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Comtech Telecommunications Corp. Announces Results for the First Quarter of Fiscal 2010

December 8, 2009 at 4:04 PM EST

MELVILLE, N.Y., Dec 8, 2009 (GlobeNewswire via COMTEX News Network) -- Comtech Telecommunications Corp. (Nasdaq:CMTL) today reported its operating results for the first quarter ended October 31, 2009.

Net sales for the first quarter of fiscal 2010 were $133.8 million compared to $191.9 million for the first quarter of fiscal 2009. As expected, the period-over-period decrease in net sales is attributable to lower sales in all three of the Company's business segments. However, during the first quarter of fiscal 2010, the Company did begin recording significant revenue in its mobile data communications segment relating to shipments for orders previously received from the U.S. Army. The Company currently expects these shipments to continue throughout fiscal 2010, resulting in quarterly consolidated revenues likely increasing from the first quarter levels for each of the remaining quarters of fiscal 2010.

GAAP net income was $9.0 million, or $0.30 per diluted share, for the first quarter of fiscal 2010 compared to $21.6 million, or $0.80 per diluted share, for the first quarter of fiscal 2009.

In commenting on the Company's performance, Fred Kornberg, President and Chief Executive Officer, stated, "As I look to the remainder of fiscal 2010, I believe we are at a turning point and starting to pick up speed, and that we remain on track to achieve another year of record revenues and significant year-over-year earnings growth."

Mr. Kornberg added, "We had approximately $535.6 million in backlog as of October 31, 2009, of which a substantial portion is expected to ship in fiscal 2010. Additionally, with over $500.0 million of cash and cash equivalents, we are continuing our efforts to identify and execute acquisitions to supplement our expected organic growth and to diversify our business."

Selected Fiscal 2010 First Quarter Financial Metrics and Other Items


 * Backlog as of October 31, 2009 was $535.6 million compared to
   $549.8 million as of July 31, 2009 and $219.1 million as of
   October 31, 2008. Bookings for the first quarter of fiscal 2010
   were $120.6 million compared to $158.6 million for the first
   quarter of fiscal 2009.

 * Earnings before interest, taxes, depreciation and amortization,
   including amortization of acquired in-process research and
   development ("EBITDA"), was $21.4 million for the first quarter
   of fiscal 2010, versus $50.0 million for the first quarter of
   fiscal 2009.

 * At October 31, 2009, the Company had $500.1 million of cash and
   cash equivalents. Net cash provided by operating activities was
   $13.0 million for the three months ended October 31, 2009 compared
   to $2.7 million for the three months ended October 31, 2008.

 * The Company's effective tax rate of 31.8% for the three months
   ended October 31, 2009 includes discrete tax benefits of $0.6
   million, primarily relating to the reversal of tax contingencies
   no longer required due to the expiration of the applicable statutes
   of limitations.

 * During the first quarter of fiscal 2010, the Company began
   recording significant revenue relating to the shipment of new
   MTS ruggedized computers and certain related accessories to the
   U.S. Army. These MTS ruggedized computers, as well as certain
   related accessories, are manufactured by a third-party supplier.
   As further discussed in our Form 10-Q filed earlier today, the
   Company believes that shipments of the new MTS ruggedized computers
   will continue throughout fiscal 2010.

 * As further discussed in the Company's Form 10-Q filed earlier
   today, on August 1, 2009, although the Company's 2.0% convertible
   senior notes were no longer outstanding, it was required to
   retroactively adjust the historical reporting relating to its
   2.0% convertible senior notes in accordance with FASB ASC 470-20,
   "Debt - Debt with Conversion and Other Options." The retroactive
   adjustment did not impact the Company's diluted earnings per share
   for the three months ended October 31, 2008.

Conference Call

The Company has scheduled an investor conference call for 8:30 AM (ET) on Wednesday, December 9, 2009. Investors and the public are invited to access a live webcast of the conference call from the investor relations section of the Comtech web site at www.comtechtel.com. Alternatively, investors can access the conference call by dialing (800) 894-5910 (domestic) or (785) 424-1052 (international) and using the conference I.D. of "Comtech." A replay of the conference call will be available for seven days by dialing (402) 220-1116. In addition, an updated investor presentation, including earnings guidance, will be available on our web site shortly after the conference call.

About Comtech

Comtech Telecommunications Corp. designs, develops, produces and markets innovative products, systems and services for advanced communications solutions. The Company believes many of its solutions play a vital role in providing or enhancing communication capabilities when terrestrial communications infrastructure is unavailable, inefficient or too expensive. The Company conducts business through three complementary segments: telecommunications transmission, mobile data communications and RF microwave amplifiers. The Company sells products to a diverse customer base in the global commercial and government communications markets. The Company believes it is a market leader in the market segments that it serves.

Cautionary Statement Regarding Forward-Looking Statements

Certain information in this press release contains forward-looking statements, including but not limited to, information relating to the Company's future performance and financial condition, plans and objectives of the Company's management and the Company's assumptions regarding such future performance, financial condition, and plans and objectives that involve certain significant known and unknown risks and uncertainties and other factors not under the Company's control which may cause actual results, future performance and financial condition, and achievement of plans and objectives of the Company's management to be materially different from the results, performance or other expectations implied by these forward-looking statements. These factors include the nature and timing of receipt of, and the Company's performance on, new or existing orders that can cause significant fluctuations in net sales and operating results, the timing and funding of government contracts, adjustments to gross profits on long-term contracts, risks associated with international sales, rapid technological change, evolving industry standards, frequent new product announcements and enhancements, changing customer demands, changes in prevailing economic and political conditions, risks associated with the results of ongoing investigations into the Company's compliance with export regulations, risks associated with the Radyne acquisition, risks associated with the Company's legal proceedings and other matters, risks associated with the Company's recent MTS orders, risks associated with the Company's MTS and BFT contracts, risks associated with the Company's obligations under its revolving credit facility, and other factors described in the Company's filings with the Securities and Exchange Commission.


                    COMTECH TELECOMMUNICATIONS CORP.
                           AND SUBSIDIARIES
            Condensed Consolidated Statements of Operations
                              (Unaudited)


                                       Three months ended October 31,
                                       ------------------------------
                                            2009             2008
                                       -------------    -------------
                                                        (as adjusted)

 Net sales                             $ 133,816,000      191,915,000
 Cost of sales                            84,042,000      104,936,000
                                       -------------    -------------

  Gross profit                            49,774,000       86,979,000
                                       -------------    -------------

 Expenses:
  Selling, general and administrative     21,719,000       28,978,000
  Research and development                11,324,000       14,125,000
  Amortization of acquired in-process
   research and development                       --        6,200,000

  Amortization of intangibles              1,764,000        1,793,000
                                       -------------    -------------
                                          34,807,000       51,096,000
                                       -------------    -------------

 Operating income                         14,967,000       35,883,000

 Other expenses (income):
  Interest expense                         1,967,000        1,825,000
  Interest income and other                 (235,000)      (1,277,000)
                                       -------------    -------------

 Income before provision for income
  taxes                                   13,235,000       35,335,000
 Provision for income taxes                4,203,000       13,694,000
                                       -------------    -------------

 Net income                            $   9,032,000       21,641,000
                                       =============    =============

 Net income per share:
  Basic                                $        0.32             0.88
                                       =============    =============
  Diluted                              $        0.30             0.80
                                       =============    =============

 Weighted average number of common
  shares outstanding - basic              28,222,000       24,586,000
                                       =============    =============

 Weighted average number of common and
  common equivalent shares outstanding
  - diluted                               34,057,000       28,537,000
                                       =============    =============


                      COMTECH TELECOMMUNICATIONS CORP.
                             AND SUBSIDIARIES
                   Condensed Consolidated Balance Sheets

                                       October 31,         July 31,
                                          2009               2009
                                      -------------     -------------
                 Assets                (Unaudited)        (Audited)
                                                        (as adjusted)
 Current assets:
  Cash and cash equivalents           $ 500,055,000       485,450,000
  Accounts receivable, net               92,036,000        79,477,000
  Inventories, net                       94,505,000        95,597,000
  Prepaid expenses and other current
   assets                                10,300,000        13,398,000

  Deferred tax asset                     15,053,000        15,129,000
                                      -------------     -------------
      Total current assets              711,949,000       689,051,000

 Property, plant and equipment, net      36,444,000        38,486,000
 Goodwill                               149,253,000       149,253,000
 Intangibles with finite lives, net      53,508,000        55,272,000
 Deferred financing costs, net            5,707,000         6,053,000

 Other assets, net                          649,000           556,000
                                      -------------     -------------
      Total assets                    $ 957,510,000       938,671,000
                                      =============     =============

      Liabilities and Stockholders'
       Equity
 Current liabilities:
  Accounts payable                    $  24,208,000        19,233,000
  Accrued expenses and other current
   liabilities                           49,846,000        51,741,000
  Customer advances and deposits         16,710,000        19,571,000
  Interest payable                        2,928,000         1,418,000

  Income taxes payable                    5,722,000           563,000
                                      -------------     -------------
      Total current liabilities          99,414,000        92,526,000

 Convertible senior notes               200,000,000       200,000,000
 Other liabilities                        2,381,000         2,283,000
 Income taxes payable                     5,199,000         4,267,000
 Deferred tax liability                   9,312,000        10,466,000
                                      -------------     -------------
      Total liabilities                 316,306,000       309,542,000

 Commitments and contingencies

 Stockholders' equity:
  Preferred stock, par value $.10 per
   share; shares authorized and
   unissued 2,000,000                            --                --
  Common stock, par value $.10 per
   share; authorized 100,000,000
   shares, issued 28,452,302 shares
   and 28,390,855 shares at
   October 31, 2009 and
   July 31, 2009, respectively            2,845,000         2,839,000
  Additional paid-in capital            338,693,000       335,656,000
  Retained earnings                     299,851,000       290,819,000
                                      -------------     -------------
                                        641,389,000       629,314,000
    Less:
     Treasury stock (210,937 shares)       (185,000)         (185,000)
                                      -------------     -------------
      Total stockholders' equity        641,204,000       629,129,000
                                      -------------     -------------
      Total liabilities and
       stockholders' equity           $ 957,510,000       938,671,000
                                      =============     =============


                   COMTECH TELECOMMUNICATIONS CORP.
                           AND SUBSIDIARIES
             Reconciliation of Non-GAAP Financial Measures
                     to GAAP Financial Measures
                              (Unaudited)

                                              Three Months Ended
                                                  October 31,
                                          ----------------------------
                                              2009           2008
                                          -------------  -------------
                                                         (as adjusted)

 Reconciliation of GAAP Net Income to
  EBITDA(1):
   GAAP net income                         $  9,032,000     21,641,000
   Income taxes                               4,203,000     13,694,000
   Net interest expense and other             1,732,000        548,000
   Amortization of acquired in-process
    research and development                         --      6,200,000
   Amortization of stock-based
    compensation                              1,776,000      2,418,000
   Depreciation and other amortization        4,666,000      5,466,000
                                          -------------  -------------
   EBITDA                                  $ 21,409,000     49,967,000
                                          =============  =============


 (1) Represents earnings before interest, income taxes, depreciation
     and amortization of intangibles, stock-based compensation and
     acquired in-process research and development. EBITDA is a
     non-GAAP operating metric used by management in assessing the
     Company's operating results and ability to meet debt service
     requirements. The Company's definition of EBITDA may differ from
     the definition of EBITDA used by other companies and may not be
     comparable to similarly titled measures used by other companies.
     EBITDA is also a measure frequently requested by the Company's
     investors and analysts. The Company believes that investors and
     analysts may use EBITDA, along with other information contained
     in its SEC filings, in assessing its ability to generate cash
     flow and service debt.

ECMTL

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SOURCE: Comtech Telecommunications Corp.

CONTACT:  Comtech Telecommunications Corp.
Media Contacts:
Michael D. Porcelain, Senior Vice President
and Chief Financial Officer

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