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

June 3, 2010 at 4:37 PM EDT

MELVILLE, N.Y., Jun 3, 2010 (GlobeNewswire via COMTEX News Network) -- Comtech Telecommunications Corp. (Nasdaq:CMTL) today reported its operating results for the three and nine months ended April 30, 2010.

Net sales for the third quarter of fiscal 2010 were $216.3 million compared to $128.5 million for the third quarter of fiscal 2009. The period-over-period increase in net sales is attributable to higher sales in both our mobile data communications and telecommunications transmission segments that were offset, in part, by lower sales in our RF microwave amplifiers segment.

GAAP net income was $21.8 million, or $0.67 per diluted share, for the third quarter of fiscal 2010 compared to $7.6 million, or $0.27 per diluted share, for the third quarter of fiscal 2009.

Net sales for the nine months ended April 30, 2010 were $521.3 million compared to $464.3 million for the nine months ended April 30, 2009. The period-over-period increase in net sales is attributable to significantly higher sales in our mobile data communications segment that were offset, in part, by a decrease in sales in both our telecommunications transmission and RF microwave amplifiers segments.

GAAP net income was $47.2 million, or $1.48 per diluted share, for the nine months ended April 30, 2010 compared to $41.3 million, or $1.55 per diluted share, for the nine months ended April 30, 2009.

In commenting on the Company's performance, Fred Kornberg, President and Chief Executive Officer, stated, "Our third quarter results for fiscal 2010 were clearly outstanding and we continue to believe that fiscal 2010 will be another year of record revenues with operating income significantly greater than in fiscal 2009."

Mr. Kornberg added, "Bookings during the three months ended April 30, 2010 were higher than bookings in either of the two prior quarters of fiscal 2010. We believe this reflects improving global business conditions in our commercial markets. In addition, we also benefited from increased government spending for our products and services. We are cautiously optimistic that these overall trends will continue and, given the expected strategic and financial benefits of our planned acquisition of CPI International, Inc., we are delighted with our positioning as we look to fiscal 2011."

Selected Fiscal 2010 Third Quarter Financial Metrics and Other Items

  --  Backlog as of April 30, 2010 was $411.1 million compared to $549.8
      million as of July 31, 2009 and $591.1 million as of April 30, 2009.
      Bookings for the three and nine months ended April 30, 2010 were $180.6
      million and $383.5 million, respectively, compared to $257.5 million and
      $803.0 million for the three and nine months ended April 30, 2009,
      respectively.

  --  Earnings before interest, income taxes, depreciation and amortization,
      including amortization of intangibles, stock-based compensation and
      acquired in-process research and development ("EBITDA"), was $43.1
      million and $98.2 million for the three and nine months ended April 30,
      2010, respectively, versus $18.4 million and $95.5 million for the three
      and nine months ended April 30, 2009, respectively.

  --  At April 30, 2010, the Company had $568.3 million of cash and cash
      equivalents. Net cash provided by operating activities was $82.5 million
      for the nine months ended April 30, 2010 compared to $49.6 million for
      the nine months ended April 30, 2009.

  --  As more fully described in the Company's Form 10-Q filed earlier today,
      in April 2010, the Enforcement Division of the Office of Defense Trade
      Controls Compliance ("DDTC") of the U.S. Department of State confirmed
      to us that it was closing, without taking further administrative action,
      its review of previously reported violations with respect to our
      compliance with International Traffic in Arms Regulations ("ITAR").

  --  As further discussed in the Company's Form 10-Q filed earlier today, in
      May 2010, the Company announced plans to supplement its organic growth
      plans and diversify its business by acquiring CPI International, Inc.
      ("CPI").

  --  As discussed in earlier SEC filings and in the Company's Form 10-Q filed
      earlier today, the Company's results for the three and nine months ended
      April 30, 2009 were retroactively adjusted to reflect the required
      adoption of FASB ASC 470-20, "Debt - Debt with Conversion and Other
      Options." The adoption of this new accounting standard requires
      adjustments to the historical reporting relating to the Company's 2.0%
      convertible senior notes, which are no longer outstanding.


Conference Call

The Company has scheduled an investor conference call for 8:30 AM (ET) on Friday, June 4, 2010. 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) 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) 220-0870. 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 its actual results, future performance and financial condition, and achievement of the Company's plans and objectives to be materially different from the results, performance or other expectations implied by these forward-looking statements. These factors include: the risk that the acquisition of CPI International, Inc. ("CPI") may not be consummated for reasons including that the conditions precedent to the completion of the acquisition may not be satisfied; the possibility that the expected synergies from the proposed merger will not be realized, or will not be realized within the anticipated time period; the risk that the Company's and CPI's businesses will not be integrated successfully; the possibility of disruption from the acquisition making it more difficult to maintain business and operational relationships; any actions taken by either of the companies, including but not limited to, restructuring or strategic initiatives (including capital investments or asset acquisitions or dispositions); the 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 Company's legal proceedings and other matters; 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 ("SEC") and CPI's filings with the SEC.

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


                                  Three months ended April 30,        Nine months ended April 30,
                                 ------------------------------     -------------------------------

                                      2010             2009              2010              2009
                                 --------------     -----------     --------------     ------------
                                                        (as                                 (as
                                                     adjusted)                          adjusted)

  Net sales                       $ 216,303,000     128,545,000        521,251,000      464,346,000

  Cost of sales                     141,512,000      81,040,000        333,185,000      270,385,000
                                 --------------     -----------     --------------     ------------

   Gross profit                      74,791,000      47,505,000        188,066,000      193,961,000
                                 --------------     -----------     --------------     ------------

  Expenses:
   Selling, general and
    administrative                   25,628,000      23,062,000         70,256,000       78,009,000
   Research and development          11,383,000      11,410,000         34,138,000       38,057,000
   Amortization of acquired
    in-process research and
    development                              --              --                 --        6,200,000

   Amortization of intangibles        1,754,000       1,805,000          5,283,000        5,394,000
                                 --------------     -----------     --------------     ------------

                                     38,765,000      36,277,000        109,677,000      127,660,000
                                 --------------     -----------     --------------     ------------

  Operating income                   36,026,000      11,228,000         78,389,000       66,301,000

  Other expenses (income):
   Interest expense                   1,980,000         928,000          5,913,000        4,647,000

   Interest income and other          (315,000)       (404,000)          (728,000)      (2,307,000)
                                 --------------     -----------     --------------     ------------

  Income before provision for
   income taxes                      34,361,000      10,704,000         73,204,000       63,961,000

  Provision for income taxes         12,565,000       3,094,000         26,043,000       22,614,000
                                 --------------     -----------     --------------     ------------


  Net income                     $   21,796,000       7,610,000         47,161,000       41,347,000
                                 ==============     ===========     ==============     ============

  Net income per share:

   Basic                               $   0.77            0.27               1.67             1.61
                                 ==============     ===========     ==============     ============

   Diluted                             $   0.67            0.27               1.48             1.55
                                 ==============     ===========     ==============     ============

  Weighted average number of
   common shares outstanding --
   basic                             28,291,000      27,779,000         28,254,000       25,708,000
                                 ==============     ===========     ==============     ============

  Weighted average number of
   common and common equivalent
   shares outstanding --
   diluted                           34,086,000      28,093,000         34,074,000       28,540,000
                                 ==============     ===========     ==============     ============

                 COMTECH TELECOMMUNICATIONS CORP.
                         AND SUBSIDIARIES
               Condensed Consolidated Balance Sheets


                                                       July 31,
                                  April 30, 2010         2009
                                 ---------------     ------------
  Assets                           (Unaudited)        (Audited)
                                                          (as
                                                      adjusted)
  Current assets:
   Cash and cash equivalents       $ 568,277,000      485,450,000
   Accounts receivable, net          107,695,000       79,477,000
   Inventories, net                   75,077,000       95,597,000
   Prepaid expenses and other
    current assets                     9,745,000       13,398,000

   Deferred tax asset                 13,919,000       15,129,000
                                 ---------------     ------------
       Total current assets          774,713,000      689,051,000

  Property, plant and
   equipment, net                     33,549,000       38,486,000
  Goodwill                           149,253,000      149,253,000
  Intangibles with finite
   lives, net                         50,102,000       55,272,000
  Deferred financing costs, net        5,022,000        6,053,000

  Other assets, net                    1,271,000          556,000
                                 ---------------     ------------

       Total assets              $ 1,013,910,000      938,671,000
                                 ===============     ============

       Liabilities and
        Stockholders' Equity
  Current liabilities:
   Accounts payable                 $ 43,798,000       19,233,000
   Accrued expenses and other
    current liabilities               47,216,000       51,741,000
   Customer advances and
    deposits                          10,951,000       19,571,000
   Interest payable                    3,031,000        1,418,000

   Income taxes payable                8,296,000          563,000
                                 ---------------     ------------
       Total current
        liabilities                  113,292,000       92,526,000

  Convertible senior notes           200,000,000      200,000,000
  Other liabilities                    2,420,000        2,283,000
  Income taxes payable                 5,088,000        4,267,000

  Deferred tax liability               8,321,000       10,466,000
                                 ---------------     ------------
       Total liabilities             329,121,000      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
    28,518,477 shares and
    28,390,855 shares at April
    30, 2010 and July 31, 2009,
    respectively                       2,852,000        2,839,000
   Additional paid-in capital        344,142,000      335,656,000

   Retained earnings                 337,980,000      290,819,000
                                 ---------------     ------------
                                     684,974,000      629,314,000
   Less:
    Treasury stock (210,937
     shares)                           (185,000)        (185,000)
                                 ---------------     ------------
       Total stockholders'
        equity                       684,789,000      629,129,000
                                 ---------------     ------------
       Total liabilities and
        stockholders' equity     $ 1,013,910,000      938,671,000
                                 ===============     ============


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


                                                  Three Months Ended                Nine months Ended
                                                       April 30,                        April 30,
                                            ------------------------------     ---------------------------

                                                 2010             2009            2010            2009
                                            --------------     -----------     -----------     -----------
                                                                   (as                             (as
                                                                adjusted)                       adjusted)

  Reconciliation of GAAP Net Income to
   EBITDA(1):
   GAAP net income                          $   21,796,000       7,610,000      47,161,000      41,347,000
   Income taxes                                 12,565,000       3,094,000      26,043,000      22,614,000
   Net interest expense (income) and other       1,665,000         524,000       5,185,000       2,340,000
   Amortization of acquired in-process
    research and development                            --              --              --       6,200,000
   Amortization of stock-based
    compensation                                 2,332,000       2,339,000       5,758,000       7,049,000

   Depreciation and other amortization           4,714,000       4,856,000      14,063,000      15,930,000
                                            --------------     -----------     -----------     -----------

   EBITDA                                     $ 43,072,000      18,423,000      98,210,000      95,480,000
                                            ==============     ===========     ===========     ===========

(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. 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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