Comtech Telecommunications Corp. Announces Record Results for Fiscal Year 2003 Fourth Quarter and Full Year

MELVILLE, N.Y., Sep 23, 2003 (BUSINESS WIRE) --

Comtech Telecommunications Corp. (Nasdaq: CMTL) today reported its results for the fourth quarter and fiscal year ended July 31, 2003. Net sales for the fourth quarter of fiscal 2003 were $51.7 million, compared to $28.5 million in fiscal 2002. Fourth quarter net income was $3.6 million, or $0.27 per diluted share, in fiscal 2003, as compared to a net loss in the fourth quarter of fiscal 2002 of $0.3 million, or $0.03 per diluted share. The fourth quarter of fiscal 2002 included (i) a non-recurring charge of $2.2 million for acquired in-process research and development in connection with the acquisition of certain assets and liabilities of Advanced Hardware Architectures, Inc. in July 2002 and (ii) a tax benefit relating to research and experimentation credits. Excluding the impact of such items, fourth quarter net income for fiscal 2002 was $0.5 million, or $0.05 per diluted share. Earnings before interest, taxes, depreciation and amortization (EBITDA) were $7.6 million for the fourth quarter of fiscal 2003 and $2.7 million for the fourth quarter of fiscal 2002, after adjusting for the in-process research and development charge.

Net sales for fiscal 2003 were $174.0 million and net income was $9.7 million, or $0.80 per diluted share, compared to net sales of $119.4 million and net income of $1.1 million, or $0.10 per diluted share, in fiscal 2002. Excluding the impact of the in-process research and development charge and the tax benefit discussed above, net income for fiscal 2002 was $2.0 million, or $0.17 per diluted share. EBITDA was $23.1 million for fiscal 2003 and $10.8 million for fiscal 2002, after adjusting for the in-process research and development charge.

Reference is made to the attached tables for further financial information, including a reconciliation of non-GAAP financial information to GAAP.

Backlog as of July 31, 2003 was $100.1 million compared to $44.1 million a year earlier.

Fred Kornberg, President and Chief Executive Officer, observed, "Fiscal 2003 was a truly remarkable year for our Company. We achieved record levels of sales, bookings, backlog, EBITDA, profits and earnings per share in an economy that continues to struggle. Once again, all of our segments were profitable."

Mr. Kornberg added, "Our record results in fiscal 2003 reflect increased demand from the U.S. Army logistics and battlefield commands for our mobile data communications products and services, as well as increased interest in our over-the-horizon microwave systems. In addition, we have recently seen signs of strengthening in our satellite earth station product lines."

In commenting on fourth quarter results, Mr. Kornberg noted, "The fourth quarter of fiscal 2003 was stronger than expected as sales and orders received in our mobile data communications segment continued to far exceed our expectations. Activity in our telecommunications transmission segment also contributed to an outstanding fourth quarter."

Mr. Kornberg concluded, "During the fourth quarter of fiscal 2003, we also sold 2.1 million shares of common stock in a private placement transaction. The net proceeds of $38.2 million were used to prepay all of our long-term debt, which will reduce our interest expense going forward. We ended fiscal 2003 with no long-term debt and $48.6 million of unrestricted cash. In addition, the 2.1 million shares issued in the private placement, combined with our three-for-two stock split in July, significantly increased our shares outstanding."

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, RF microwave amplifiers, and mobile data communications. 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 Tuesday, September 23, 2003. 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. A replay of the webcast will be available at the same location for 30 days following the conference call. Alternatively, investors can access the conference call by dialing (800) 903-0247 (domestic), or (785) 832-1508 (international) and using the conference I.D. of "Comtech." A replay of the conference call will be available for seven days by dialing (402) 220-1126. In addition, an updated investor presentation, including updated earnings guidance, will be available on our web site shortly after our 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 continued domestic and 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 in an early
        stage;

    --  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; and

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

- tables to follow -

                   COMTECH TELECOMMUNICATIONS CORP.
                 Consolidated Statements of Operations


                     Three Months Ended         Fiscal Year Ended
                          July 31,                   July 31,
                  ------------------------- --------------------------
                      2003         2002          2003         2002
                  ----------- ------------- ------------ -------------

Net sales         $51,683,000   28,525,000   174,035,000  119,357,000
Costs of sales     33,676,000   17,770,000   114,317,000   78,780,000
                  ----------- ------------- ------------ -------------
   Gross profit    18,007,000   10,755,000    59,718,000   40,577,000
                  ----------- ------------- ------------ -------------

Operating expenses:
 Selling,
  general and
  administrative    8,075,000    6,104,000    28,045,000   22,512,000
 Research and
  development       3,502,000    2,884,000    12,828,000   11,041,000
 In-process
  research and
  development               -    2,192,000             -    2,192,000
 Amortization of
  intangibles         499,000      370,000     2,039,000    1,471,000
                  ----------- ------------- ------------ -------------
   Total operating
    expenses       12,076,000   11,550,000    42,912,000   37,216,000
                  ----------- ------------- ------------ -------------

Operating income
 (loss)             5,931,000     (795,000)   16,806,000    3,361,000
Other (income)
 expense:
 Interest
  expense             744,000      696,000     2,803,000    3,061,000
 Interest
  income              (88,000)     (82,000)     (275,000)    (452,000)
 Other, net                 -      (11,000)            -      (28,000)
                  ----------- ------------- ------------ -------------

Income (loss)
 before provision
 (benefit) for
 income taxes       5,275,000   (1,398,000)   14,278,000      780,000
Provision
 (benefit) for
 income taxes       1,688,000   (1,087,000)    4,569,000     (368,000)
                  ----------- ------------- ------------ -------------
   Net income
    (loss)        $ 3,587,000     (311,000)    9,709,000    1,148,000
                  =========== ============= ============ =============

Basic income
 (loss) per share $      0.30        (0.03)         0.85         0.10
Diluted income
 (loss) per share $      0.27        (0.03)         0.80         0.10

Weighted average
 number of common
 shares outstanding-
 basic computation 11,857,000   11,239,000    11,445,000   11,192,000
Potential dilutive
 common shares      1,302,000            -       748,000      516,000
                  ----------- ------------- ------------ -------------

Weighted average
 number of common
 and common
 equivalent shares
 outstanding
 assuming
 dilution-diluted
 computation       13,159,000   11,239,000    12,193,000   11,708,000
                  =========== ============= ============ =============

                      Non-GAAP Financial Measures

    EBITDA and the other non-GAAP operating measures presented below
are used by management in assessing the Company's operating results
and ability to meet debt service requirements. These non-GAAP measures
are frequently requested by the Company's investors and analysts. The
Company believes that investors and analysts may use these non-GAAP
measures, along with other information contained in its SEC filings,
in assessing the Company's operating results and ability to generate
cash flow and service debt.


                     Three Months Ended         Fiscal Year Ended
                          July 31,                   July 31,
                  ------------------------- --------------------------
                      2003         2002          2003         2002
                  ----------- ------------- ------------ -------------

Reconciliation of Non-
 GAAP Net Income to
    GAAP Net Income
     (Loss):
----------------------

 Non-GAAP net
  income          $ 3,587,000      532,000     9,709,000    1,991,000
 In-process
  research and
  development
  charge,
  net of income
  taxes                     -   (1,468,000)            -   (1,468,000)
 Normalization of
  taxes                     -      625,000             -      625,000
                  ----------- ------------- ------------ -------------
 GAAP net income
  (loss)          $ 3,587,000     (311,000)    9,709,000    1,148,000
                  =========== ============= ============ =============

Reconciliation of
 Adjusted EBITDA to
 GAAP Net Income
 (Loss):
-------------------

 Adjusted EBITDA  $ 7,572,000    2,702,000    23,064,000   10,783,000
 Net interest
  expense            (656,000)    (603,000)   (2,528,000)  (2,581,000)
 Depreciation and
  amortization     (1,641,000)  (1,305,000)   (6,258,000)  (5,230,000)
 Income taxes      (1,688,000)   1,087,000    (4,569,000)     368,000
 In-process
  research and
  development
  charge                    -   (2,192,000)            -   (2,192,000)
                  ----------- ------------- ------------ -------------
 GAAP net income
  (loss)          $ 3,587,000     (311,000)    9,709,000    1,148,000
                  =========== ============= ============ =============

                   COMTECH TELECOMMUNICATIONS CORP.
                      Consolidated Balance Sheets

                                                      July 31
                                            --------------------------
                Assets                           2003         2002
                                                 ----         ----
Current  assets:
   Cash and cash equivalents                $ 48,617,000   15,510,000
   Restricted cash                             4,288,000            -
   Accounts receivable, less allowance for
    doubtful accounts of $912,000 in 2003
    and $795,000 in 2002                      26,696,000   27,435,000
   Inventories, net                           34,048,000   33,996,000
   Prepaid expenses and other current
    assets                                     1,742,000    1,407,000
   Deferred tax asset - current                5,699,000    2,492,000
                                             ------------ ------------
               Total current assets          121,090,000   80,840,000

Property, plant and equipment, net            12,328,000   11,889,000
Intangible assets, net                        29,079,000   30,628,000
Other assets                                     390,000      661,000
Deferred tax asset - non-current               1,363,000    2,568,000
                                             ------------ ------------
                 Total assets               $164,250,000  126,586,000
                                             ============ ============

      Liabilities and Stockholders' Equity
Current liabilities:
      Current installments of capital lease
       obligations                          $    899,000    1,062,000
      Accounts payable                        11,527,000    9,529,000
      Accrued expenses and other current
       liabilities                            13,267,000    9,686,000
      Customer advances and deposits           2,491,000    2,173,000
      Deferred service revenue                11,160,000    4,343,000
      Income taxes payable                     6,945,000    2,470,000
                                             ------------ ------------
                 Total current liabilities    46,289,000   29,263,000

Long-term debt, less current installments              -   28,683,000
Capital lease obligations, less current
 installments                                    393,000    1,294,000
Other long-term liabilities                            -       58,000
                                             ------------ ------------
                 Total liabilities            46,682,000   59,298,000

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 14,020,769 shares in 2003 and
     11,404,382 shares in 2002                 1,402,000    1,140,000
    Additional paid-in capital               107,573,000   67,503,000
    Retained earnings (accumulated deficit)    8,884,000     (825,000)
                                             ------------ ------------
                                             117,859,000   67,818,000
    Less:
        Treasury stock (140,625 shares)         (185,000)    (185,000)
        Deferred compensation                   (106,000)    (345,000)
                                             ------------ ------------
                 Total stockholders' equity  117,568,000   67,288,000
                                             ------------ ------------

      Total liabilities and stockholders'
                     equity                 $164,250,000  126,586,000
                                             ============ ============

    ECMTL

SOURCE: Comtech Telecommunications Corp.

Comtech Telecommunications Corp.
Media Contacts:
Fred Kornberg, President and Chief Executive Officer
Robert G. Rouse, Chief Financial Officer
(631) 777-8900
info@comtechtel.com

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