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Comtech Telecommunications Corp. Announces Results for the Third Quarter of Fiscal 2005

June 8, 2005 at 6:00 AM EDT

MELVILLE, N.Y., Jun 08, 2005 (BUSINESS WIRE) -- Comtech Telecommunications Corp. (Nasdaq: CMTL) today reported results for the third quarter of fiscal 2005. Sales, operating profit, EBITDA, net income and diluted earnings per share were higher than the Company's third quarter guidance and at a level in the Company's history second only to the previous quarter.

Net sales for the three months ended April 30, 2005 were $75.4 million compared to $51.2 million for the three months ended April 30, 2004. Strong increases in sales were experienced in all three business segments. Net income of $8.4 million, or $0.32 per diluted share, for the three months ended April 30, 2005 far exceeded the $4.8 million, or $0.20 per diluted share, for the three months ended April 30, 2004.

Net sales for the nine months ended April 30, 2005 were $209.6 million compared to $164.3 million for the nine months ended April 30, 2004. Net income for the nine months ended April 30, 2005 was $25.6 million, or $1.00 per diluted share, versus $15.7 million, or $0.67 per diluted share, for the nine months ended April 30, 2004.

Earnings before interest, taxes, depreciation and amortization (EBITDA) were $12.6 million and $9.0 million for the three months ended April 30, 2005 and 2004, respectively. For the nine months ended April 30, 2005 and 2004, EBITDA was $41.5 million and $28.1 million, respectively. Cash flows from operating activities were an impressive $49.5 million for the nine months ended April 30, 2005.

Backlog as of April 30, 2005 remained strong at $153.6 million compared to $83.5 million as of July 31, 2004. Bookings for the three and nine months ended April 30, 2005 were $70.0 million and $279.6 million, respectively.

In commenting on the Company's performance during the third quarter of fiscal 2005, Fred Kornberg, President and Chief Executive Officer, noted, "The third quarter was yet another strong showing in a sustained period of outstanding performance by Comtech. The strength has been experienced across all three of our business segments. All but a small portion of our growth has been organic -- driven by our significant investments in technology and research and development which have translated into well-entrenched leadership positions in high growth markets and participation in high growth programs."

Mr. Kornberg added, "During the quarter, the Company completed a 3-for-2 stock split which we believe enhances the liquidity in the market for our shares and makes our shares more accessible to individual and institutional investors."

Mr. Kornberg concluded, "Anchored by the performance during the first nine months, fiscal 2005 is expected to be another record year for us on the top and bottom lines by a wide margin. As we complete fiscal 2005 and look into fiscal 2006, we remain optimistic that fiscal 2006 will be yet another record year for Comtech."

Comtech Telecommunications Corp. designs, develops, produces and markets innovative products, systems and services for advanced communications solutions. The Company conducts its business through three complementary segments: telecommunications transmission, mobile data communications and RF microwave amplifiers. The Company offers niche products, systems and services where it believes it has technological, engineering, systems design or other expertise that differentiate its product offerings.

The Company has scheduled an investor conference call for 11:30 AM (ET) on Wednesday, June 8, 2005. Investors and the public are invited to access a live webcast of the conference call from the news section of the Comtech web site, www.comtechtel.com. Alternatively, investors can access the conference call by dialing (800) 905-0392 (domestic), or (785) 832-0201 (international) and using the conference I.D. of "Comtech." A replay of the conference call will be available for seven days by dialing (402) 220-2677. In addition, an updated investor presentation, including updated earnings guidance, will be available on our web site shortly after the conference call.

Certain information in this press release contains forward-looking statements, including but not limited to, information relating to the future performance and financial condition of the Company, the plans and objectives of the Company's management and the Company's assumptions regarding such performance and plans that are forward-looking in nature and involve certain significant risks and uncertainties. Actual results could differ materially from such forward-looking information. The Company's Securities and Exchange Commission filings identify many such risks and uncertainties, which include the following:

-- Our operating results being difficult to forecast and subject to volatility;

-- Our inability to maintain our government business;

-- Our inability to keep pace with technological changes;

-- Our dependence on international sales;

-- The impact of a domestic or foreign economic slow-down and reduction in telecommunications equipment and systems spending on the demand for our products, systems and services;

-- Our mobile data communications business being subject to unique risks;

-- Our backlog being subject to cancellation or modification;

-- Our dependence on component availability, subcontractor availability and performance by key suppliers;

-- Our fixed price contracts being subject to risk;

-- The impact of adverse regulatory changes on our ability to sell products, systems and services;

-- The impact of prevailing economic and political conditions on our businesses;

-- Whether we can successfully integrate and assimilate the operations of acquired businesses;

-- The impact of the loss of key technical or management personnel;

-- The highly competitive nature of our markets;

-- Our inability to protect our proprietary technology;

-- Our operations being subject to environmental regulation;

-- The impact of recently enacted and proposed changes in securities laws and regulations on our costs;

-- The impact of terrorist attacks and threats, and government responses thereto, and threats of war on our businesses;

-- Our inability to satisfy our debt obligations, including the recently issued convertible senior notes;

-- The inability to effectuate a change in control of the Company due to provisions in its certificate of incorporation and by-laws, stockholders' rights plan and Delaware law;

-- Our stock price being volatile; and

-- Our current intention not to declare or pay any cash dividends.

COMTECH TELECOMMUNICATIONS CORP.
                 Consolidated Statements of Operations
                              (Unaudited)

                         Three months ended     Nine months ended
                              April 30,              April 30,
                          2005       2004        2005        2004
                      ----------- ----------  ----------- -----------

Net sales             $75,388,000 51,244,000  209,597,000 164,334,000
Cost of sales          45,910,000 30,635,000  120,708,000 102,132,000
                      ----------- ----------  ----------- -----------
  Gross profit         29,478,000 20,609,000   88,889,000  62,202,000
                      ----------- ----------  ----------- -----------

Expenses:
  Selling, general
   and administrative  12,855,000  8,775,000   36,112,000  26,153,000
  Research and
   development          5,325,000  3,993,000   15,175,000  11,198,000
  Amortization of
   intangibles            597,000    499,000    1,734,000   1,498,000
                      ----------- ----------  ----------- -----------
                       18,777,000 13,267,000   53,021,000  38,849,000
                      ----------- ----------  ----------- -----------

Operating income       10,701,000  7,342,000   35,868,000  23,353,000

Other expense
 (income):
  Interest expense        669,000    675,000    2,005,000     750,000
  Interest income      (1,191,000)  (324,000)  (2,739,000)   (543,000)
                      ----------- ----------  ----------- -----------

Income before
 provision for
 income taxes          11,223,000  6,991,000   36,602,000  23,146,000
Provision for
 income taxes           2,851,000  2,238,000   10,972,000   7,407,000
                      ----------- ----------  ----------- -----------

Net income            $ 8,372,000  4,753,000   25,630,000  15,739,000
                      =========== ==========  =========== ===========

Net income per share
  Basic               $      0.39       0.22         1.19        0.75
                      =========== ==========  =========== ===========
  Diluted             $      0.32       0.20         1.00        0.67
                      =========== ==========  =========== ===========

Weighted average
 number of common
 shares outstanding
 - basic               21,666,000 21,326,000   21,505,000  21,125,000
                      =========== ==========  =========== ===========

Weighted average
 number of common and
 common equivalent
 shares outstanding
 assuming dilution
 - diluted             27,327,000 26,439,000   26,936,000  24,329,000
                      =========== ==========  =========== ===========

EBITDA(1)

Reconciliation of net
 income to EBITDA:
  Net income          $ 8,372,000  4,753,000   25,630,000  15,739,000
  Income taxes          2,851,000  2,238,000   10,972,000   7,407,000
  Net interest
   expense (income)      (522,000)   351,000     (734,000)    207,000
  Depreciation and
   amortization         1,943,000  1,614,000    5,609,000   4,738,000
                      ----------- ----------  ----------- -----------
  EBITDA              $12,644,000  8,956,000   41,477,000  28,091,000
                      =========== ==========  =========== ===========


    (1) Represents earnings before interest, income taxes,
        depreciation and amortization. EBITDA is a non-GAAP operating
        metric used by management in assessing the Company's operating
        results and ability to meet its debt service requirements.
        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.



                   COMTECH TELECOMMUNICATIONS CORP.
                      Consolidated Balance Sheets

                                           April 30,       July 31,
                                             2005            2004
                                        -------------   -------------
              Assets                     (Unaudited)

Current assets:
  Cash and cash equivalents             $ 205,250,000     163,292,000
  Restricted cash                           1,044,000       4,054,000
  Accounts receivable, net                 38,229,000      43,002,000
  Inventories, net                         45,455,000      39,758,000
  Prepaid expenses and other current
   assets                                   3,896,000       1,817,000
  Deferred tax assets - current             6,501,000       6,501,000
                                        -------------   -------------
           Total current assets           300,375,000     258,424,000

Property, plant and equipment, net         17,337,000      14,652,000
Goodwill                                   22,322,000      18,721,000
Intangibles with definite lives, net        9,716,000      10,706,000
Deferred financing costs, net               3,131,000       3,541,000
Other assets, net                             365,000         346,000
                                        -------------   -------------
           Total assets                 $ 353,246,000     306,390,000
                                        =============   =============

   Liabilities and Stockholders' Equity

Current liabilities:
  Accounts payable                      $  23,307,000       9,566,000
  Accrued expenses                         27,660,000      20,515,000
  Customer advances and deposits            6,751,000       7,290,000
  Deferred service revenue                  9,222,000      13,716,000
  Current installments of other
   obligations                                234,000         234,000
  Interest payable                            525,000       1,073,000
  Income taxes payable                      4,699,000       4,812,000
                                        -------------   -------------
           Total current liabilities       72,398,000      57,206,000

Convertible senior notes                  105,000,000     105,000,000
Other obligations, less current
 installments                                 457,000         158,000
Deferred tax liabilities - non-current      4,908,000       1,628,000
                                        -------------   -------------
           Total liabilities              182,763,000     163,992,000
Stockholders' equity:
  Preferred stock, par value $.10 per
   share; shares authorized and
   unissued 2,000,000                               -               -
  Common stock, par value $.10 per
   share; authorized 30,000,000 shares;
   issued 21,907,379 shares at April 30,
   2005 and 21,557,002 shares at
   July 31, 2004                            2,191,000       2,156,000
  Additional paid-in capital              112,136,000     109,716,000
  Retained earnings                        56,341,000      30,711,000
                                        -------------   -------------
                                          170,668,000     142,583,000
  Less:
    Treasury stock (210,937 shares)          (185,000)       (185,000)
                                        -------------   -------------
           Total stockholders' equity     170,483,000     142,398,000
                                        -------------   -------------
           Total liabilities and
            stockholders' equity        $ 353,246,000     306,390,000
                                        =============   =============
Commitments and contingencies

ECMTL

SOURCE: Comtech Telecommunications Corp.

Comtech Telecommunications Corp.
Fred Kornberg or Robert G. Rouse, 631-777-8900
Info@comtechtel.com

Copyright Business Wire 2005

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