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Comtech Telecommunications Corp. Announces Record Third Quarter Results for Fiscal 2003

June 5, 2003 at 6:00 AM EDT

MELVILLE, N.Y., Jun 5, 2003 (BUSINESS WIRE) --

Comtech Telecommunications Corp. (Nasdaq: CMTL):

    --  Sales increased by 67% from $29.3 million to $48.8 million
    --  Diluted earnings per share increased by 760% from 5 cents to
        43 cents
    --  EBITDA increased by 192% from $2.5 million to $7.2 million

Comtech Telecommunications Corp. (Nasdaq: CMTL) today reported its results for the three months ended April 30, 2003.

Net sales for the three months ended April 30, 2003 were $48.8 million compared to $29.3 million for the three months ended April 30, 2002.

Net income was $3.5 million, or 43 cents per diluted share, and $0.4 million or 5 cents per diluted share, for the three month periods ended April 30, 2003 and 2002, respectively. Earnings before interest, income taxes, depreciation and amortization (EBITDA) increased to $7.2 million for the three months ended April 30, 2003 from $2.5 million for the three months ended April 30, 2002.

Net sales for the nine months ended April 30, 2003 were $122.4 million compared to $90.8 million for the nine months ended April 30, 2002. Net income was $6.1 million, or 77 cents per diluted share, and $1.5 million, or 18 cents per diluted share, for the nine months ended April 30, 2003 and 2002, respectively. EBITDA increased to $15.5 million for the nine months ended April 30, 2003 from $8.1 million for the nine months ended April 30, 2002.

The significant increase in profitability for the three and nine months ended April 30, 2003 reflects additional gross profit on the increased sales, partially offset by higher selling, general and administrative expenses and research and development expenses.

Backlog as of April 30, 2003 was $115.9 million compared to $47.3 million last year and $87.9 million as of January 31, 2003.

Cash as of April 30, 2003 increased to $31.3 million, excluding restricted cash of $4.2 million, primarily as a result of strong cash flow from operations.

In commenting on the Company's performance during the third quarter of fiscal 2003, Fred Kornberg, President and Chief Executive Officer of Comtech Telecommunications Corp., said, "The third quarter was an outstanding one for Comtech. Sales and earnings were at record levels. We believe our performance continues to validate our strategic plan."

Mr. Kornberg added, "The third quarter of fiscal 2003 was favorably impacted by strong sales in our mobile data communications services segment due to the acceleration of the Army's rollout of our product in connection with the recent conflict in Iraq. In addition, sales of satellite earth station equipment and over-the-horizon microwave systems in our telecommunications transmission segment were also strong."

Comtech Telecommunications Corp. is an innovative player in domestic and global high-technology markets. Through its operating units, Comtech pursues opportunities in three interrelated market segments: telecommunications transmission, RF microwave amplifiers, and mobile data communications services. In each of these segments, growth has been driven by increasing demand for telecommunications infrastructure and network and messaging services. The Company's specialties include the design and manufacture of advanced products and networks used for transmission of voice, data and video using satellite, over-the-horizon microwave, terrestrial line-of-sight and other wireless communications systems. More than 300 distinct Comtech products are in service in more than 100 countries.

The Company has scheduled an investor conference call for 11:30 AM (ET) on Thursday, June 5, 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) 245-3043 (domestic), or (785) 832-0326 (international) and using the conference I.D. of "Comtech." A replay of the conference call will be available for seven days by dialing (402) 220-0863. In addition, an updated investor presentation 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:

    --  the impact of a continued domestic and foreign economic
        slow-down on the demand for our products and services,
        particularly in the telecommunications industry;
    --  risks associated with our mobile data communications business
        being in an early stage;
    --  our potential inability to keep pace with rapid technological
        changes;
    --  our backlog being subject to customer cancellation or
        modification;
    --  our sales to the U.S. government being subject to funding,
        deployment and other risks;
    --  our fixed price contracts being subject to risks;
    --  our dependence on component availability, subcontractor
        availability and performance by key suppliers;
    --  the highly competitive nature of our markets;
    --  our dependence on international sales;
    --  the adverse effect on demand for our products and services
        that would be caused by a decrease in the value of foreign
        currencies relative to the U.S. dollar;
    --  the potential entry of new competitors in all of our segments;
    --  uncertainty whether the satellite communications industry or
        infrastructure will continue to develop and the market will
        grow;
    --  uncertainty whether the Internet will continue to grow in
        international markets;
    --  the potential impact of increased competition on prices,
        profit margins and market share for the Company's products and
        services;
    --  the availability of satellite capacity on a leased basis
        needed to provide the necessary global coverage for our mobile
        data communications services;
    --  whether we can successfully implement our satellite mobile
        data communications services and achieve recurring revenues
        for such services; and
    --  whether we can successfully combine and assimilate the
        operations of acquired businesses and product lines.
                   COMTECH TELECOMMUNICATIONS CORP.
                 Consolidated Statements of Operations
                              (Unaudited)

                         Three Months Ended       Nine Months Ended
                              April 30,               April 30,
                      ----------------------- -----------------------
                          2003       2002        2003        2002
                      ----------- ----------- ----------- -----------

Net sales            $ 48,753,000  29,262,000 122,352,000  90,832,000
Cost of sales          32,262,000  19,364,000  80,641,000  61,010,000
                      ----------- ----------- ----------- -----------
    Gross profit       16,491,000   9,898,000  41,711,000  29,822,000
                      ----------- ----------- ----------- -----------

Expenses:
  Selling, general
   and administrative   7,270,000   5,531,000  19,970,000  16,408,000
  Research and
   development          3,014,000   2,797,000   9,326,000   8,157,000
  Amortization of
   intangibles            488,000     370,000   1,540,000   1,101,000
                      ----------- ----------- ----------- -----------
                       10,772,000   8,698,000  30,836,000  25,666,000
                      ----------- ----------- ----------- -----------

Operating income        5,719,000   1,200,000  10,875,000   4,156,000
Other expense (income):
 Interest expense         682,000     692,000   2,059,000   2,348,000
 Interest income          (66,000)    (90,000)   (187,000)   (370,000)
                      ----------- ----------- ----------- -----------

Income before
 provision for income
 taxes                  5,103,000     598,000   9,003,000   2,178,000
Provision for income
 taxes                  1,633,000     189,000   2,881,000     719,000
                      ----------- ----------- ----------- -----------
    Net income       $  3,470,000     409,000   6,122,000   1,459,000
                      =========== =========== =========== ===========

Net income per share:
 Basic               $       0.46        0.06        0.81        0.20
                      =========== =========== =========== ===========
 Diluted             $       0.43        0.05        0.77        0.18
                      =========== =========== =========== ===========

Weighted average
 number of common
 shares outstanding -
 basic computation      7,567,000   7,474,000   7,538,000   7,450,000
Potential dilutive
 common shares            474,000     380,000     375,000     459,000
                      ----------- ----------- ----------- -----------
Weighted average
 number of common and
 common equivalent
 shares outstanding
 assuming dilution -
 diluted computation    8,041,000   7,854,000   7,913,000   7,909,000
                      =========== =========== =========== ===========

EBITDA  (1)          $  7,228,000   2,479,000  15,492,000   8,081,000
                      =========== =========== =========== ===========

Reconciliation of net
 income to EBITDA:
 Net income          $  3,470,000     409,000   6,122,000   1,459,000
 Income taxes           1,633,000     189,000   2,881,000     719,000
 Net interest expense     616,000     602,000   1,872,000   1,978,000
 Depreciation and
  amortization          1,509,000   1,279,000   4,617,000   3,925,000
                      ----------- ----------- ----------- -----------
 EBITDA              $  7,228,000   2,479,000  15,492,000   8,081,000
                      =========== =========== =========== ===========

(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,
                                                2003          2002
                                            ------------ ------------
            Assets
Current assets:
 Cash and cash equivalents                  $ 31,297,000   15,510,000
 Restricted cash                               4,247,000            -
 Accounts receivable, net                     31,675,000   27,435,000
 Inventories, net                             32,236,000   33,996,000
 Prepaid expenses and other current assets     1,879,000    1,407,000
 Deferred tax asset - current                  2,492,000    2,492,000
                                            ------------ ------------
            Total current assets             103,826,000   80,840,000

 Property, plant and equipment, net           12,121,000   11,889,000
 Goodwill and other intangibles with
  indefinite lives                            17,726,000   17,726,000
 Other intangibles with definite lives, net   11,852,000   12,902,000
 Other assets, net                               549,000      661,000
 Deferred tax asset - non-current              2,568,000    2,568,000
                                            ------------ ------------
            Total assets                    $148,642,000  126,586,000
                                            ============ ============

            Liabilities and Stockholders'
             Equity
Current liabilities:
 Current installments of long-term debt     $  1,983,000            -
 Current installments of capital lease
  obligations                                  1,011,000    1,062,000
 Accounts payable                             11,726,000    9,529,000
 Accrued expenses and other current
  liabilities                                 11,754,000    9,686,000
 Customer advances and deposits                6,783,000    2,173,000
 Deferred service revenue                      8,675,000    4,343,000
 Income taxes payable                          5,431,000    2,470,000
                                            ------------ ------------
            Total current liabilities         47,363,000   29,263,000

 Long-term debt, less current installments    26,700,000   28,683,000
 Capital lease obligations, less current
  installments                                   543,000    1,294,000
 Other long-term liabilities                      12,000       58,000
                                            ------------ ------------
             Total liabilities                74,618,000   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
   7,674,345 shares at April 30, 2003 and
   7,602,921 shares at July 31, 2002             767,000      760,000
  Additional paid-in capital                  68,328,000   67,883,000
  Retained earnings (accumulated deficit)      5,297,000     (825,000)
                                            ------------ ------------
                                              74,392,000   67,818,000

  Less:
    Treasury stock (93,750 shares)              (185,000)    (185,000)
    Deferred compensation                       (183,000)    (345,000)
                                            ------------ ------------
             Total stockholders' equity       74,024,000   67,288,000
                                            ------------ ------------
             Total liabilities and
              stockholders' equity          $148,642,000  126,586,000
                                            ============ ============
Commitments and contingencies

ECMTL

SOURCE: Comtech Telecommunications Corp.

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