Comtech Telecommunications Corp. Announces Results for the First Quarter of Fiscal 2009

MELVILLE, N.Y., Dec 4, 2008 (GlobeNewswire via COMTEX News Network) -- Comtech Telecommunications Corp. (Nasdaq:CMTL) today reported its operating results for the three months ended October 31, 2008.

Net sales for the first quarter of fiscal 2009 were $191.9 million compared to $115.1 million for the first quarter of fiscal 2008, reflecting core organic growth in all three of our segments and incremental sales achieved in connection with the Company's purchase of Radyne Corporation.

GAAP net income was $22.4 million, or $0.80 per diluted share, for the three months ended October 31, 2008 compared to $14.7 million, or $0.54 per diluted share, for the three months ended October 31, 2007. GAAP net income for the three months ended October 31, 2008 has been reduced by a one-time charge of $6.2 million ($0.22 per diluted share) for the amortization of acquired in-process research and development associated with the Radyne acquisition.

Non-GAAP net income for the three months ended October 31, 2008, which excludes the amortization of stock-based compensation expense and amortization of acquired in-process research and development, was $30.2 million, or $1.07 per diluted share, as compared to Non-GAAP net income of $16.5 million, or $0.59 per diluted share, for the three months ended October 31, 2007.

In commenting on the Company's performance during the first quarter of fiscal 2009, Fred Kornberg, President and Chief Executive Officer, stated, "Although general business conditions are more difficult than usual, our first quarter results were outstanding and we are pleased with our strong performance. The execution of our integration and restructuring plans has exceeded our expectations and our ability to execute in these challenging times is a testament to our leadership positions and the successful strategies that we have implemented over the past several years. We continue to expect that fiscal 2009 will be another record year."

Selected Fiscal 2009 First Quarter Financial Metrics and Other Items


 * On August 1, 2008 (the beginning of our fiscal year 2009), and as
   more fully described in our Form 10-Q filed earlier today, we
   purchased Radyne Corporation using a portion of our existing cash
   and cash equivalents for a preliminary aggregate purchase price
   of approximately $231.7 million (including estimated transaction
   costs and payments made for outstanding share-based stock
   awards). At October 31, 2008, we had $211.5 million of
   unrestricted cash and cash equivalents on hand.

 * Bookings for the three months ended October 31, 2008 and 2007
   were $158.6 million and $235.0 million, respectively. Backlog as
   of October 31, 2008 was $219.1 million compared to $201.1 million
   as of July 31, 2008 and $248.9 million as of October 31, 2007.

 * Earnings before interest, taxes, depreciation and amortization,
   including amortization of acquired in-process research and
   development ("EBITDA"), were $50.0 million and $23.9 million for
   the three months ended October 31, 2008 and 2007, respectively.

 * Net cash provided by operating activities was $2.7 million for
   the three months ended October 31, 2008 compared to cash used in
   operating activities of $9.7 million for the three months ended
   October 31, 2007. The net increase in cash provided by operating
   activities was primarily driven by significant increases in net
   sales and profits partially offset by an increase in net working
   capital requirements during the three months ended October 31,
   2008.

 * Interest income and other was $1.3 million for the three months
   ended October 31, 2008 as compared to $4.4 million for the three
   months ended October 31, 2007. The decrease in interest income
   was primarily due to the significant reduction in our cash and
   cash equivalents as a result of our August 1, 2008 acquisition of
   Radyne and the significant year-over-year decline in interest
   rates.

 * Our effective tax rate was 38.7% and 34.5% in the first quarter
   of fiscal 2009 and 2008, respectively. Our effective tax rate for
   the three months ended October 31, 2008 reflects the fact that we
   recorded an amortization charge of $6.2 million for acquired
   in-process research and development, which is non-deductible for
   income tax purposes. In addition, we recorded discrete tax
   benefits of $0.8 million for the three months ended October 31,
   2008, principally relating to the passage of legislation that
   included the retroactive extension of the Federal research and
   experimentation credit from December 31, 2007 to December
   31, 2009. Excluding these items, our estimated effective tax rate
   for the three months ended October 31, 2008 was 35.0%.

Conference Call

The Company has scheduled an investor conference call for 8:30 a.m. (ET) on Friday, December 5, 2008. 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) 220-0874. 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 results of ongoing investigations into the Company's compliance with export regulations, risks associated with the Radyne acquisition, 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,
                                          ---------------------------
                                              2008          2007
                                          ------------- -------------

 Net sales                                $ 191,915,000   115,055,000
 Cost of sales                              104,936,000    64,577,000
                                          ------------- -------------
      Gross profit                           86,979,000    50,478,000
                                          ------------- -------------

 Expenses:
      Selling, general and administrative    28,978,000    20,399,000
      Research and development               14,125,000    11,041,000
      Amortization of acquired in-process
       research and development               6,200,000            --

      Amortization of intangibles             1,793,000       379,000
                                          ------------- -------------
                                             51,096,000    31,819,000
                                          ------------- -------------

 Operating income                            35,883,000    18,659,000

 Other expense (income):
      Interest expense                          666,000       677,000
      Interest income and other              (1,277,000)   (4,447,000)
                                          ------------- -------------

 Income before provision for income taxes    36,494,000    22,429,000
 Provision for income taxes                  14,123,000     7,735,000
                                          ------------- -------------

 Net income                               $  22,371,000    14,694,000
                                          ============= =============

 Net income per share:
      Basic                               $        0.91          0.61
                                          ============= =============
      Diluted                             $        0.80          0.54
                                          ============= =============

 Weighted average number of common shares
  outstanding - basic                        24,586,000    23,924,000
                                          ============= =============

 Weighted average number of common and
  common equivalent shares outstanding
  assuming dilution - diluted                28,537,000    28,208,000
                                          ============= =============


                   COMTECH TELECOMMUNICATIONS CORP.
                           AND SUBSIDIARIES
                 Condensed Consolidated Balance Sheets

                                           October 31,     July 31,
                                              2008           2008
                                          ------------- -------------
                    Assets                 (Unaudited)    (Audited)
 Current assets:
     Cash and cash equivalents            $ 211,472,000   410,067,000
     Accounts receivable, net               113,014,000    70,040,000
     Inventories, net                       115,116,000    85,966,000
     Prepaid expenses and other current
      assets                                  9,758,000     5,891,000
     Deferred tax asset                      15,986,000    10,026,000
                                          ------------- -------------
        Total current assets                465,346,000   581,990,000

 Property, plant and equipment, net          39,188,000    34,269,000
 Goodwill                                   147,566,000    24,363,000
 Intangibles with finite lives, net          60,971,000     7,505,000
 Deferred financing costs, net                1,221,000     1,357,000
 Other assets, net                              645,000     3,636,000
                                          ------------- -------------
        Total assets                      $ 714,937,000   653,120,000
                                          ============= =============

     Liabilities and Stockholders' Equity
 Current liabilities:
     Accounts payable                     $  33,243,000    31,423,000
     Accrued expenses and other current
      liabilities                            46,537,000    49,671,000
     Customer advances and deposits          17,542,000    15,287,000
     Current installments of other
      obligations                                73,000       108,000
     Interest payable                           525,000     1,050,000
     Income taxes payable                     7,304,000            --
                                          ------------- -------------
        Total current liabilities           105,224,000    97,539,000

 Convertible senior notes                   105,000,000   105,000,000
 Other liabilities                            2,216,000            --
 Income taxes payable                         3,404,000     1,909,000
 Deferred tax liability                      22,907,000     5,870,000
                                          ------------- -------------
        Total liabilities                   238,751,000   210,318,000

 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 24,953,198 shares and
      24,600,166 shares at October 31,
      2008 and July 31, 2008, respectively    2,495,000     2,460,000
     Additional paid-in capital             197,224,000   186,246,000
     Retained earnings                      276,652,000   254,281,000
                                          ------------- -------------
                                            476,371,000   442,987,000
      Less:
       Treasury stock (210,937 shares)         (185,000)     (185,000)
                                          ------------- -------------
        Total stockholders' equity          476,186,000   442,802,000
                                          ------------- -------------
        Total liabilities and
         stockholders' equity             $ 714,937,000   653,120,000
                                          ============= =============


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

                                               Three Months Ended
                                                   October 31,
                                          ---------------------------
                                               2008          2007
                                          ------------- -------------
 Reconciliation of Non-GAAP Net
  Income to GAAP Net Income(1):
    Non-GAAP net income                   $  30,207,000    16,472,000
    Amortization of acquired in-process
     research and development                (6,200,000)           --
    Amortization of stock-based
     compensation                            (2,418,000)   (2,719,000)
    Tax effect of stock-based compensation
     expense                                    782,000       941,000
                                          ------------- -------------
    GAAP net income                       $  22,371,000    14,694,000
                                          ============= =============

 Reconciliation of Non-GAAP Diluted
  Earnings Per Share to GAAP Diluted
  Earnings Per Share(1):
    Non-GAAP diluted earnings per share   $        1.07          0.59
    Amortization of acquired in-process
     research and development                     (0.22)           --
    Amortization of stock-based
     compensation                                 (0.08)        (0.08)
    Tax effect of stock-based compensation
     expense                                       0.03          0.03
                                          ------------- -------------
    GAAP diluted earnings per share       $        0.80          0.54
                                          ============= =============

 Reconciliation of GAAP Net Income to
  EBITDA(2):
    GAAP net income                       $  22,371,000    14,694,000
    Income taxes                             14,123,000     7,735,000
    Net interest income and other              (611,000)   (3,770,000)
    Amortization of acquired in-process
     research and development                 6,200,000            --
    Amortization of stock-based
     compensation                             2,418,000     2,719,000
    Depreciation and other amortization       5,466,000     2,491,000
                                          ------------- -------------
    EBITDA                                $  49,967,000    23,869,000
                                          ============= =============

 (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 acquired in-process research and development and
     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, 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 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

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SOURCE: Comtech Telecommunications Corp.

Comtech Telecommunications Corp.
          Media Contacts:
          Michael D. Porcelain, Senior Vice President 
           and Chief Financial Officer

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