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Comtech Telecommunications Corp. Announces Results for the First Quarter of Fiscal 2008

December 5, 2007 at 12:00 AM EST

MELVILLE, N.Y., Dec 05, 2007 (BUSINESS WIRE) -- Comtech Telecommunications Corp. (NASDAQ: CMTL) today reported its operating results for the three months ended October 31, 2007. Net sales for the first quarter of fiscal 2008 were $115.1 million compared to $97.1 million in the first quarter of fiscal 2007, reflecting significant growth in both the mobile data communications and RF microwave amplifiers segments, offset by lower net sales in the telecommunications transmission segment.

GAAP net income was $14.7 million, or $0.54 per diluted share, for the three months ended October 31, 2007 compared to $10.8 million, or $0.41 per diluted share, for the three months ended October 31, 2006. Non-GAAP net income, which excludes the amortization of stock-based compensation expense, was $16.5 million, or $0.59 per diluted share, for the three months ended October 31, 2007 as compared to Non-GAAP net income of $12.1 million, or $0.45 per diluted share, for the three months ended October 31, 2006.

In commenting on the Company's performance during the first quarter of fiscal 2008, Fred Kornberg, President and Chief Executive Officer of Comtech Telecommunications Corp., said, "We are very pleased with our first quarter results and believe they underscore the strength of our businesses. We achieved outstanding results, as evidenced by the strong levels of net income and earnings per share, while significantly increasing our research and development spending."

Mr. Kornberg added, "We intend to continue this ramp up in research and development spending for the balance of the year in order to remain an innovative technology leader in our markets. At the same time, we continue to see increased demand from customers in each of our three business segments that we believe positions us well for another record year in fiscal 2008."

Selected First Quarter Fiscal 2008 Financial Metrics and Other Items

-- Bookings for the first quarter of fiscal 2008 were $235.0 million compared to $121.4 million in the first quarter of fiscal 2007. Backlog as of October 31, 2007 was a record $248.9 million compared to $129.0 million as of July 31, 2007.

-- Earnings before interest, taxes, depreciation and amortization (EBITDA) were $23.9 million and $19.2 million for the three months ended October 31, 2007 and 2006, respectively.

-- Cash used in operating activities for the first quarter of fiscal 2008 was $9.7 million compared to cash used in operating activities of $3.6 million for the first quarter of fiscal 2007, primarily reflecting a significant increase in accounts receivable due to the timing of shipments in the first quarter of fiscal 2008 to our customers (primarily the U.S. government), a buildup of inventory anticipated to be shipped throughout fiscal 2008, payment of fiscal 2007 incentive awards and the net impact of normal changes in other working capital accounts primarily associated with timing.

Conference Call

The Company has scheduled an investor conference call for 8:30 AM (ET) on Thursday, December 6, 2007. Investors and the public are invited to access a live webcast of the conference call from the news section of the Comtech web site at www.comtechtel.com. Alternatively, investors can access the conference call by dialing (800) 862-9098 (domestic) or (785) 424-1051 (international) and using the conference I.D. of "Comtech." A replay of the conference call will be available for seven days by dialing (402) 220-2653. 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 or ineffective. 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, 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 timing of receipt of, and the Company's performance on, new 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 subpoena from the U.S. Immigration and Customs Enforcement branch of the Department of Homeland Security, 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,
                                             -------------------------
                                                 2007         2006
                                             ------------- -----------
Net sales                                    $115,055,000  97,070,000
Cost of sales                                  64,577,000  57,695,000
                                             ------------- -----------
   Gross profit                                50,478,000  39,375,000
                                             ------------- -----------

Expenses:
   Selling, general and administrative         20,399,000  16,587,000
   Research and development                    11,041,000   7,157,000
   Amortization of intangibles                    379,000     649,000
                                             ------------- -----------
                                               31,819,000  24,393,000
                                             ------------- -----------

Operating income                               18,659,000  14,982,000

Other expenses (income):
   Interest expense                               677,000     695,000
   Interest income                             (4,447,000) (3,175,000)
                                             ------------- -----------

Income before provision for income taxes       22,429,000  17,462,000
Provision for income taxes                      7,735,000   6,635,000
                                             ------------- -----------
Net income                                   $ 14,694,000  10,827,000
                                             ============= ===========

Net income per share:
   Basic                                     $       0.61        0.47
                                             ============= ===========
   Diluted                                   $       0.54        0.41
                                             ============= ===========

Weighted average number of common shares
 outstanding - basic                           23,924,000  22,948,000
                                             ============= ===========

Weighted average number of common and common
 equivalent shares outstanding assuming
 dilution - diluted                            28,208,000  27,389,000
                                             ============= ===========

                   COMTECH TELECOMMUNICATIONS CORP.
                           AND SUBSIDIARIES
                Condensed Consolidated Balance Sheets

                                            October 31,     July 31,
                                                2007          2007
                                            ------------- ------------
                  Assets                     (Unaudited)
Current assets:
  Cash and cash equivalents                 $333,391,000  342,903,000
  Accounts receivable, net                    89,517,000   73,585,000
  Inventories, net                            71,685,000   61,987,000
  Prepaid expenses and other current assets    9,946,000    6,734,000
  Deferred tax asset - current                 9,616,000    9,380,000
                                            ------------- ------------
                Total current assets         514,155,000  494,589,000

Property, plant and equipment, net            30,349,000   29,282,000
Goodwill                                      24,363,000   24,387,000
Intangibles with finite lives, net             6,257,000    5,717,000
Deferred financing costs, net                  1,767,000    1,903,000
Other assets, net                                415,000      464,000
                                            ------------- ------------
                Total assets                $577,306,000  556,342,000
                                            ============= ============

   Liabilities and Stockholders' Equity
Current liabilities:
  Accounts payable                          $ 27,928,000   26,137,000
  Accrued expenses and other current
   liabilities                                40,141,000   47,332,000
  Customer advances and deposits              21,620,000   20,056,000
  Current installments of other obligations      137,000      135,000
  Interest payable                               525,000    1,050,000
  Income taxes payable - current               3,862,000    2,796,000
                                            ------------- ------------
                Total current liabilities     94,213,000   97,506,000

Convertible senior notes                     105,000,000  105,000,000
Other obligations, less current
 installments                                     73,000      108,000
Income taxes payable - non-current             2,854,000            -
Deferred tax liability - non-current           8,184,000    7,960,000
                                            ------------- ------------
                Total liabilities            210,324,000  210,574,000

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
   24,236,629 shares and 24,016,329 shares
   at October 31, 2007 and July 31, 2007,
   respectively                                2,424,000    2,402,000
  Additional paid-in capital                 172,201,000  165,703,000
  Retained earnings                          192,542,000  177,848,000
                                            ------------- ------------
                                             367,167,000  345,953,000
    Less:
     Treasury stock (210,937) shares            (185,000)    (185,000)
                                            ------------- ------------
                Total stockholders' equity   366,982,000  345,768,000
                                            ------------- ------------
                Total liabilities and
                 stockholders' equity       $577,306,000  556,342,000
                                            ============= ============

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

                                                Three Months Ended
                                                     October 31,
                                              ------------------------
                                                  2007        2006
                                              ------------ -----------
Reconciliation of Non-GAAP Net Income To GAAP
 Net Income(1):
  Non-GAAP net income                         $16,472,000  12,142,000
  Amortization of stock-based compensation     (2,719,000) (1,810,000)
  Tax effect of stock-based compensation
   expense                                        941,000     495,000
                                              ------------ -----------
  GAAP net income                             $14,694,000  10,827,000
                                              ============ ===========

Reconciliation of Non-GAAP Diluted Earnings
 Per Share To GAAP Diluted Earnings Per
 Share(1):
  Non-GAAP diluted earnings per share         $      0.59        0.45
  Amortization of stock-based compensation          (0.08)      (0.06)
  Tax effect of stock-based compensation
   expense                                           0.03        0.02
                                              ------------ -----------
GAAP diluted earnings per share               $      0.54        0.41
                                              ============ ===========

Reconciliation of GAAP Net Income to
 EBITDA(2):
  GAAP net income                             $14,694,000  10,827,000
  Income taxes                                  7,735,000   6,635,000
  Net interest income                          (3,770,000) (2,480,000)
  Amortization of stock-based compensation      2,719,000   1,810,000
  Depreciation and amortization                 2,491,000   2,417,000
                                              ------------ -----------
  EBITDA                                      $23,869,000  19,209,000
                                              ============ ===========

(1) Non-GAAP net income is used by management in assessing the Company's operating results. The Company believes that investors and analysts may use non-GAAP measures that exclude the amortization of stock-based compensation, along with other information contained in its SEC filings, in assessing the Company's operating results.

(2) Represents earnings before interest, income taxes, depreciation and amortization of intangibles and stock-based compensation. 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

SOURCE: Comtech Telecommunications Corp.

Comtech Telecommunications Corp.
Robert G. Rouse,
Executive Vice President and Chief Operating Officer

Copyright Business Wire 2007

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