SecProbe.io

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<TYPE>CORRESP
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Correspondence

COMMENT #1: CRITICAL ACCOUNTING POLICIES:
------------------------------------------

We note that management is required to make estimates and use assumptions  under
certain revenue models utilized by the Company (e.g.,  percentage of completion,
milestones, cost reimbursement contracts) and accordingly,  you consider revenue
recognition  as  one  of  your  critical  accounting  policies;   however,  such
disclosures should supplement,  not duplicate, the description of the accounting
policies that are already  disclosed in the notes to the  financial  statements.
The disclosure  should provide  greater insight into the quality and variability
of information in the financial condition and operating  performance and address
why the Company's  accounting  estimates or assumptions bear the risk of change.
For example,  with respect to your  estimates  and  assumptions  used in revenue
recognition you should consider discussing, to the extent material, factors such
as how you arrive at your estimates,  how accurate the  estimate/assumption  has
been in the past, how much the  estimate/assumption has changed in the past, and
whether the  estimate/assumption  is reasonably  likely to change in the future.
Since critical  accounting  estimates and  assumptions are based on matters that
are highly uncertain,  you should analyze their specific  sensitivity to change,
based on other  outcomes  that are  reasonably  likely to occur and would have a
material effect.  In this regard,  we believe you should consider  revising your
disclosures  in your  critical  accounting  estimates  to  address  the  factors
discussed above, to the extent  material,  rather than duplicate your accounting
policy from the notes to the financial statements.  Please refer to the guidance
in FR-72 (Release No. 33-8350).

Response
--------

As suggested by the Staff, Management will revise our critical accounting policy
disclosures in future filings to further  clarify our estimates and  assumptions
used in revenue  recognition.  Our  proposed  revision  to be included in future
filings to our critical accounting estimates is presented below.

Filtration  / Fluid Flow  Operating  Unit:
------------------------------------------

Within  the  Filtration  /  Fluid  Flow  operating  unit,  approximately  75% of
operating  unit revenues (30% of  consolidated  revenues)  are  recognized  when
products  are  delivered  (when title and risk of ownership  transfers)  or when
services are performed for unaffiliated customers.

Approximately 25% of operating unit revenues (10% of consolidated  revenues) are
recorded under the percentage-of-completion  provisions of SOP 81-1, "Accounting
for  Performance of  Construction-Type  and Certain  Production-Type  Contracts"
because the Company  manufactures  complex  products for  aerospace and military
customers under production  contracts.  The  percentage-of-completion  method of
accounting involves the use of various estimating techniques to project costs at
completion. These estimates involve various assumptions and projections relative
to the outcome of future events over a period of several years, including future
labor productivity and availability, the nature and complexity of the work to be
performed, availability of materials, the impact of delayed performance, and the
timing of product deliveries. These estimates are based on Management's judgment
and the Company's substantial experience in developing these types of estimates.
Changes in  underlying  assumptions/estimates  may  adversely  affect  financial
performance  if  they  increase  estimated  project  costs  at  completion,   or
positively affect financial performance if they decrease estimated project costs
at  completion.  Due to the nature of these  contracts and the operating  unit's
cost estimating  process,  the Company  believes that these estimates  generally
should not be subject to significant variation in the future. There have been no
material  changes  to  these  estimates  for  the  financial  statement  periods
presented.  The Company  regularly  reviews its estimates to assess revisions in
contract values and estimated costs at completion.

Communications Segment:
-----------------------

Within the  Communications  segment,  approximately 90% of the segment's revenue
arrangements (30% of consolidated revenues) contain software components. Revenue
under these  arrangements is recognized in accordance with Statement of Position
97-2  (SOP  97-2),  "Software  Revenue  Recognition,"  as  amended  by SOP 98-9,
"Modification of SOP 97-2, Software Revenue Recognition, with Respect to Certain
Transactions."  The  application  of  software  revenue   recognition   requires
judgment, including the determination of whether a software arrangement includes
multiple  elements  and  estimates  of  the  fair  value  of  the  elements,  or
vendor-specific  objective  evidence  of fair  value  ("VSOE").  Changes  to the
elements in a software  arrangement,  and the ability to identify VSOE for those
elements could materially  impact the amount of earned and/or deferred  revenue.
There  have  been no  material  changes  to these  estimates  for the  financial
statement  periods  presented  and the  Company  believes  that these  estimates
generally  should not be subject to  significant  variation  in the future.  The
remaining 10% of the segment's  revenues  represent products sold under a single
element   arrangement   and  are  recognized  when  products  are  delivered  to
unaffiliated customers.
<PAGE>

Test  Segment:
--------------

Within the Test  segment,  approximately  65% of revenues  (18% of  consolidated
revenues) are  recognized  when  products are delivered  (when title and risk of
ownership transfers) or when services are performed for unaffiliated  customers.
Certain arrangements contain multiple elements which are accounted for under the
provisions of EITF 00-21, "Revenue Arrangements with Multiple Deliverables." The
application of EITF 00-21 requires  judgment as to whether the  deliverables can
be divided into more than one unit of accounting  and whether the separate units
of  accounting  have value to the customer on a  stand-alone  basis.  Changes to
these elements could affect the timing of revenue  recognition.  There have been
no  material  changes to these  elements  for the  financial  statement  periods
presented.

Approximately  35% of the Test segment  revenues (10% of consolidated  revenues)
are  recorded  under  the  percentage-of-completion   provisions  of  SOP  81-1,
"Accounting for the Performance of Construction-Type and Certain Production-Type
Contracts"  due to the complex  nature of the  enclosures  that are designed and
produced under these contracts.  As discussed  above,  this method of accounting
involves  the  use  of  various  estimating   techniques  to  project  costs  at
completion,   which  are  based  on  Management's  judgment  and  the  Company's
substantial  experience  in  developing  these  types of  estimates.  Changes in
underlying  assumptions/estimates  may adversely or positively  affect financial
performance.  Due to the nature of these contracts and the operating unit's cost
estimating  process,  the Company believes that these estimates generally should
not be  subject  to  significant  variation  in the  future.  There have been no
material  changes  to  these  estimates  for  the  financial  statement  periods
presented.  The Company  regularly  reviews  its  contract  estimates  to assess
revisions in contract values and estimated costs at completion.

COMMENT #2:  NOTE 1.  SUMMARY OF  SIGNIFICANT  ACCOUNTING  POLICIES  (e) REVENUE
--------------------------------------------------------------------------------
             RECOGNITION
             -----------

Based on your current revenue recognition  accounting policies you indicate that
the majority of your  revenues  are  recognized  upon  product  shipment or when
services are performed, and that other revenue recognition methods are also used
depending on the terms of the contract or arrangement. However, your disclosures
appear  only to provide  general  descriptions  of your broad  number of revenue
recognition  methods and do not  elaborate  on how such  methods  relate to your
specific  product and service  offerings.  That is, the information  included in
your current  revenue  recognition  footnote is insufficient to provide a reader
with a clear  understanding  of how each of the revenue methods  employed by the
Company and its respective  criteria for recognition applies to your product and
service  offerings,  and,  furthermore,  the  context  necessary  to assess  the
significance  of each  type of  revenue  stream  relative  to your  consolidated
financial statements. For example, you state revenue recognition under long-term
contracts,  for which delivery is an inappropriate  measure of performance,  the
percentage of completion method is used; however,  there is no explanation as to
why delivery is an inappropriate measure of performance,  or alternatively,  why
percentage of completion  is  appropriate  rather than other methods used by the
Company such as  milestone-based  or when specific contract terms are fulfilled.
Another  example  includes your  disclosure  with respect to cost  reimbursement
contracts in which case revenue is recognized as costs are incurred plus a fixed
fee,  but  it  is  unclear  which  of  the  Company's  products  and/or  service
offering(s) that this method of recognition is relevant and why. Furthermore, it
is unknown whether there are  circumstances  that exist where the Company may be
liable for or  obligated to repay any of the funds and if so, how such funds are
accounted for within the financial  statements.  In this regard,  we believe you
should  revise  future  filings to clarify  your revenue  recognition  policy to
provide in clear and complete detail of the  information  necessary for a reader
to understand  the  application  of the Company's  revenue  recognition  methods
relative to its various product and service offerings.  For each method,  please
discuss the products and  services  involved and why such method is  appropriate
for recognition. This will provide enhanced clarity and transparency within your
current  disclosures.  Note  that  for  revenue  methods  that do not  generally
represents  a material  portion of the  company's  revenue,  you may quantify or
specifically  discuss in the footnote why you do not consider it to be material.
Please provide us with your proposed revisions.

Response
--------

As suggested by the Staff,  Management will revise future filings to clarify our
revenue  recognition  policy  to  provide  in  clear  and  complete  detail  the
information  necessary  for a  reader  to  understand  the  application  of  the
Company's  revenue  recognition  methods  relative  to its  various  product and
service  offerings.   Our  proposed  revision  to  our  Summary  of  Significant
Accounting Policies in future filings is provided below.
<PAGE>

Filtration  / Fluid Flow  Operating  Unit:
------------------------------------------

Within  the  Filtration  /  Fluid  Flow  operating  unit,  approximately  75% of
operating  unit revenues (30% of  consolidated  revenues)  are  recognized  when
products  are  delivered  (when title and risk of ownership  transfers)  or when
services are performed for unaffiliated customers.

Approximately 25% of operating unit revenues (10% of consolidated  revenues) are
recorded under the percentage-of-completion  provisions of SOP 81-1, "Accounting
for Performance of  Construction-Type  and Certain  Production-Type  Contracts."
Products  accounted  for under SOP 81-1  include  the  design,  development  and
manufacture  of complex fluid  control  products,  quiet  valves,  manifolds and
systems primarily for the aerospace and military markets.  For arrangements that
are accounted for under SOP 81-1, the Company estimates profit as the difference
between  total  estimated  revenue and total  estimated  cost of a contract  and
recognizes   these   revenues   and  costs   based  on  units   delivered.   The
percentage-of-completion  method  of  accounting  involves  the  use of  various
estimating techniques of expected costs at completion.

Communications  Segment:
------------------------

Within the  Communications  segment,  approximately 90% of the segment's revenue
arrangements (30% of consolidated revenues) contain software components. Revenue
under these  arrangements is recognized in accordance with Statement of Position
97-2  (SOP  97-2),  "Software  Revenue  Recognition,"  as  amended  by SOP 98-9,
"Modification of SOP 97-2, Software Revenue Recognition, with Respect to Certain
Transactions."  The segment's  software revenue  arrangements  generally include
multiple products and services, or "elements" consisting of meter and substation
hardware,  meter  reading  system  software,   software  support  (post-contract
customer  support  "PCS") and program  management  support.  These  arrangements
typically  require  the  Company to deliver  software  at the  inception  of the
arrangement while the hardware,  software support and program management support
are delivered over the contractual deployment period. These revenue arrangements
are divided into separate units of accounting if the delivered item(s) has value
to the customer on a stand-alone basis, there is objective and reliable evidence
of the fair value of the  undelivered  item(s) and  delivery/performance  of the
undelivered item(s) is probable.  For multiple element arrangements,  revenue is
allocated to the individual elements based on vendor-specific objective evidence
of fair value ("VSOE") of the individual elements.

The  application  of  these   principles   requires   judgment,   including  the
determination of whether a software  arrangement  includes multiple elements and
estimates  of the  fair  value  of the  elements.  The  VSOE of the  undelivered
elements is determined based on the historical  evidence of stand-alone sales of
these elements to customers.  Hardware revenues are generally  recognized at the
time of shipment or receipt by customer  depending  upon  contract  terms.  VSOE
generally does not exist for the software element,  therefore,  the Company uses
the  residual  method  to  recognize  revenue  when  VSOE  exists  for all other
undelivered  elements.  Under  the  residual  method,  the  fair  value  of  the
undelivered  elements is deferred and the remaining  portion of the  arrangement
fee is recognized as revenue.

SOP 97-2 requires the seller of software that  includes  post-contract  customer
support (PCS) to establish  VSOE of the  undelivered  element of the contract in
order to account separately for the PCS revenue.  The Company determines VSOE by
a consistent  pricing of PCS and PCS  renewals as a  percentage  of the software
license fees and by reference to  contractual  renewals,  when the renewal terms
are  substantive.  Revenues for PCS are recognized  ratably over the maintenance
term specified in the contract  (generally in 12 monthly  increments).  Revenues
for program  management support are recognized when services have been provided.
The Company determines VSOE for program management support based on hourly rates
when services are performed separately.

Deferred  revenue  is  recorded  for  products  or  services  that have not been
provided but have been invoiced  under  contractual  agreements or paid for by a
customer,  or when  products or services have been provided but the criteria for
revenue  recognition  have not been  met.  If  there  is a  customer  acceptance
provision or there is uncertainty about customer acceptance, revenue is deferred
until the customer has accepted the