

Deferred income taxes		27,743			23,823
Intangible assets		1,330			1,400
Long-term investments		7,698			1,324
Other assets		21,042			20,624

Total assets	$	151,184		$	146,406


Liabilities and Shareholders’ Equity
Current liabilities:
Short-term debt	$	26		$	799
Accounts payable		9,659			8,018
Accrued payroll and related expenses		6,196			4,799
Other accrued expenses		4,834			4,753
Income taxes payable		3,211			3,911

Total current liabilities		23,926			22,280

Long-term deferred compensation		2,923			3,924
Deferred income taxes		79			74
Long-term income taxes payable		4,998			—
Other long-term liabilities		7,973			7,104
Shareholders’ equity:
Common Shares, stated value $.0125:
Authorized - 80,000,000; issued and outstanding - 14,679,979 at March 31, 2008, and 14,580,978 at September 30, 2007		183			182
Class B Common Shares, stated value $.0125:
Authorized - 9,000,000; issued and outstanding - 2,150,502 at March 31, 2008 and September 30, 2007		27			27
Capital in excess of stated value		38,019			36,436
Retained earnings		86,573			85,676
Accumulated other comprehensive loss		(860	)		(946	)
Common shares held in treasury, at cost		(12,657	)		(8,351	)

Total shareholders’ equity		111,285			113,024

Total liabilities and shareholders’ equity	$	151,184		$	146,406

The accompanying notes are an integral part of these financial statements.

KEITHLEY INSTRUMENTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Thousands of Dollars Except for Per Share Data)
(Unaudited)


	For the Three Months						For the Six Months
	Ended March 31,						Ended March 31,
	2008			2007			2008			2007
Net sales	$	39,938		$	32,930		$	78,376		$	73,956
Cost of goods sold		15,663			13,290			31,397			29,402

Gross profit		24,275			19,640			46,979			44,554
Selling, general and administrative expenses		16,367			16,324			32,428			32,967
Product development expenses		6,278			6,501			12,441			12,247

Operating income (loss)		1,630			(3,185	)		2,110			(660	)
Investment income		455			555			983			1,133
Interest expense		(18	)		(9	)		(38	)		(27	)
Impairment of long-term investments		(670	)		—			(670	)		—

Income (loss) before income taxes		1,397			(2,639	)		2,385			446
Income tax provision (benefit)		212			(566	)		311			(556	)


Net income (loss)	$	1,185		$	(2,073	)	$	2,074		$	1,002


Basic earnings (loss) per share	$	0.07		$	(0.13	)	$	0.13		$	0.06

Diluted earnings (loss) per share	$	0.07		$	(0.13	)	$	0.13		$	0.06

Cash dividends per Common Share	$	.0375		$	.0375		$	.075		$	.075

Cash dividends per Class B Common Share	$	.030		$	.030		$	.060		$	.060

The accompanying notes are an integral part of these financial statements.

KEITHLEY INSTRUMENTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands of Dollars)
(Unaudited)


	For the Six Months
	Ended March 31,
	2008			2007
Cash flows from operating activities:
Net income	$	2,074		$	1,002
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		1,994			2,057
Stock-based compensation		1,360			1,041
Loss on the disposition/impairment of assets		708			105
Other items not effecting outlay of cash		(478	)		265
Changes in working capital		(5,273	)		5,820
Other operating activities		(79	)		(1,854	)

Net cash provided by operating activities		306			8,436


Cash flows from investing activities:
Payments for property, plant and equipment		(2,062	)		(2,270	)
Purchase of short-term investments		(10,725	)		(14,496	)
Sale of short-term investments		23,561			17,348

Net cash provided by investing activities		10,774			582


Cash flows from financing activities:
Net payment of short term debt		(863	)		(302	)
Cash dividends		(1,160	)		(1,183	)
Repurchase of Common Shares		(4,216	)		—
Proceeds from stock purchase and option plans		96			296
Excess tax benefits from stock-based compensation arrangements		37			270

Net cash used in financing activities		(6,106	)		(919	)


Effect of exchange rate changes on cash		742			385

Increase in cash and cash equivalents		5,716			8,484
Cash and cash equivalents at beginning of period		12,888			10,501

Cash and cash equivalents at end of period	$	18,604		$	18,985

The accompanying notes are an integral part of these financial statements.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands of dollars, except for share data)

A. Nature of Operations

The business of Keithley Instruments, Inc. is to design, develop, manufacture and market complex electronic instruments and systems to serve the specialized needs of electronics manufacturers for high-performance production testing, process monitoring, product development and research. Our primary products are integrated systems used to source, measure, connect, control or communicate electrical direct current (DC), radio frequency (RF) or optical signals. Although our products vary in capability, sophistication, use, size and price, they generally test, measure and analyze electrical, RF, optical or physical properties. As such, we consider our business to be in a single industry segment.

B. Summary of Significant Accounting Policies

Basis of Presentation

The consolidated financial statements at March 31, 2008 and 2007, and for the three and six month periods then ended have not been audited by an independent registered public accounting firm, but, in the opinion of our management, all adjustments necessary to fairly present the consolidated balance sheets, consolidated statements of operations and consolidated statements of cash flows for those periods have been included. All adjustments included are of a normal recurring nature. The year-end condensed balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America.

The Company’s consolidated financial statements for the three and six month periods ended March 31, 2008 and 2007, included in this Form 10-Q report have been prepared in accordance with the accounting policies described in the Notes to Consolidated Financial Statements for the year ended September 30, 2007, which were included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2007, filed on December 14, 2007 (the “2007 Form 10-K”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. These financial statements should be read in conjunction with the financial statements and the notes thereto included in the 2007 Form 10-K.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the reported financial statements and the reported amounts of revenues and expenses during the reporting periods. Examples include the allowance for doubtful accounts, estimates of contingent liabilities, inventory valuation, pension plan assumptions, estimates and assumptions relating to stock-based compensation costs, the assessment of the valuation of deferred income taxes and income tax reserves, and estimates and assumptions relating to the value of long-term investments. Actual results could differ materially from those estimates.

C. Recent Accounting Pronouncements

In July 2006, the Financial Accounting Standards Board, (“FASB”), issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes — an Interpretation of FASB Statement 109” (FIN 48). FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. It also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006. The Company adopted FIN 48 effective October 1, 2007, resulting in an increase to the accrued tax liability of $3,055, an increase to deferred tax assets of $3,038 and a decrease to retained earnings of $17. As of March 31, 2008, the Company had gross unrecognized tax benefits of $6,900. The total amount of unrecognized benefits that, if recognized, would benefit the effective tax rate was $3,172. The Company anticipates a decrease in its unrecognized tax positions of approximately $2,000 to $2,500 over the next 12 months. The anticipated decrease is primarily due to the

settlement of the current audit in Germany. Tax positions under examination include a position for which the deductibility of an item is highly certain, but the timing of the deduction is in question. Additionally, the allocation of certain deductions between jurisdictions is under examination.

The Company records interest and penalties related to uncertain tax positions as income tax expense. On March 31, 2008, the Company had accrued approximately $910 of interest and penalties. On April 1, 2008, the Company was notified by the Internal Revenue Service (IRS) that its audit for the tax year ended September 30, 2004, was complete. The Company is no longer subject to IRS examination for periods prior to September 30, 2004. The Company is being examined by the German tax authorities for the tax years 1999 through 2004. The Company has not been notified of any other significant audits; however, it may be subject to examination in various U.S. state and local jurisdictions for the tax years 2003 to present as well as various foreign jurisdiction with varying statutes. See Note N.

In March 2008, the FASB issued SFAS No. 161, “Disclosures About Derivative Instruments and Hedging Activities — an amendment of FASB Statement No. 133” (SFAS No. 161). SFAS No. 161 expands quarterly disclosure requirements in SFAS No. 133 about an entity’s derivative instruments and hedging activities. SFAS No. 161 is effective for fiscal years beginning after November 15, 2008. The Company is currently assessing the impact of SFAS No. 161 on its consolidated financial position and results of operations.

D. Earnings Per Share

Both Common Shares and Class B Common Shares are included in calculating earnings per share. The weighted average number of shares outstanding used in the calculation is set forth below:


	For the Three Months					For the Six Months
	Ended March 31,					Ended March 31,
	2008		2007			2008		2007
Net income (loss)	$	1,185	$	(2,073	)	$	2,074	$	1,002

Weighted averages shares outstanding		15,845,978		16,202,313			15,953,492		16,182,142
Dilutive effect of stock awards		200,213		—			181,431		210,922
Assumed purchase of stock under stock purchase plan		593		—			722		—

Weighted average shares used for dilutive earnings per share		16,046,784		16,202,313			16,135,645		16,393,064

Basic earnings (loss) per share	$	0.07	$	(0.13	)	$	0.13	$	0.06
Diluted earnings (loss) per share	$	0.07	$	(0.13	)	$	0.13	$	0.06

Due to the net loss for the three months ended March 31, 2007, 239,472 shares are excluded from the dilutive calculation for the exercise of stock options and purchase of stock under the stock purchase plan.

E. Stock-based Compensation

The Company currently has one equity-based compensation plan from which stock-based compensation awards can be granted to employees and Directors. In addition, we have two plans that were terminated or have expired, but which have options currently outstanding. The Company also has an employee stock purchase plan (“ESPP”) that provides employees with the opportunity to purchase Common Shares at 95 percent of the fair market value at the end of the one-year subscription period. The provisions of the ESPP are such that measurement of compensation expense is not required by SFAS No. 123R — Share-Based Payments. Additionally, no shares were issued pursuant to the ESPP during the first half of fiscal year 2008 or 2007.

Compensation costs recorded

Stock-based compensation expense is attributable to the granting of stock options, performance share units, restricted share units and restricted share awards. The Company records the expense using the single approach method on a straight-line basis over the requisite service period of the respective grants. The table below summarizes stock-based compensation expense recorded under SFAS 123R for the three and six-month periods ended March 31, 2008 and 2007, which was allocated as follows:


	For the Three Months				For the Six Months
	Ended March 31,				Ended March 31,
	2008		2007		2008		2007
Cost of goods sold	$	56	$	39	$	105	$	57
Selling, general and administrative expenses		553		494		1,056		842
Product development expenses		105		92		199		142

Stock-based compensation included in operating expenses		714		625		1,360		1,041
Estimated tax impact of stock-based compensation		232		204		442		341

Stock-based compensation expense, net of tax	$	482	$	421	$	918	$	700

The excess tax benefits recognized during the first half of fiscal year 2008 and 2007 were approximately $37 and $270, respectively.

As of March 31, 2008, there was $4,169 of total pretax unrecognized compensation cost related to nonvested awards. That cost is expected to be recognized over a weighted-average period of 2.2 years.

Stock option activity

During the first quarter of fiscal year 2008, the Company granted non-qualified stock options to purchase 145,125 shares to officers and other key employees. The options have an exercise price equal to the $9.12 market value of the shares on the grant date. During the second quarter of fiscal year 2007, the Company granted 100,125 non-qualified stock options to officers and other key employees. The options have an exercise price equal to the $14.00 market value of the shares on the grant date. The awards granted in both periods have a term of ten years, vest 50 percent after two years, and an additional 25 percent each after years three and four. No options were granted during the second quarter of fiscal year 2008 or the first quarter of fiscal year 2007.

The fair value of the options granted during the first quarter of fiscal year 2008 and the second quarter of fiscal year 2007 was $3.00 and $5.44 per share, respectively. The fair values were determined using the Black-Scholes option-pricing model. The following assumptions were applied for options granted during these periods:


	First Quarter			Second Quarter
	Fiscal Year 2008			Fiscal Year 2007
Expected life (years)		4.75			4.75
Risk-free interest rate		3.84	%		4.79	%
Volatility		38	%		42	%
Dividend yield		1.64	%		1.07	%

Performance award units

During the first quarter of fiscal year 2008, the Company granted 170,975 performance award units to officers and other key employees with a fair market value per unit on the grant date of $9.12. During the second quarter of fiscal year 2007, the Company granted 138,400 performance award units to officers and other key employees with a fair market value per unit on the grant date of $14.00. No performance award units were granted during the second quarter of fiscal year 2008 or the first quarter of fiscal year 2007. The performance award unit agreements granted during both fiscal years provide for the award of performance units with each unit representing the right to receive one of the Company’s Common Shares to be issued after the applicable award period. The award period for performance award units issued in fiscal year 2008 will end on September 30, 2010, while the award period for awards issued during fiscal year 2007 will end on September 30, 2009. The final number of units earned pursuant to an award may range from a minimum of no units to a maximum of twice the initial award. The awards issued during fiscal years 2008 and 2007 may be adjusted in 25 percent increments, while the awards issued during fiscal year 2006, which will vest on September 30, 2008, may be adjusted in 50 percent increments. The number of units earned will be based on the Company’s revenue growth relative to a defined peer group, and the Company’s return on assets or return on invested capital during the applicable performance period as defined in the performance award unit agreements. Each reporting period, the compensation cost of the performance award units is subject to adjustment based upon our estimate of the number of awards we expect will be issued upon the completion of the performance period. The awards granted

during fiscal years 2008 and 2007 are being expensed at target level, while the awards issued during fiscal year 2006 are being expensed at 50 percent of target.

Restricted award units

During the first half of fiscal year 2008, the Company granted 20,225 restricted award units to key employees other than officers. The awards have a weighted average fair market value per unit of $9.15 based upon the fair value of the Company’s stock on the award dates. During the first half of fiscal year 2007, the Company granted 25,050 restricted award units with a weighted average fair market value per unit on the grant dates of $13.61. The restricted unit award agreements provide for the award of restricted units with each unit representing one share of the Company’s Common Shares. Generally, the awards vest on the fourth anniversary of the award date, subject to certain conditions specified in the agreement. The vesting date may be earlier than four years in certain cases to accommodate individuals’ planned retirement dates.

Directors’ equity plans

Non-employee Directors receive an annual Common Share grant equal to $58. The Common Shares are to be issued out of the Keithley Instruments, Inc. 2002 Stock Incentive Plan. During the first half of fiscal year 2008, 26,802 shares were issued at a weighted average price of $9.73 per share. During the first quarter of fiscal year 2007, no shares were issued due to the pending investigation of the Company’s stock option practices by the Special Committee of the Board of Directors. On December 29, 2006, the Company announced that the Special Committee had completed its investigation. Therefore, during the second quarter of fiscal year 2007, the non-employee Directors received a total of 18,288 shares with an average fair market value per share of $14.27, including the shares that normally would have been issued during the first quarter.

The Board of Directors also may issue restricted stock grants worth $75 to a new non-employee Director at the time of his or her election. These restricted stock grants vest over a 3-year period. There were no such grants issued during the first half of fiscal year 2008 or 2007.

F. Repurchase of Common Shares

On February 12, 2007, the Company announced its Board of Directors had approved an open market stock repurchase program (the “2007 Program”). Under the terms of the 2007 Program, the Company may purchase through February 28, 2009, up to 2,000,000 Common Shares, which represented approximately 12 percent of its total outstanding Common Shares at the start of the 2007 Program. The 2007 Program replaces the prior repurchase program (the “2003 Program”), which expired on December 31, 2006. The purpose of the 2007 and 2003 Programs was to offset the dilutive effect of stock option and stock purchase plans, and to provide value to shareholders. Common Shares held in treasury may be reissued in settlement of purchases under these stock plans.

During the first half of fiscal year 2008, the Company purchased 434,400 Common Shares for $4,216 at an average cost per share of $9.71 including commissions. There were no purchases during the first half of fiscal year 2007. At March 31, 2008 and 2007, 1,008,715 and 405,500 Common Shares remained in treasury at an average cost, including commissions, of $10.87 and $12.40, respectively.

Also, included in the “Common shares held in treasury, at cost” caption of the condensed consolidated balance sheets are shares repurchased to settle non-employee Directors’ fees deferred pursuant to the Keithley Instruments, Inc. 1996 Outside Directors Deferred Stock Plan. Shares held in treasury pursuant to this plan totaled 177,156 and 155,931 at March 31, 2008 and 2007, respectively.

G. Financing Arrangements

On March 27, 2008, the Company extended the term of its credit agreement, as amended, to March 31, 2011, from March 31, 2010. The agreement is a $10,000 debt facility ($0 outstanding at March 31, 2008) that provides unsecured, multi-currency revolving credit at various interest rates based on Prime or LIBOR. The Company is required to pay a facility fee of 0.125% per annum on the total amount of the commitment. The agreement may be extended annually. Additionally, the Company has a number of other credit facilities in various currencies and for standby letters of credit aggregating $5,000 ($26 of short-term debt and $695 for standby letters of credit outstanding at March 31, 2008). At March 31, 2008, the Company had total unused lines of credit with domestic and foreign banks aggregating $14,279, of which $10,000 was long-term and $4,279 was a combination of long-term and short-term depending upon the nature of the indebtedness.

Under certain provisions of the debt agreements, the Company is required to comply with various financial ratios and covenants. The Company was in compliance with all such debt covenants as of March 31, 2008.

H. Accounting for Derivatives and Hedging Activities

In accordance with the provisions of SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” (as amended), all of the Company’s derivative instruments are recognized on the balance sheet at their fair value. To hedge sales, the Company currently utilizes foreign exchange forward contracts or option contracts to sell foreign currencies to fix the exchange rates related to near-term sales and effectively fix the Company’s margins.

On the date the derivative contract is entered into, the Company designates its derivative as either a hedge of the fair value of a recognized asset or liability (“fair value” hedge), as a hedge of the variability of cash flows to be received (“cash flow” hedge), or as a foreign-currency cash flow hedge (“foreign currency” hedge). Changes in the fair value of a derivative that is highly effective as, and that is designated and qualifies as, a fair value hedge, along with the gain or loss on the hedged asset or liability that is attributable to the hedged risk are recorded in current period earnings. Changes in the fair value of a derivative that is highly effective as, and that is designated and qualifies as a cash flow hedge, are recorded in other comprehensive income until earnings are affected by the transaction in the underlying asset. Changes in the fair value of derivatives that are highly effective and that qualify as foreign currency hedges are recorded in either current period income or other comprehensive income, depending on whether the hedge transaction is a fair value hedge or a cash flow hedge. At March 31, 2008, the foreign exchange forward contracts were designated as foreign currency cash flow hedges.

At March 31, 2008, the Company had obligations under foreign exchange forward contracts to sell 2,550,000 Euros, 240,000 British pounds and 300,000,000 Yen at various dates through June 2008. In accordance with the provisions of SFAS No. 133, the derivative instruments are recorded on the Company’s condensed consolidated balance sheets. The fair market value of the foreign exchange forward contracts represented a liability to the Company of $421 and $90, at March 31, 2008 and 2007, respectively.

The Company documents all relationships between hedging instruments and hedged items, as well as its risk-management objective and strategy for undertaking various hedge transactions. The Company also assesses whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flows of hedged items. When it is determined that a derivative is not highly effective as a hedge, the Company discontinues hedge accounting prospectively. Cash flows resulting from hedging transactions are classified in the consolidated statements of cash flows in the same category as the cash flows from the item being hedged.

I. Comprehensive Income

Comprehensive income (loss) for the three and six month periods ended March 31, 2008 and 2007 is as follows:


	For the Three Months						For the Six Months
	Ended March 31,						Ended March 31,
	2008			2007			2008			2007
Net income (loss)	$	1,185		$	(2,073	)	$	2,074		$	1,002

Unrealized losses on value of derivative securities, net of tax		(177	)		(35	)		(66	)		(86	)
Net unrealized investment (losses) gains, net of tax		(497	)		27			(484	)		48
Foreign currency translation adjustments		557			151			636			403


Comprehensive income (loss)	$	1,068		$	(1,930	)	$	2,160		$	1,367

J. Geographic Segment Information

The Company reports a single Test and Measurement segment. Our net sales and long-lived assets by geographic area are presented below. The basis for attributing revenues from external customers to a geographic area is the customer location to which the product is shipped.


	For the Three Months				For the Six Months
	Ended March 31,				Ended March 31,
	2008		2007		2008		2007
Net sales:
United States	$	9,097	$	7,637	$	17,401	$	17,318
Other Americas		599		1,003		1,260		2,546
Germany		5,890		3,593		11,914		10,009
Other Europe		7,315		6,651		15,643		14,836
Japan		5,946		5,514		9,776		10,028
China		4,655		3,826		9,050		8,028
Other Asia		6,436		4,706		13,332		11,191

	$	39,938	$	32,930	$	78,376	$	73,956


	At March 31,		At September 30,
	2008		2007
Long-lived assets:
United States	$	36,399	$	29,557
Germany		7,146		6,369
Other		1,122		1,121

	$	44,667	$	37,047

K. Guarantor’s Disclosure Requirements

Guarantee of original lease

The Company has assigned the lease of its former office space in Reading, Great Britain to a third party. If the third party defaults on the monthly lease payments, the Company would be responsible for the payments until the lease expires on July 14, 2009. If the third party were to default, the maximum amount of future payments (undiscounted) the Company would be required to make under the guarantee would be approximately $295 through July 14, 2009. The Company has not recorded any liability for this item, as it does not believe that it is probable that the third party will default on the lease payments.

Product Warranties

Generally, the Company’s products are covered under a one-year warranty; however, certain products are covered under a two or three-year warranty. It is the Company’s policy to accrue for all product warranties based upon historical in-warranty repair data. In addition, the Company accrues for specifically identified product performance issues. The Company also offers extended warranties for certain of its products for which revenue is recognized over the life of the contract period. The costs associated with servicing the extended warranties are expensed as incurred. The revenue, as well as the costs related to the extended warranties is immaterial for the three and six month periods ending March 31, 2008 and 2007.

A reconciliation of the estimated changes in the aggregated product warranty liability for the three and six month periods ending March 31, 2008 and 2007 is as follows:


	For the Three Months						For the Six Months
	Ended March 31,						Ended March 31,
	2008			2007			2008			2007
Beginning balance	$	780		$	1,009		$	722		$	992
Accruals for warranties issued during the period		359			241			674			630
Accruals related to pre-existing warranties (including changes in estimates and expiring warranties)		(74	)		(29	)		(96	)		(32	)
Settlements made (in cash or in kind) during the period		(281	)		(352	)		(516	)		(721	)


Ending balance	$	784		$	869		$	784		$	869

L. Pension Benefits

The Company has a noncontributory defined benefit pension plan covering all of its eligible employees in the United States and a contributory defined plan covering eligible employees at its German subsidiary. Pension benefits are based upon the employee’s length of service and a percentage of compensation. The Company also has government mandated defined benefit retirement plans for its eligible employees in Japan and Korea; however, these plans are not material to the Company’s consolidated financial statements. A summary of the components of net periodic pension cost based upon a measurement date of June 30 for the U.S. plan and the German plan is shown below:


	United States Plan						German Plan
	For the Three Months						For the Three Months
	Ended March 31,						Ended March 31,
	2008			2007			2008			2007
Service costs-benefits earned during the period	$	419		$	355		$	57		$	59
Interest cost on projected benefit obligation		589			551			104			81
Expected return on plan assets		(883	)		(783	)		(19	)		(16	)
Net loss recognition		21			17			—			—
Amortization of transition asset		—			—			5			7
Amortization of prior service cost		45			45			2			1


Net periodic benefit cost	$	191		$	185		$	149		$	132


	United States Plan						German Plan
	For the Six Months						For the Six Months
	Ended March 31,						Ended March 31,
	2008			2007			2008			2007
Service costs-benefits earned during the period	$	838		$	710		$	113		$	118
Interest cost on projected benefit obligation		1,178			1,102			205			162
Expected return on plan assets		(1,766	)		(1,565	)		(38	)		(32	)
Net loss recognition		42			33			—			1
Amortization of transition asset		—			—			11			12
Amortization of prior service cost		89			89			3			2


Net periodic benefit cost	$	381		$	369		$	294		$	263

M. Investments

We review our investments for other-than-temporary impairment whenever the fair value of an investment is less than amortized cost and evidence indicates that an investment’s carrying value is not recoverable within a reasonable period of time. In the evaluation of whether impairment is other-than-temporary, the Company considers its ability and intent to hold the investment until the market price recovers, the reasons for the impairment, compliance with the Company’s investment policy, the severity and duration of the impairment and expected future performance. Based on this evaluation, we recorded impairment losses of $670 before taxes, or approximately $0.03 per share after taxes, during the quarter ended March 31, 2008, on our long-term investments carried at cost.

At March 31, 2008, the caption “Long-term investments” on the condensed consolidated balance sheet included $7,020 of auction rate securities, which were reclassified from short-term investments. Our auction rate securities are private placement securities, primarily backed by student college loans with long-term nominal maturities for which the interest rates are reset through an auction each month. Auctions for these types of securities, including those securities held by the Company at March 31, 2008, have failed during recent months making a portion of our auction rate securities not readily convertible to cash until there is a successful auction for them. We continue to receive interest income associated with the auction rate securities. We recorded a temporary mark-to-market fair value adjustment of $780 through other comprehensive income at March 31, 2008, related to these investments.

We continue to classify $8,000 of our auction rate securities in the caption “Short-term investments” on the condensed consolidated balance sheets at March 31, 2008, as a result of our broker commencing a tender offer at par to purchase those specific auction rate securities from registered owners. We have accepted the tender offer with an expected settlement date of May 21, 2008.

N. Income Taxes

Income tax expense for the second quarter ended March 31, 2008, was $212 on income before taxes of $1,397, an effective tax rate of 15.2 percent. This compared with an income tax benefit of $566 on a loss before taxes of $2,639, or an effective tax benefit rate of 21.4 percent for the same period ended March 31, 2007. The effective rate in the 2008 second quarter was lower than the statutory rate due primarily to the favorable impacts for differences between the prior year tax return and the prior year provision, and tax benefits related to foreign income. These benefits were partially offset by taxes paid to U.S. state and local jurisdictions, an increase for contingent tax liabilities and other permanent differences. For the three months ended March 31, 2007, the tax benefit was less than the benefit at the U.S. federal statutory tax rate due to the unfavorable impact of an increase for contingent tax liabilities.

Income taxes for the six months ended March 31, 2008, were $311 on income before taxes of $2,385, an effective tax rate of 13.0 percent as compared with an income tax benefit of $556 on income before taxes of $466, or an effective tax benefit rate of 124.7 percent for the same period ended March 31, 2007. For the first six months of fiscal year 2008, the effective tax rate was less than the U.S. federal statutory tax rate due to the favorable impacts of the research tax credit, favorable differences between the prior year tax return and the prior year provision, and recognized tax benefits of foreign income primarily related to tax rates lower than the U.S. statutory tax rate. These benefits were partially offset by taxes paid to U.S. state and local jurisdictions, accruals for contingent tax liabilities and other permanent differences. For the first six months of fiscal year 2007, the effective tax rate was less than the U.S. federal statutory tax rate due to the favorable impacts of the research tax credit, extraterritorial income exclusion on U.S. exports and the domestic manufacturing deduction. These benefits were partially offset by taxes paid to U.S. state and local jurisdictions, permanent differences in the U.S., and the net impact of foreign operations including losses in certain foreign jurisdictions that were not available to reduce overall tax expense, and tax rates in certain jurisdiction that are higher than the U.S. statutory tax rate.

The increase in the effective tax rate for the six months ended March 31, 2008, compared to the prior years six- month period is due primarily to the treatment of the research tax credit. For the six months ended March 31, 2007, an $882 research tax credit for the period of January 1, 2006, through September 30, 2006, was recognized. This benefit had not been recognized during the fiscal year ended September 30, 2006, because the research tax credit had expired and was not extended until after the fiscal year. Additionally, the effective tax rate for the quarter ended March 31, 2007, included research tax credits for the fiscal year ended September 30,

2007. Without regard to discrete items or any benefit from a research tax credit, the tax rate for the quarters ended March 31, 2008, and March 31, 2007, would have been 31.0 percent and 32.8 percent, respectively.

The Company adopted FIN 48 effective October 1, 2007, resulting in an increase to the accrued tax liability of $3,055, an increase to deferred tax assets of $3,038 and a decrease to retained earnings of $17. As of March 31, 2008, the Company had gross unrecognized tax benefits of $6,900. The total amount of unrecognized benefits that, if recognized, would benefit the effective tax rate was $3,172. The Company anticipates a decrease in its unrecognized tax positions of approximately $2,000 to $2,500 over the next 12 months. The anticipated decrease is primarily due to the settlement of the current audit in Germany. Tax positions under examination include a position for which the deductibility of an item is highly certain, but the timing of the deduction is in question. Additionally, the allocation of certain deductions between jurisdictions is under examination.

The Company records interest and penalties related to uncertain tax positions as income tax expense. On March 31, 2008, the Company had accrued approximately $910 of interest and penalties. On April 1, 2008, the Company was notified by the Internal Revenue Service (IRS) that its audit for the tax year ended September 30, 2004 was complete. The Company is no longer subject to IRS examination for periods prior to September 30, 2004. The Company is being examined by the German tax authorities for the tax years 1999 through 2004. The Company has not been notified of any other significant audits; however, it may be subject to examination in various U.S. state and local jurisdictions for the tax years 2003 to present as well as various foreign jurisdiction with varying statutes.

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to provide investors with an understanding of the Company’s operating performance and financial condition. A discussion of our business, including our strategy, products, and competition is included in Part I of our 2007 Form 10-K.

Business Overview

Our business is to design, develop, manufacture and market complex electronic instruments and systems geared to the specialized needs of electronics manufacturers for high-performance production testing, process monitoring, product development and research. Our primary products are integrated systems used to source, measure, connect, control or communicate electrical direct current (DC), radio frequency (RF) or optical signals. Our customers are engineers, technicians and scientists in manufacturing, product development and research functions. During the first half of fiscal year 2008, orders from our semiconductor customers comprised approximately 30 percent of our total orders; orders from our wireless communications customers were approximately 15 percent; orders from precision electronic components/subassembly manufacturers were approximately 25 percent, which includes customers in automotive, computers and peripherals, medical equipment, aerospace and defense, and manufacturers of components; and orders from our research and education customers were approximately 30 percent of total orders. Although our products vary in capability, sophistication, use, size and price, they generally test, measure and analyze electrical, RF, optical or physical properties. As such, we consider our business to be in a single industry segment.

The most important factors influencing our ability to grow revenue are (i) our customers’ spending patterns as they invest in new capacity or upgrade their production lines for their new product offerings, (ii) our ability to offer interrelated products with differentiated value that solve our customers’ most compelling test challenges, and (iii) our success in penetrating key accounts with our globally deployed sales and service team. We continue to believe that our strategy of pursuing a focused set of applications will allow us to grow faster than the overall test and measurement industry.

Many of the industries we serve, including, but not limited to, the semiconductor industry, the wireless communications industry, and precision electronic components/subassembly manufacturers, have historically been very cyclical and have experienced periodic downturns. We began experiencing a softening in orders during the second quarter of fiscal year 2007 reflecting our semiconductor customers’ cautious attitude with regard to capital equipment spending, and believe 2008 capital spending for production applications will soften from 2007 levels.

Our focus during the past several years has been on building long-term relationships and strong collaborative partnerships with our global customers to serve their measurement needs. Toward that end, we rely primarily upon employing our own sales personnel to sell our products, and use sales representatives, to whom we pay a

commission, in areas where we believe it is not cost effective to employ our own people. This sales channel strategy allows us to build a sales network of focused, highly trained sales engineers who specialize in measurement expertise and problem-solving for customers and enhances our ability to sell our products to customers with worldwide operations. We believe our ability to serve our customers has been strongly enhanced by deploying our own employees throughout the U.S., Europe and Asia. We expect that selling through our own sales force will be favorable to earnings during times of strong sales and unfavorable during times of depressed sales as a greater portion of our selling costs are now fixed.

Critical Accounting Policies and Estimates

Management has identified the Company’s “critical accounting policies.” These policies have the potential to have a more significant impact on our financial statements, either because of the significance of the financial statement item to which they relate or because they require judgment and estimation due to the uncertainty involved in measuring, at a specific point in time, events which will be settled in the future. These critical accounting policies and estimates are described in Management’s Discussion and Analysis included in our 2007 Form 10-K, and include use of estimates, revenue recognition, inventories, income taxes, pension plan and stock compensation plans.

Results of Operations

Second Quarter Fiscal Year 2008 Compared with Second Quarter Fiscal Year 2007

Net sales of $39,938 for the second quarter of fiscal year 2008 increased 21 percent as compared to the prior year’s second quarter sales of $32,930. The effect of a weaker U.S. dollar positively impacted sales growth by approximately five percentage points. Geographically, sales were up 12 percent in the Americas, up 29 percent in Europe, and up 21 percent in Asia. More than three-quarters of our sales were generated outside the Americas during the second quarter of fiscal year 2008. On a sequential basis, sales increased four percent from the first quarter of fiscal year 2008.

Orders of $38,997 for the second quarter increased 17 percent compared to last year’s second quarter orders of $33,324. Geographically, orders increased 16 percent in the Americas, 23 percent in Asia, and 11 percent in Europe when compared to the same period in the prior year. Orders from the Company’s semiconductor customers increased approximately 10 percent, orders from wireless communications customers increased approximately five percent, orders from precision electronic component and subassembly manufacturers were flat, and research and education customer orders increased approximately 60 percent compared to the prior year’s second quarter. Sequentially, orders decreased four percent from the first quarter of fiscal year 2008. Order backlog decreased $579 during the quarter to $17,137 as of March 31, 2008. The Company does not track net sales in the same manner as it tracks orders by major customer group. However, sales trends generally correlate to Company order trends although they may vary between quarters depending upon the orders which remain in backlog.

Cost of goods sold as a percentage of net sales decreased to 39.2 percent from 40.4 percent in the prior year’s second quarter. The decrease was primarily due to fixed manufacturing costs being spread over higher sales volume, as the favorable effect of a weaker U.S. dollar was offset by price decreases in certain geographies and unfavorable customer and product mix. Nearly all products the Company sells are manufactured in the United States; therefore, cost of goods sold expressed in dollars is generally not affected by changes in foreign currencies. However, as a percentage of net sales, it is affected as net sales dollars fluctuate due to currency exchange rates changes. The effect of foreign exchange hedging on cost of goods sold was not material in either the second quarter of fiscal year 2008 or fiscal year 2007.

Selling, general and administrative expenses of $16,367, or 41.0 percent of net sales, were essentially flat compared with $16,324, or 49.6 percent of net sales, in last year’s second quarter. Bonuses and commissions increased as a result of higher sales and earnings, which were partially offset by the absence of stock option investigation costs that were included in the prior year’s second quarter. Additionally, marketing communications costs were lower in the 2008 quarter as compared to 2007’s second quarter.

Product development expenses for the quarter were $6,278, or 15.7 percent of net sales, down $223, or three percent, from last year’s $6,501, or 19.7 percent of net sales. The decrease was primarily a result of lower development supplies, which correlates to the timing of new product introductions.

The Company reported operating income for the second quarter of fiscal year 2008 of $1,630 compared to an operating loss of $3,185 for the prior year’s quarter. Higher sales and gross margins accounted for the increase.

Investment income was $455 for the quarter compared to $555 in last year’s second quarter. Lower interest rates and lower average cash and investment balances accounted for the decrease.

Income tax expense for the second quarter ended March 31, 2008, was $212 on income before taxes of $1,397, an effective tax rate of 15.2 percent. This compared with an income tax benefit of $566 on a loss before taxes of $2,639, or an effective tax benefit rate of 21.4 percent for the same period ended March 31, 2007. The effective rate in the 2008 quarter was lower than the statutory rate due primarily to the favorable impacts for differences between the prior year tax return and the prior year provision, and tax benefits related to foreign income. These benefits were partially offset by taxes paid to U.S. state and local jurisdictions, an increase for contingent tax liabilities and other permanent differences. For the three months ended March 31, 2007, the tax benefit was less than the benefit at the U.S. federal statutory tax rate due to the unfavorable impact of an increase for contingent tax liabilities.

The Company reported net income for the quarter of $1,185, or $0.07 per share, compared to a net loss for the quarter of $2,073, or $0.13 per share. Higher sales and gross margins, partially offset by the impairment charge as described above, accounted for the increase.

Six Months Ended March 31, 2008 Compared with Six Months Ended March 31, 2007

Net sales of $78,376 for the six months ended March 31, 2008, increased six percent from $73,956 reported for the six-month period last year. The effect of a weaker U.S. dollar positively impacted sales growth by approximately four percentage points. Geographically, net sales were down six percent in the Americas, up 11 percent in Europe, and up 10 percent in Asia.

Orders of $79,590 for the six months ended March 31, 2008, increased 13 percent from $70,229 last year. Geographically, orders increased nine percent in the Americas, 11 percent in Asia, and 21 percent in Europe compared to the same period in fiscal year 2007. See the “Business Overview” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations for a breakout of the first six months of fiscal year 2008 orders by major industry group.

Cost of goods sold as a percentage of net sales increased slightly to 40.1 percent from 39.8 percent for the six-month period last year. The increase was due primarily to higher freight and other manufacturing costs partially offset by a 10 percent weaker U.S. dollar. Nearly all products the Company sells are manufactured in the United States; therefore, cost of goods sold expressed in dollars is generally not affected by changes in foreign currencies. However, as a percentage of net sales, it is affected as net sales dollars fluctuate due to currency exchange rate changes. The effect of foreign exchange hedging on cost of goods sold was not material in either period.

Selling, general and administrative expenses of $32,428, or 41.4 percent of net sales, decreased two percent from $32,967, or 44.6 percent of net sales, in the same period last year. In the prior year’s first half, we incurred approximately $1,300 of costs associated with the stock option investigation and litigation versus minimal costs in the current year’s six-month period. Partially offsetting the decrease were higher bonuses and commission expense resulting from our increased sales and earnings, higher salaries resulting from an increased number of sales personnel in Asia, as well as higher foreign exchange costs resulting from the weaker U.S. dollar.

Product development expenses for the first six months of fiscal year 2008 of $12,441, or 15.8 percent of sales, were up less than two percent from $12,247, or 16.5 percent of net sales, for the same period last year.

Investment income during the first six months of fiscal year 2008 of $983 decreased $150, or 13 percent, from $1,133 for the same period in the prior year. The decrease was primarily due to lower average cash and investment balances during the period.

As stated earlier, we recorded impairment charges of $670 in the second quarter of fiscal year 2008 related to our long-term investments carried at cost.

Income taxes for the six months ended March 31, 2008, were $311 on income before taxes of $2,385, an effective tax rate of 13.0 percent, as compared with an income tax benefit of $556 on income before taxes of $466, or an effective tax benefit rate of 124.7 percent, for the same period ended March 31, 2007. For the first six months of fiscal year 2008, the effective tax rate was less than the U.S. federal statutory tax rate due to the favorable impacts of the research tax credit, favorable differences between the prior year tax return and the prior year provision, and recognized tax benefits of foreign income primarily related to tax rates lower than the U.S. statutory tax rate. These benefits were partially offset by taxes paid to U.S. state and local jurisdictions, accruals for contingent tax liabilities and other permanent differences. For the first six months of fiscal year 2007, the effective tax rate was less than the U.S. federal statutory tax rate due to the favorable impacts of the research tax credit, extraterritorial income exclusion on U.S. exports and the domestic manufacturing deduction. These benefits were partially offset by taxes paid to U.S. state and local jurisdictions, permanent differences in the U.S. and the net impact of foreign operations including losses in certain foreign jurisdictions that were not available to reduce overall tax expense, and tax rates in certain jurisdiction that are higher than the U.S. statutory tax rate. The increase in the effective tax rate for the six months ended March 31, 2008 compared to the prior years six-month period is due primarily to the treatment of the research tax credit. For the six months ended March 31, 2007, an $882 research tax credit for the period of January 1, 2006, through September 30, 2006, was recognized. This benefit had not been recognized during the fiscal year ended September 30, 2006, because the research tax credit had expired and was not extended until after the fiscal year. Additionally, the effective tax rate for the quarter ended March 31, 2007, included research tax credits for the fiscal year ended September 30, 2007.

Net income for the first six months of fiscal year 2008 was $2,074, or $0.13 per diluted share, compared with $1,002, or $0.06 per diluted share, last year. Higher sales and lower operating costs partially offset by the impairment charge accounted for the increase.

Financial Condition, Liquidity and Capital Resources

Working Capital

The following table summarizes working capital as of March 31, 2008 and September 30, 2007:


	March 31		September 30
Current assets:
Cash and cash equivalents	$	18,604	$	12,888
Short-term investments		11,707		32,340
Refundable income taxes		678		136
Accounts receivable and other, net		22,494		19,510
Total inventories		19,778		14,675
Deferred income taxes		3,920		3,961
Prepaid expenses		2,373		2,026


Total current assets		79,554		85,536

Current liabilities:
Short-term debt		26		799
Accounts payable		9,659		8,018
Accrued payroll and related expenses		6,196		4,799
Other accrued expenses		4,834		4,753
Income taxes payable		3,211		3,911


Total current liabilities		23,926		22,280


Working capital	$	55,628	$	63,256

As of March 31, 2008, the Company reclassified $7,020 million of short-term investments to long-term investments, which represents the fair value of a portion of our investment in auction rate securities. Additionally, we recorded a temporary mark-to-market fair value decrease of those investments of $780 through other comprehensive income at March 31, 2008. We continue to classify $8,000 as short-term investments as a result of our broker commencing a tender offer at par to purchase those specific securities from registered owners with an expected settlement date of May 21, 2008. Our auction rate securities are private placement securities, primarily backed by student college loans with long-term nominal maturities for which the interest rates are reset through an auction each month. Auctions during the recent months have failed, making a portion of these securities not readily convertible to cash until there is a successful auction for them. We continue to receive interest income associated with the auction rate securities. See Note M.

Working capital decreased during the first six months of fiscal year 2008 by $7,628, including the $7,020 reclassification described above. Decreases in current assets combined with increases in current liabilities accounted for the decrease. Accounts receivable and other, net, increased $2,984 during the first half of fiscal year 2008 due primarily to higher sales during the month of March versus September. Days sales outstanding were 50 at both March 31, 2008, and September 30, 2007. Inventories increased $5,103 during the first six months of fiscal year 2008 due primarily to the build-up of product for a large order received in April, and the anticipated shipment demand for our new products. Accounts payable increased due to higher purchases resulting from our higher sales volume. Accrued payroll and related expenses increased primarily due to the expected payment of previously deferred compensation over the next 12 months as well as for higher accruals for bonuses and commissions for the first six months of fiscal year 2008. Significant changes in cash and cash equivalents and short-term investments are discussed in the “Sources and Uses of Cash” section below.

Sources and Uses of Cash

The following table is a summary of our Condensed Consolidated Statements of Cash Flows:


	For the Six Months
	Ended March 31,
	2008			2007
Cash provided by (used in):
Operating activities	$	306		$	8,436
Investing activities		10,774			582
Financing activities		(6,106	)		(919	)

Operating activities. Cash provided by operating activities of $306 for the first half of fiscal year 2008 decreased $8,130 as compared with the same period last year. The decrease was driven primarily by changes in working capital. During the 2008 period, accounts receivable increased as described above in “Working Capital,” while during the 2007 period decreases in accounts receivable generated $10,139 of cash. Additionally, inventory increased during the 2008 period as described above resulting in a use of cash of $4,950 versus $480 in the prior year’s period. Other adjustments to reconcile net earnings to net cash provided by operating activities are presented on the condensed consolidated statements of cash flows.

Investing activities. Cash provided by investing activities was $10,774 for the first half of fiscal year 2008 compared with $582 in the same period last year. Payments for property, plant and equipment were similar in both periods. We purchased short-term investments of $10,725 and sold short-term investments generating $23,561 in cash during the first half of 2008. During the 2007 period, we purchased short-term investments of $14,496 and sold short-term investments of $17,348. Short-term investments totaled $11,707 at March 31, 2008, as compared to $33,425 at March 31, 2007. At March 31, 2008, we reclassified $7,020 of auction rate securities from short-term investments to long-term investments. See Note M.

Financing activities. Cash used in financing activities was $6,106 in the first half of fiscal year 2008 as compared to $919 last year. During the first half of 2008, we repurchased 434,000 Common Shares for $4,216 at an average cost of $9.71 per share including commissions. We did not repurchase any shares during the first half of 2007. See Note F. Short-term debt was $26 at March 31, 2008, versus $576 at March 31, 2007.

We expect to finance capital spending and working capital requirements with cash and short-term investments on hand, cash provided by operations and our available lines of credit. At March 31, 2008, we had available unused lines of credit with domestic and foreign banks aggregating $14,279, of which $10,000 is long-term and $4,279 is a combination of long-term and short-term depending upon the nature of the indebtedness. See Note G.

Outlook

Based upon current expectations, the Company is estimating net sales for the third quarter of fiscal year 2008, which will end June 30, 2008, to range between $39,000 and $45,000 and earnings before taxes to range from a loss to earnings in the single digits as a percentage of net sales. This guidance is based, in part, upon the Company’s receipt of a large order during the month of April 2008. The Company also foresees a slight decline in gross margin rates as a result of anticipated product and customer mix. Operating costs are expected to increase slightly in the third quarter of fiscal year 2008 from the levels experienced during the second quarter of fiscal year 2008. The Company expects the effective tax rate for the remainder of fiscal year 2008 to approximate the statutory rate, excluding discrete items and assuming the U.S. Congress does not enact legislation to restore research and development credits.

Recent Accounting Pronouncements

In July 2006, the FASB issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes — an Interpretation of FASB Statement 109” (FIN 48). FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. It also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. FIN 48 is effective for fiscal years beginning after December 15, 2006. The Company adopted FIN 48 effective October 1, 2007 resulting in an increase to the accrued tax liability of $3,055, an increase to deferred tax assets of $3,038 and a decrease to retained earnings of $17. As of March 31, 2008, the

Company had gross unrecognized tax benefits of $6,900. The total amount of unrecognized benefits that, if recognized, would benefit the effective tax rate was $3,172. The Company anticipates a decrease in its unrecognized tax positions of approximately $2,000 to $2,500 over the next 12 months. The anticipated decrease is primarily due to the settlements of the current audit in Germany. Tax positions under examination include a position for which the deductibility of an item is highly certain, but the timing of the deduction is in question. Additionally, the allocation of certain deductions between jurisdictions is under examination.

The Company records interest and penalties related to uncertain tax positions as income tax expense. On March 31, 2008, the Company had accrued approximately $910 of interest and penalties. On April 1, 2008, the Company was notified by the Internal Revenue Service (IRS) that its audit for the tax year ended September 30, 2004 was complete. The Company is no longer subject to IRS examination for periods prior to September 30, 2004. The Company is being examined by the German tax authorities for the tax years 1999 through 2004. The Company has not been notified of any other significant audits; however, it may be subject to examination in various U.S. state and local jurisdictions for the tax years 2003 to present as well as various foreign jurisdiction with varying statutes. See Note N.

ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.

The Company is exposed to a variety of risks, including foreign currency fluctuations, interest rate fluctuations and changes in the market value of its short-term investments. In the normal course of business, we employ established policies and procedures to manage our exposure to fluctuations in foreign currency values and interest rates.

The Company is exposed to foreign currency exchange rate risk primarily through transactions denominated in foreign currencies. We currently utilize foreign exchange forward contracts or option contracts to sell foreign currencies to fix the exchange rates related to near-term sales and effectively fix our margins. Generally, these contracts have maturities of three months or less. Our policy is to only enter into derivative transactions when we have an identifiable exposure to risk, thus not creating additional foreign currency exchange rate risk. In our opinion, a 10 percent adverse change in foreign currency exchange rates would not have a material effect on these instruments and, therefore, our results of operations, financial position or cash flows.

The Company maintains a short-term investment portfolio consisting of United States government backed notes and bonds, corporate notes and bonds, and mutual funds consisting primarily of government notes and bonds. An increase in interest rates would decrease the value of certain of these investments. However, in management’s opinion, a 10 percent increase in interest rates would not have a material impact on our results of operations, financial position or cash flows.

ITEM 4. Controls and Procedures.

The Company’s management has evaluated, under the supervision and with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, the design and operation of the Company’s disclosure controls and procedures as of March 31, 2008, pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures are effective in ensuring that information required to be disclosed in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities Exchange Commission’s rules and forms, and that information was accumulated and communicated to the Company’s management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

There were no changes in the internal control over financial reporting that occurred during the second quarter of fiscal year 2008 that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. Legal Proceedings.

On August 9, 2006 and August 15, 2006, the Company was named as a nominal defendant in two separate shareholder derivative suits, Nathan Diamond v. Joseph P. Keithley, et al., Cuyahoga County, Ohio, Court of Common Pleas (“Diamond”) and Michael C. Miller v. Joseph P. Keithley, et al, Cuyahoga County, Ohio, Court of Common Pleas (“Miller”). Both suits were removed to the United States District Court for the Northern District of Ohio on September 8, 2006. Miller and Diamond were consolidated and on November 13, 2006, the plaintiffs filed a consolidated Complaint (the “Consolidated Complaint”).

On October 23, 2006 and October 24, 2006, the Company was named as a nominal defendant in two additional shareholder derivative lawsuits, Edward P. Hardy v. Joseph P. Keithley, et al., in the United States District Court for the Northern District of Ohio and Mike Marks v. Joseph P. Keithley, in the United States District Court for the Northern District of Ohio.

The four suits have been consolidated in a single action, In re Keithley Instruments, Inc. Derivative Litigation, in the United States District Court for the Northern District of Ohio. Pursuant to the consolidation order, the Consolidated Complaint is the operative complaint in the action. The Consolidated Complaint alleges that various Company officers and/or directors manipulated the dates on which stock options were granted by the Company so as to maximize the value of the stock options. The suits allege numerous claims, including violations of Sections 10(b), 10b(5) and 20(a) of the Exchange Act, breaches of fiduciary duties, aiding and abetting, corporate waste, unjust enrichment and rescission.

The Company and other defendants filed a motion to dismiss the Consolidated Complaint. After extensive briefing and oral argument, on March 21, 2008, the Court issued a forty-seven page Memorandum Opinion and Order granting the defendants’ motion to dismiss in its entirety. The Court granted plaintiffs leave to amend the Consolidated Complaint within 30 days of the Court’s Order. On April 21, 2008, plaintiffs filed a Second Amended Complaint. The Second Amended Complaint does not include the claims under the Securities Exchange Act of 1934 contained in the Consolidated Complaint. The Second Amended Complaint alleges state law claims for unjust enrichment, fraud, breach of fiduciary duty, aiding and abetting breach of fiduciary duty, and conversion.

ITEM 1A. Risk Factors.

Other than the following, there have been no material changes to the Company’s risk factors as disclosed in Item 1A — Risk Factors, in the Company’s 2007 Form 10-K.

Uncertain Financial Markets

We maintain a portfolio of liquid short-term investments consisting primarily of auction rate securities to support the financing needs of the Company. Our ability to fund our daily operations requires continuous access to our bank and investment accounts, as well as access to our bank credit lines, which provide additional liquidity through short-term bank loans. During the recent months, auctions for auction rate securities have failed, making a portion of our short-term investments not readily convertible to cash. At March 31, 2008, we reclassified $7,020, at fair value, of auction rate securities from short-term to long-term investments. We also recorded a temporary mark-to-market fair value adjustment of $780 through other comprehensive income for those investments. If we are unable to access our cash, short-term investments or credit lines (for example, due to instability in the financial markets), our results of operations and financial condition could be adversely affected.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Issuer Purchases of Equity Securities

The following table sets forth, for the months indicated, our purchases of Common Shares in the second quarter of fiscal year 2008:


					Total number of		Maximum number of
					shares purchased as		shares that may yet
					part of publicly		be purchased under
	Total number of		Average price paid		announced plans or		the plans or
Period	shares purchased		per share (1)		programs		programs
January 1 — 31, 2008		92,100	$	9.27		92,100		1,515,500
February 1 — 29, 2008		65,900	$	10.20		65,900		1,449,600
March 1 — 31, 2008		35,000	$	9.27		35,000		1,414,600
Total		193,000	$	9.59		193,000		1,414,600

(1) Price includes commissions.

On February 12, 2007, the Company announced its Board of Directors had approved an open market stock repurchase program (the “2007 Program”). Under the terms of the 2007 Program, the Company may purchase up to 2,000,000 Common Shares, which represented approximately 12 percent of its total outstanding Common Shares at the start of the 2007 Program, through February 28, 2009. The 2007 Program replaces the prior repurchase program, which expired on December 31, 2006. The purpose of the 2007 Program is to offset the dilutive effect of stock option and stock purchase plans, and to provide value to shareholders. Common Shares held in treasury may be reissued in settlement of purchases under the stock option and stock purchase plans. See Note F to our condensed consolidated financial statements included in this Form 10-Q.

Item 4. Submission of Matters to a Vote of Security Holders.

On February 9, 2008, the registrant conducted its Annual Meeting of Shareholders. The following matters were brought before the shareholders for vote at this meeting:


Proposal 1 - Election of Directors:	FOR		WITHHELD
Joseph P. Keithley		32,542,146		594,077
Brian R. Bachman*		11,215,963		589,480
James T. Bartlett		32,527,459		608,764
James B. Griswold		32,532,739		603,484
Leon J. Hendrix, Jr.		32,558,173		578,050
Brian J. Jackman*		11,535,681		269,762
Dr. N. Mohan Reddy*		11,569,179		236,264
Thomas A. Saponas		32,899,936		236,287
Barbara V. Scherer		32,528,504		607,719
R. Elton White		32,474,181		662,042


*		Elected by holders of Common Shares only.

Proposal 2 — Approve the amendments to the Amended Code of Regulations of Keithley Instruments, Inc. relating to:


	FOR		AGAINST		ABSTAIN
(a) Modernization and clarification of existing Code		33,015,035		92,814		28,373


	FOR		AGAINST		ABSTAIN
(b) Notice of shareholder proposals		32,968,368		143,320		24,534


	FOR		AGAINST		ABSTAIN
(c) Permitting the Board to fix the number of directors and to amend the Code to the extent permitted by law		32,411,200		705,553		19,468


	FOR		AGAINST		ABSTAIN
(d) A new NYSE requirement regarding uncertified shares		33,025,748		87,160		23,313

No other matters were brought before shareholders for a vote at the meeting.

Item 6. Exhibits.

(a) Exhibits. The following exhibits are filed herewith:


Exhibit
Number		Exhibit

3(a)		Code of Regulations of Keithley Instruments, Inc. Amended February 9, 2008

31(a)		Certification of Joseph P. Keithley pursuant to Rule 13a-14(a)-15d-14(a).

31(b)		Certification of Mark J. Plush pursuant to Rule 13a-14(a)-15d-14(a).

32(a)+		Certification of Joseph P. Keithley pursuant to Rule 13a-14(b) and 18 U.S.C. Section 1350.

32(b)+		Certification of Mark J. Plush pursuant to Rule 13a-14(b) and 18 U.S.C. Section 1350.


+		The certifications furnished pursuant to this item will not be deemed “filed” for purposes of Section 18 of the Exchange Act (15 U.S.C. 78r), or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.

SIGNATURES

Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	KEITHLEY INSTRUMENTS, INC. (Registrant)
Date: May 12, 2008	/s/ Joseph P. Keithley
	Joseph P. Keithley
	Chairman, President and Chief Executive Officer (Principal Executive Officer)



Date: May 12, 2008	/s/ Mark J. Plush
	Mark J. Plush
	Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)

EX-3.A 2 l31543aexv3wa.htm EX-3(A) EX-3(A)

Exhibit 3a

CODE OF REGULATIONS

KEITHLEY INSTRUMENTS, INC.

Adopted February 21, 1976

Amended February 9, 1985

Amended February 9, 2008

ARTICLE I

Fiscal Year

Unless otherwise designated by resolution of the Board of Directors, the fiscal year of the Corporation shall end on September 30 of each year.

ARTICLE II

Meetings of Shareholders.

(a) Annual Meeting. The Annual Meeting of Shareholders of the Corporation for the election of Directors, the consideration of financial statements and other reports to be laid before such meeting, and the transaction of such other business as may be brought before such meeting shall be held at such date and time during the month of January or February of each year as shall be designated by the Board of Directors. If no other date is designated by the Board of Directors, the annual meeting shall be held at 11:00 o’clock A.M. on the second Saturday in February of each year, if not a legal holiday, or, if a legal holiday then on the next succeeding business day. Upon due notice there may also be considered and acted upon at an annual meeting any matter which would properly be considered and acted upon at a special meeting. In the event that the annual meeting is not held or if Directors are not elected thereat, a special meeting may be called and held for that purpose.

(b) Special Meeting. Special meetings of the Shareholders may be held on any business day when called by any person or persons who may be authorized by law to do so. Calls for special meetings shall specify the purpose or purposes thereof, and no business shall be considered at any such meeting other than that specified in the call therefore.

(c) Place of Meetings. Any meeting of Shareholders may be held at such place within or without the State of Ohio as may be designated in the Notice of said meeting.

(d) Notice of Meeting and Waiver of Notice.

(1) Notice. Written notice of the time, place and purposes of any meeting of Shareholders shall be given to each Shareholder entitled thereto not less than seven (7) days nor more than sixty (60) days before the date fixed for the meeting and as prescribed by law. Such notice shall be given either by personal delivery or by mail, overnight delivery service, or by other means of communication authorized by the Shareholder to whom the notice is given, to each Shareholder entitled to notice of or to vote at such meeting. If such notice is mailed, it shall be directed, postage prepaid, to the Shareholders at their respective addresses as they appear upon the records of the Corporation, and notice shall be deemed to

have been given on the day so mailed. If sent by any other means of communication authorized by the Shareholder, the notice shall be sent to the address furnished by the Shareholder for those transmissions. If any meeting is adjourned to another time or place, no notice as to such adjourned meeting need be given other than by announcement at the meeting at which such an adjournment is taken. No business shall be transacted at any such adjourned meeting except as might have been lawfully transacted at the meeting at which such adjournment was taken.

(2) Notice to Joint Owners. All notices with respect to any shares to which persons are entitled by joint or common ownership may be given to that one of such persons who is named first upon the books of this Corporation, and notice so given shall be sufficient notice to all the holders of such shares.

(3) Waiver. Notice of any meeting, however, may be waived in writing by any Shareholder either before or after any meeting of Shareholders, or by attendance at such meeting without protest prior to the commencement thereof.

(e) Shareholders Entitled to Notice and to Vote. If a record date shall not be fixed or the books of the Corporation shall not be closed against transfers of shares pursuant to statutory authority, the record date for the determination of Shareholders entitled to notice of or to vote at any meeting of Shareholders shall be the close of business on the twentieth day prior to the date of the meeting and only Shareholders of record at such record date shall be entitled to notice of and to vote at such meeting. Such record date shall continue to be the record date for all adjournments of such meeting unless a new record date shall be fixed and notice thereof and of the date of the adjourned meeting be given to all Shareholders entitled to notice in accordance with the new record date so fixed.

(f) Quorum. At any meeting of Shareholders, the holders of shares entitling them to exercise a majority of the voting power of the Corporation, present in person or by proxy, shall constitute a quorum for such meeting; provided, however, that no action required by law, the Articles, or these Regulations to be authorized or taken by the holders of any class of shares or by a designated proportion of the shares of any particular class or of each class of the Corporation may be authorized or taken by another class or by a less proportion of the appropriate class. The Shareholders present in person or by proxy, whether or not a quorum be present, may adjourn the meeting from time to time without notice other than by announcement at the meeting.

(g) Organization of Meetings:

(1) Presiding Officer. The Chairman of the Board, or in his absence, the President, or in the absence of both of them, a Vice President of the Corporation shall call all meetings of the Shareholders to order and shall act as Chairman thereof. If all are absent, the Shareholders shall select a Chairman.

(2) Minutes. The Secretary of the Corporation, or, in his absence, an Assistant Secretary, or in the absence of both, a person appointed by the Chairman of the meeting, shall act as Secretary of the meeting and shall keep and make a record of the proceedings thereat.

(h) Order of Business. The date and time of the opening and the closing of the polls for each matter upon which the Shareholders will vote at a meeting shall be announced at such meeting by the person acting as Chairman of the meeting. The Board of Directors may adopt by resolution such rules or regulations for the conduct of meetings of Shareholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the Board of Directors, the Chairman of any meeting of Shareholders shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such Chairman, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board of Directors

or prescribed by the Chairman of the meeting, may include, without limitation, the following: (1) the establishment of an agenda or order of business for the meeting; (2) rules and procedures for maintaining order at the meeting and the safety of those present; (3) limitations on attendance at or participation in the meeting to Shareholders of record of the Corporation, their duly authorized and constituted proxies or such other persons as the Chairman shall permit; (4) restrictions on entry to the meeting after the time fixed for the commencement thereof, and (5) limitations on the time allotted to questions or comments by participants. Unless, and to the extent determined by the Board of Directors or the Chairman of the meeting, meetings of Shareholders shall not be required to be held in accordance with rules of parliamentary procedure.

(i) Voting. Except as provided by statute or in the Articles, every Shareholder entitled to vote shall be entitled to cast one vote on each proposal submitted to the meeting for each share held of record by him on the record date for the determination of the Shareholders entitled to vote at the meeting. At any meeting at which a quorum is present, all questions and business which may come before the meeting shall be determined by a majority of votes cast, except when a greater proportion is required by law, the Articles, or these Regulations.

(j) Proxies. A person who is entitled to attend a Shareholders’ meeting, to vote thereat, or to execute consents, waivers and releases, may be represented at such meeting or vote thereat, and execute consents, waivers, and releases, and exercise any of his or her rights, by proxy or proxies appointed by a writing signed by such person, appointed by a verifiable communication authorized by such person, or appointed by his or her duly authorized attorney, as provided by the laws of the State of Ohio.

(k) List of Shareholders. At any meeting of Shareholders a list (or lists by classes) of Shareholders, alphabetically arranged, showing the number and classes of shares held by each on the record date applicable to such meeting shall be produced on the request of any Shareholder.

(l) Notice of Shareholder Business at an Annual Meeting. At an annual meeting of Shareholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be (1) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (2) otherwise properly brought before the meeting by or at the direction of the Board of Directors, or (3) otherwise properly brought before the meeting by a Shareholder who is a Shareholder of record at the time of giving notice as provided below in this paragraph (l) and at the time of the annual meeting. For business to be properly brought before an annual meeting by a Shareholder (other than the nomination of a person for election as a Director, which is governed by paragraph (d) of Article III, Section 2 of this Code of Regulations), the Shareholder must have given timely notice thereof in writing to the Secretary of the Corporation.

To be timely, a Shareholder’s notice must be delivered to or mailed and received at the principal executive offices of the Corporation no later than ninety (90) days nor more than one hundred twenty (120) days prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is changed by more than thirty (30) days from such anniversary date, notice by the Shareholder to be timely must be delivered to or mailed and received at the principal executive offices of the Corporation no later than ninety (90) days nor more than one hundred twenty (120) days prior to such annual meeting and no later than the close of business on the tenth (10th) day following the earlier of (i) the date on which notice of the date of the meeting was mailed and (ii) the date on which public disclosure of the meeting date was made. In no event shall the public announcement of an adjournment of an annual meeting commence a new time period for the giving of a Shareholder’s notice as described above. For purposes of this paragraph (l) of Article II of this Code of Regulations, public disclosure shall be deemed to include a disclosure made in a press release reported by the Dow Jones News Services, Associated Press or a comparable national news service or in a document

filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

A Shareholder’s notice to the Secretary of the Corporation with respect to business to be brought at an annual meeting shall set forth (1) the nature of the proposed business with reasonable particularity, including the exact text of any proposal to be presented for adoption, and the reasons for conducting that business at the annual meeting, (2) with respect to each Shareholder giving notice and the beneficial owner, if any, on whose behalf the notice of proposed business is made, the name, address and telephone number of such Shareholder (as they appear on the records of the Corporation) and of such beneficial owner, if any, the class or series and number of shares of capital stock of the Corporation which are owned beneficially and of record by that Shareholder and beneficial owner, if any, as of the date of such notice (which information shall by supplemented by such Shareholder and beneficial owner, if any, not later than ten (10) days after the record date for the meeting to disclose ownership as of the record date), (3) any other information relating to such Shareholder and beneficial owner, if any, that would be required to be disclosed in a proxy statement or other filings required to be made in connection with the solicitation of proxies for the proposal pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder, (4) any material interest of the Shareholder in the proposed business, (5) a description of all arrangements or understandings between such Shareholder and any other person or persons (including their names) in connection with the proposal of such business by such Shareholder, and (6) a representation that such Shareholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting.

Notwithstanding anything in this Code of Regulations to the contrary, no business shall be conducted at any annual meeting except in accordance with the procedures set forth in this paragraph (l) of Article II of this Code of Regulations. The Chairman of the annual meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this paragraph (l) of Article II of this Code of Regulations, and if he or she should so determine, he or she shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted. Nothing in this paragraph (l) shall relieve a Shareholder who proposes to conduct business at an annual meeting from complying with all applicable requirements, if any, of the Exchange Act and the rules and regulations thereunder.

ARTICLE III

Directors

Section 1. General Powers.

The business, power and authority of this Corporation shall be exercised, conducted and controlled by a Board of Directors, except where the law, the Articles or these Regulations require action to be authorized or taken by the Shareholders.

Section 2. Election, Number, Qualification and Nomination of Directors.

(a) Election. The Directors shall be elected at the annual meeting of Shareholders, or if not so elected, at a special meeting of Shareholders called for that purpose. At any meeting of Shareholders at which Directors are to be elected, only persons nominated as candidates shall be eligible for election.

(b) Number. The number of Directors, which shall not be less than three, may be fixed or changed (i) at a meeting of the Shareholders called for the purpose of electing Directors at which a quorum is

present, by the affirmative vote of the holders of a majority of the shares represented at the meeting and entitled to vote on such proposal or (ii) at any time by resolution adopted by the Board of Directors as permissible under Section 1701.56 (A)(2) of the Ohio Revised Code.

(d) Nomination of Directors. Nominations of candidates for election as Directors at any meeting of Shareholders called for election of Directors (an “Election Meeting”) may be made (1) by or at the direction of the Board of Directors or a committee thereof or (2) by any Shareholder of the Corporation who is a Shareholder of record at the time of giving notice as provided below in this paragraph (d) and at the time of the Election Meeting, who shall be entitled to vote for the election of the Director so nominated, and who complies with the notice procedures set forth below in this paragraph (d).

Shareholders proposing to nominate a person for election or reelection as a Director shall give timely notice in writing to the secretary of the Corporation at the Corporation’s principal place of business. To be timely, a Shareholder’s notice shall be delivered to or mailed and received at the principal executive offices of the Corporation (1) in the case of an annual meeting, not later than ninety (90) days nor more than one hundred twenty (120) days prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is changed more than thirty (30) days from such anniversary date, notice by the Shareholder to be timely must be delivered to or mailed and received at the principal executive offices of the Corporation not later than ninety (90) days nor more than one hundred twenty (120) days prior to such annual meeting and not later than the close of business on the tenth (10th) day following the earlier of (i) the date on which notice of the date of the meeting was mailed and (ii) the date on which public disclosure of the meeting date was made, and (2) in the case of a special meeting at which Directors are to be elected, not later than ninety (90) days nor more than one hundred twenty (120) days prior to such special meeting and not later than the close of business on the tenth (10th) day following the earlier of (i) the date on which notice of the date of the meeting was mailed and (ii) the date on which public disclosure of the meeting date and the nominees proposed by the Board of Directors to be elected at such meeting was made.

Such notice shall set forth (1) with respect to each Shareholder giving notice and the beneficial owner, if any, on whose behalf the proposed nomination is made, the name, address and telephone number of such Shareholder (as they appear on the records of the Corporation) and of such beneficial owner, if any, the class or series and number of shares of capital stock of the Corporation which are owned beneficially and of record by that Shareholder and beneficial owner, if any, as of the date of such notice (which information shall by supplemented by such Shareholder and beneficial owner, if any, not later than ten (10) days after the record date for the meeting to disclose ownership as of the record date), (2) any other information relating to the Shareholder and beneficial owner, if any, giving notice that would be required to be disclosed in a proxy statement or other filings required to be made in connection with the solicitation of proxies for the proposal pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder, (3) as to each proposed nominee for election as a Director, all information relating to such person that would be required to be disclosed in solicitations of proxies for election of Directors, or that otherwise would be required, in each case pursuant to Regulation 14A under the Exchange Act (including such person’s written consent to serving as a Director if elected and, if applicable, to being named in the proxy statement as a nominee), (4) a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three years, and any other material relationships, between or among the Shareholder and beneficial owner, if any, giving notice and their respective affiliates and associates, or others acting in concert therewith, on the one hand, and each proposed nominee, and his or her respective affiliates and associates, or others acting in concert therewith, on the other hand, including, without limitation all information that would be required to be disclosed pursuant to Item 404 of Regulation S-K if the

Shareholder making the nomination and any beneficial owner on whose behalf the nomination is made, if any, or any affiliate or associate thereof or person acting in concert therewith, were the “registrant” for purposes of such rule and the nominee were a Director or executive officer of such registrant, and (5) a representation that such Shareholder intends to appear in person or by proxy at the meeting to nominate the persons named in its notice. The Corporation may require any proposed nominee to furnish a questionnaire, representation and/or agreement and such other information as may reasonably be required by the Corporation to determine the eligibility of such proposed nominee to serve as an independent Director of the Corporation or that could be material to a reasonable Shareholder’s understanding of the independence, or lack thereof, of such proposed nominee.

If the Chairman of the Election Meeting determines that a nomination of any candidate for election as a Director was not made in accordance with the applicable provisions of this Code of Regulations, such nomination shall be void. Nothing in this paragraph (d) shall relieve a Shareholder who proposes to nominate a Director for election to the Board of Directors from complying with all applicable requirements, if any, of the Exchange Act and the rules and regulations thereunder.

Section 3. Term of Office of Directors

(a) Term. Each Director shall hold office until the next annual meeting of the Shareholders and until his successor has been elected or until his earlier resignation, removal from office, or death. Directors shall be subject to removal as provided by statute or by other lawful procedures and nothing herein shall be construed to prevent the removal of any or all Directors in accordance therewith.

(b) Resignation. A resignation from the Board of Directors shall be deemed to take effect immediately upon its being received by the President or the Secretary unless some other time is specified therein.

(c) Vacancy. In the event of any vacancy in the Board of Directors for any cause, a majority of the remaining Directors, though less than a majority of the whole Board, may fill any such vacancy for the unexpired term.

Section 4. Meetings of Directors.

(a) Regular Meeting. Regular meeting of the Board of Directors shall be held at such times and places as may be fixed by the Board of Directors.

(b) Special Meetings. Special meetings of the Board of Directors may be held at any time upon call of the Chairman of the Board, the President, any Vice President, or any two Directors.

(c) Place and Manner of Meeting. Any meeting of Directors may be held at any place within or without the state of Ohio in person and/or through any communications equipment if all persons participating in the meeting can hear each other.

(d) Notice of Meeting and Waiver of Notice. Notice of the time and place of any regular or special meeting of the Board of Directors (other than the regular meeting of Directors following the adjournment of the annual meeting of the Shareholders or following any special meeting of the Shareholders at which Directors are elected) shall be given to each Director by personal delivery or by mail, telegram, cablegram, overnight delivery service, telephone, electronic mail, or any other means of communication authorized by the Director at least forty-eight (48) hours before the meeting, which notice need not specify the purpose of the meeting. Such notice, however, may be waived in writing by any Director either before or after any such meeting, or by attendance at such meeting (including attendance (presence)

by means of participation through any communications equipment as above provided) without protest prior to the commencement thereof.

Section 5. Quorum and Voting.

At any meeting of Directors, not less than one-half of the whole authorized number of Directors is necessary to constitute a quorum for such meeting, except that a majority of the remaining Directors in office constitutes a quorum for filling a vacancy in the Board pursuant to the requirements of the Articles of Incorporation and Article III, Section 3(c) of these Regulations. At any meeting at which a quorum is present, all acts, questions and business which may come before the meeting shall be determined by a majority of votes cast by the Directors present at such meeting, unless the vote of a greater number is required by the Articles, Regulations or any By-Laws.

Section 6. Committees.

(a) Appointment. The Board of Directors may from time to time create committees, to consist of one or more Directors, and may authorize the delegation to any such committee of any of the authority of the Directors, however conferred, other than the authority of filling vacancies among the Directors or in any committee of the Directors and other than the authority to adopt, amend or repeal regulations. Each such committee shall serve at the pleasure of the Directors, shall act only in the intervals between meetings of the Directors, and shall be subject to the control and direction of the Directors.

(b) Executive Committee. In particular, the Board of Directors may create from its membership and define the powers and duties of an Executive Committee. During the intervals between meetings of the Board of Directors the Executive Committee shall possess and may exercise all of the powers of the Board of Directors in the management and control of the business of the Corporation to the extent permitted by law. All action taken by the Executive Committee shall be reported to the Board of Directors at its first meeting thereafter.

(c) Committee Action. Unless otherwise provided by the Board of Directors, a majority of the members of any committee appointed by the Board of Directors pursuant to this Section shall constitute a quorum at any meeting thereof and the act of a majority of the members present at a meeting at which a quorum is present shall be the act of such committee. Action may be taken by any such committee without a meeting by a writing signed by all its members. Any such committee shall prescribe its own rules for calling and holding meetings and its method of procedure, subject to any rules prescribed by the Board of Directors, and shall keep a written record of all action taken by it.

Section 7. Action of Directors Without a Meeting.

Any action which may be taken at a meeting of Directors may be taken without a meeting if authorized by a writing or writings signed by all the Directors, which writing or writings shall be filed or entered upon the records of the Corporation.

ARTICLE IV

Officers

Section 1. General Provisions.

The Board of Directors shall elect a President, a Secretary and a Treasurer, and may elect a Chairman of the Board, one or more Vice-Presidents, and such other officers and assistant officers as the Board may from time to time deem necessary. The Chairman of the Board, if any, shall be a Director, but none of the other officers need be a Director. Any two or more offices may be held by the same person, but no officer shall execute, acknowledge or verify any instrument in more than one capacity if such instrument is required to be executed, acknowledged or verified by two or more officers.

Section 2. Powers and Duties.

All officers, as between themselves and the Corporation, shall respectively have such authority and perform such duties as are customarily incident to their respective offices, and as may be specified from time to time by the Board of Directors, regardless of whether such authority and duties are customarily incident to such office. In the absence of any officer of the Corporation, or for any other reason the Board of Directors may deem sufficient, the Board of Directors may delegate for the time being, the powers or duties of such officer, or any of them, to any other officer or to any Director. The Board of Directors may from time to time delegate to any officer authority to appoint and remove subordinate officers and to prescribe their authority and duties. Since the lawful purposes of this Corporation include the acquisition and ownership of real property, personal property and property in the nature of patents, copyrights, and trademarks and the protection of the Corporation’s property rights in its patents, copyrights and trademarks, each of the officers of this Corporation is empowered to execute any power of attorney necessary to protect, secure, or vest the Corporation’s interest in and to real property, personal property and its property protectable by patents, trademarks, and copyright registration and to secure such patents, copyrights and trademark registrations.

Section 3. Term of Office and Removal.

(a) Term. Each officer of the Corporation shall hold office during the pleasure of the Board of Directors, and unless sooner removed by the Board of Directors, until the meeting of the Board of Directors following the date of their election and until his successor is elected and qualified.

(b) Removal. The Board of Directors may remove any officer at any time, with or without cause by the affirmative vote of a majority of Directors in office.

Section 4. Compensation of Officers and Directors.

The Directors, by a majority vote, and irrespective of any financial or personal interest of any of them, shall have the authority to establish reasonable compensation for services to the Corporation by Directors and officers, or to delegate such authority to (i) one or more officers or Directors or (ii) a Committee of the Board of Directors.

ARTICLE V

Indemnification of Directors, Officers, Employees, and Others.

(a) Right of Indemnification. The Corporation shall indemnify any Director, officer, employee or other person, to the fullest extent provided by, or permissible under, Section 1701.13(E), Ohio Revised Code; and the Corporation is hereby specifically authorized to take any and all further action to effectuate any indemnification of any person which any Ohio corporation may have power to take permissible under Section 1701.13(E) (6) or under any other statute or under general law, by any vote of the Shareholders, vote of disinterested Directors, by any Agreement, or otherwise. This Section of the Code of Regulations of the Corporation shall be interpreted in all respects to expand such power to indemnify to the maximum

extent permissible to any Ohio Corporation with regard to the particular facts of each case, and not in any way to limit any statutory or other power to indemnify, or right of any individual to indemnification.

(b) Insurance of Indemnification. The Corporation may purchase and maintain insurance for protection of the Corporation and for protection of any Director, officer, employee and/or any other person for whose protection, and to the fullest extent, such insurance may be purchased and maintained under Section 1701.13 (E) (7), Ohio Revised Code, or otherwise. Such policy or policies of insurance may provide such coverage and be upon such terms and conditions as shall be authorized or approved from time to time by the Board of Directors or the Shareholders of the Corporation.

ARTICLE VI

Securities Held by the Corporation.

Section 1. Transfer of Securities Owned by the Corporation.

All endorsements, assignments, transfers stock powers, share powers or other instruments of transfer of securities standing in the name of the Corporation shall be executed for and in the name of the Corporation by the President, by a Vice President, by the Secretary or by the Treasurer or by any other person or persons as may be thereunto authorized by the Board of Directors.

Section 2. Voting Securities Held by the Corporation.

The Chairman of the Board, President, any Vice President, Secretary or Treasurer, in person or by another person thereunto authorized by the Board of Directors, in person or by proxy or proxies appointed by him shall have full power and authority on behalf of the Corporation to vote, act and consent with respect to any securities issued by other corporations which the Corporation may own.

ARTICLE VII

Share Certificates; Uncertificated Shares.

Section 1. Transfer and Registration.

The Board of Directors shall have authority to make such rules and regulations, not inconsistent with law, the Articles or these Regulations, as it deems expedient concerning the issuance, transfer and registration of certificates for shares and the shares represented thereby and may appoint transfer agents and registrars thereof and shall have authority to make such rules and regulations, not inconsistent with law, the Articles or these Regulations, as it deems expedient concerning the issuance, transfer and registration of uncertificated shares. Shares of the Corporation shall be transferable upon the books of the Corporation by the holder thereof in person or by his or her duly authorized attorney, upon surrender and cancellation of certificates for a like number of shares of the same class or series, with duly executed assignment and power of transfer endorsed thereon or attached thereto, and with such proof of authenticity of the signatures to such assignment and power of transfer as the Corporation or its agents may reasonably require. Any uncertificated shares of the Corporation shall be transferable in person or by attorney upon written request in form and substance acceptable to the Corporation or any transfer agent for the applicable class of shares, accompanied by a duly endorsed stock power and/or such other assurances as the Corporation or such transfer agent may require as to the genuineness and effectiveness thereof.

Section 2. Substituted Certificates.

Any person claiming that a certificate for shares has been lost, stolen or destroyed, shall make an affidavit or affirmation of that fact and, if required, shall give the Corporation (and its registrar or registrars and its transfer agent or agents, if any) a bond of indemnity, in such form and with one or more sureties satisfactory to the Board, and, if required by the Board of Directors, shall advertise the same in such manner as the Board of Directors may require, whereupon a new certificate may be executed and delivered of the same tenor and for the same number of shares as the one alleged to have been lost, stolen or destroyed.

Section 3. Form of Certificates and Signatures.

Certificates for shares may be, but are not required to be, issued to each Shareholder in such form as shall be approved by the Board of Directors. Each holder of certificated shares is entitled to one or more certificates, signed by the Chairman of the Board or the President or a Vice President and by the Secretary or Assistant Secretary or the Treasurer or Assistant Treasurer of the Corporation, which shall certify the number and class of shares held by such Shareholder in the Corporation, but no certificates for shares shall be executed or delivered until such shares are fully paid. When such a certificate is countersigned by an incorporated transfer agent or registrar, the signature of any of said officers of the Corporation may be a facsimile, engraved, stamped or printed. Although any officer of the Corporation whose manual or facsimile, engraved, stamped or printed signature is affixed to such a certificate ceases to be such officer before the certificate is delivered, such certificate shall be effective in all respects when delivered.

Section 4. Uncertificated Shares.

The Board of Directors may provide by resolution that some or all of any or all classes and series of shares of the Corporation shall be uncertificated shares, provided that the resolution shall not apply to shares represented by a certificate until the certificate is surrendered to the Corporation and the resolution shall not apply to a certificated security issued in exchange for an uncertificated security. Within a reasonable time after the issuance or transfer of uncertificated shares, the Corporation shall send to the registered owner of the shares a written notice containing the information that would be required to be set forth or stated on a share certificate in accordance with applicable law. Except as otherwise expressly provided by law, the rights and obligations of holders of uncertificated shares and the rights and obligations of the holders of certificates representing shares of the same class and series shall be identical.

Section 5. Registered Shareholders.

A person in whose name shares are of record on the books of the Corporation shall conclusively be deemed the unqualified owner and holder thereof for all purposes and to have capacity to exercise all rights of ownership. Neither the Corporation nor any transfer agent of the Corporation shall be bound to recognize any equitable interest in or claim to such shares on the part of any other person, whether disclosed upon a certificate or otherwise, nor shall they be obliged to see to the execution of any trust or obligation.

ARTICLE VIII

Seal

The Directors may adopt a seal for the Corporation which shall be in such form and of such style as is determined by the Directors. Failure to affix any such corporate seal shall not affect the validity of any instrument.

ARTICLE IX

Consistency with Articles of Incorporation

If any provision of these Regulations shall be inconsistent with the Corporation’s Articles of Incorporation (and as they may be amended from time to time), the Articles of Incorporation (as so amended at the time) shall govern.

ARTICLE X

Emergency Regulations

The Directors may adopt, either before or during an emergency, as that term is defined by the General Corporation Law of Ohio, any emergency regulations permitted by the General Corporation Law of Ohio which shall be operative only during such an emergency. In the event the Board of Directors does not adopt any such emergency regulations, the special rules provided in the General Corporation Law of Ohio shall be applicable during an emergency as therein defined.

ARTICLE XI

Section Headings

The headings contained in this Code of Regulations are for reference purposes only and shall not be construed to be part of and/or shall not affect in any way the meaning or interpretation of this Code of Regulations. The parenthetical numerical references contained throughout these Regulations refer to sections of the General Corporation Law of Ohio contained in the Ohio Revised Code as in effect at the date of adoption of this Code of Regulations or, with respect to amended provisions, at the date of any such amendment. Such statutory section designations are for reference purposes only and shall not be construed to be a part of and/or shall not affect in any way the meaning or interpretation of this Code of Regulations, provided, however, that if any provision of these Regulations shall at any time be inconsistent with the General Corporation Law of Ohio, the General Corporation Law of Ohio shall govern.

ARTICLE XII

Amendments

This Code of Regulations of the Corporation (and as it may be amended from time to time) may be amended or added to (i) by the affirmative vote or the written consent of the Shareholders of record entitled to exercise a majority of the voting power on such proposal or (ii) unless a provision of the Ohio Revised Code reserves such authority to the Shareholders, by the Directors. However, if the regulations are amended or added to, other than by the Shareholders at a meeting held for that purpose, it shall be the duty of the Secretary to enter the amendment or addition in the records of the Corporation, and to (i) send a copy of such amendment or addition by mail, overnight delivery service or any other means of communication authorized by the Shareholder to whom a copy is sent, to each Shareholder of record as of the date of the adoption of the amendment or addition or (ii) include a copy of the amendment or addition in a report filed with the United States Securities and Exchange Commission pursuant to Section 13 or Section 15(d) of the Exchange Act within twenty days after the adoption of the amendment or addition.

This Amended Code of Regulations is effective as of the date of adoption by the Shareholders of the Corporation and supersedes all Regulations and Amendments thereto heretofore adopted.

The End.

EX-31.1 3 l31543aexv31w1.htm EX-31.1 EX-31.1

Exhibit 31(a)

Certification Pursuant to Rule 13a-14(a)/15d-14(a)

I, Joseph P. Keithley, certify that:

	1.		I have reviewed this quarterly report on Form 10-Q of Keithley Instruments, Inc.;

	2.		Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

	3.		Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

	4.		The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	a)		designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b)		designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c)		evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d)		disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

	a)		all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

	b)		any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date: May 12, 2008	/s/ Joseph P. Keithley
	Chairman, President and Chief Executive Officer

EX-31.2 4 l31543aexv31w2.htm EX-31.2 EX-31.2

Exhibit 31(b)

Certification Pursuant to Rule 13a-14(a)/15d-14(a)

I, Mark J. Plush, certify that:

	1.		I have reviewed this quarterly report on Form 10-Q of Keithley Instruments, Inc.;

	2.		Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

	3.		Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

	4.		The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

	a)		designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

	b)		designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

	c)		evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

	d)		disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

	a)		all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and

	b)		any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.



Date: May 12, 2008	/s/ Mark J. Plush
	Vice President and Chief Financial Officer

EX-32.1 5 l31543aexv32w1.htm EX-32.1 EX-32.1

Exhibit 32(a)

Certification Pursuant to 18 U.S.C. Section 1350

I, Joseph P. Keithley, Chairman, President and Chief Executive Officer of Keithley Instruments, Inc. (the “Company”), certify, pursuant to 18 U.S.C. Section 1350, that:

(1) The Quarterly Report on Form 10-Q of the Company for the period ended March 31, 2008 which this certification accompanies fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


/s/ Joseph P. Keithley Joseph P. Keithley Chairman, President and Chief Executive Officer May 12, 2008

A signed original of this written statement has been provided to Keithley Instruments, Inc. and will be retained by Keithley Instruments, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2 6 l31543aexv32w2.htm EX-32.2 EX-32.2

Exhibit 32(b)

Certification Pursuant to 18 U.S.C. Section 1350

I, Mark J. Plush, Vice President and Chief Financial Officer of Keithley Instruments, Inc. (the “Company”), certify, pursuant to 18 U.S.C. Section 1350, that:

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


/s/ Mark J. Plush Mark J. Plush May 12, 2008

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