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Comtech Telecommunications Corp. Announces Results for Fiscal 2009 Fourth Quarter and Full Year

September 23, 2009 at 4:33 PM EDT

MELVILLE, N.Y., Sep 23, 2009 (GlobeNewswire via COMTEX News Network) -- Comtech Telecommunications Corp. (Nasdaq:CMTL) today reported its operating results for the fourth quarter and fiscal year ended July 31, 2009.

Fourth Quarter 2009

Net sales for the fourth quarter of fiscal 2009 were $122.0 million compared to $126.5 million for the fourth quarter of fiscal 2008. Net sales significantly benefited from incremental sales associated with our acquisition of Radyne which positively impacted both our telecommunications transmission and RF microwave amplifiers segments. As expected, this increase was offset by a shift of revenue in our mobile data communications segment from fiscal 2009 to fiscal 2010. This shift resulted from the receipt, as previously announced in January 2009, of the single largest order in our Company's history that, based on the U.S. Army's request, is expected to substantially ship in fiscal 2010.

GAAP net income was $6.2 million, or $0.21 per diluted share, for the fourth quarter of fiscal 2009 compared to $17.0 million, or $0.61 per diluted share, for the fourth quarter of fiscal 2008. Our GAAP diluted earnings per share of $0.21 includes a pre-tax charge of approximately $2.0 million related to previously announced cost reduction actions related to two small product lines that we initiated during the fourth quarter of fiscal 2009. Non-GAAP net income for the fourth quarter of fiscal 2009, which includes the pre-tax charge of $2.0 million but excludes the amortization of stock-based compensation expense, was $7.9 million, or $0.26 per diluted share, as compared to Non-GAAP net income of $18.8 million, or $0.67 per diluted share, for the fourth quarter of fiscal 2008.

Fiscal 2009

Net sales for fiscal 2009 were $586.4 million compared to $531.6 million for fiscal 2008. The year-over-year increase in net sales is primarily attributable to our acquisition of Radyne which significantly benefited both our telecommunications transmission and RF microwave amplifiers segments. As noted above, sales in our mobile data communications segment decreased due to a shift of revenue from fiscal 2009 to fiscal 2010.

GAAP net income was $49.6 million, or $1.73 per diluted share, for fiscal 2009 compared to $76.4 million, or $2.76 per diluted share, for fiscal 2008. GAAP net income for fiscal 2009 includes pre-tax charges of $6.2 million related to the immediate amortization of acquired in-process research and development associated with the Radyne acquisition and $2.0 million related to the above mentioned cost reduction actions. Non-GAAP net income for fiscal 2009, which includes the pre-tax charge of $2.0 million but excludes the amortization of stock-based compensation expense and amortization of acquired in-process research and development, was $62.1 million, or $2.14 per diluted share, as compared to Non-GAAP net income of $83.4 million, or $2.98 per diluted share, for fiscal 2008.

In commenting on the Company's performance, Fred Kornberg, President and Chief Executive Officer, stated, "We believe that the fourth quarter may represent a bottoming out and that cost reductions implemented in fiscal 2009 will continue to benefit us as we focus on important commercial and U.S. government opportunities that we see ahead."

Mr. Kornberg added, "We entered fiscal 2010 with almost $550.0 million in backlog and with the confident expectation that fiscal 2010 will be a year of record revenues and strong EPS growth. Additionally, with over $485.5 million in cash, we have the clear capacity to execute when our ongoing efforts identify appropriate acquisitions that enhance our organic growth or further diversify our business. In short, we are quite pleased with our positioning both in terms of where we are and what lies ahead of us."

Selected Fiscal 2009 Fourth Quarter Financial Metrics and Other Items


 * Backlog as of July 31, 2009 was $549.8 million compared to $201.1
   million as of July 31, 2008. Bookings for the three months ended
   July 31, 2009 were $80.8 million, and for the twelve months ended
   July 31, 2009 were a record of $883.8 million compared to $141.7
   million and $603.7 million for the fourth quarter and fiscal year
   ended July 31, 2008, respectively.

 * Earnings before interest, taxes, depreciation and amortization,
   including amortization of acquired in-process research and
   development ("EBITDA"), were $18.8 million and $114.3 million for
   the fourth quarter and fiscal year ended July 31, 2009,
   respectively, versus $30.6 million and $128.3 million for the
   fourth quarter and fiscal year ended July 31, 2008, respectively.

 * In the fourth quarter of fiscal 2009, operating income in our
   telecommunications transmission segment was reduced by
   approximately $2.0 million, including a charge to cost of sales
   of $1.2 million related to the write-down of inventory to net
   realizable value, associated with our decision to no longer offer
   video encoder and decoder products or market fiberglass antennas
   to commercial broadcast customers.

 * At July 31, 2009, the Company had $485.5 million of cash and cash
   equivalents. Net cash provided by operating activities was $88.5
   million for the twelve months ended July 31, 2009 compared to
   $77.8 million for the twelve months ended July 31, 2008. Included
   in cash and cash equivalents are the net proceeds related to the
   issuance, on May 8, 2009, of $200.0 million of our 3.0%
   convertible senior notes.

 * As discussed further in our Form 10-K that was filed earlier
   today, although our 2.0% convertible senior notes are no longer
   outstanding, pursuant to our adoption, on August 1, 2009, of FSP
   Accounting Principles Board 14-1, "Accounting for Convertible
   Debt Instruments That May Be Settled in Cash upon Conversion
   (Including Partial Cash Settlement)," we are required to adjust
   and retroactively present certain historical consolidated
   financial data and certain consolidated financial statements for
   fiscal 2005 through fiscal 2009. This historical information will
   be retroactively presented in a Form 8-K to be filed with the SEC
   during the first quarter of fiscal 2010. Early adoption was
   prohibited. The adoption of this new accounting principle has no
   effect on our 3.0% convertible senior notes because holders of
   the Company's 3.0% convertible senior notes can only receive
   stock upon conversion.

Conference Call

The Company has scheduled an investor conference call for 8:30 AM (ET) on Thursday, September 24, 2009. 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) 220-2553. 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 our 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 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 nature and 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 results of ongoing investigations into the Company's compliance with export regulations, risks associated with the Radyne acquisition, risks associated with the Department of Defense subpoenas, risks associated with our other legal matters, risks associated with our recent MTS orders, risks associated with our MTS and BFT contracts, 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)                (Audited)
                         Three months             Twelve months
                        ended July 31,            ended July 31,
                  -------------------------- -------------------------
                     2009          2008         2009         2008
                  ------------- ------------ ------------ ------------

 Net sales        $122,026,000  126,474,000  586,372,000  531,627,000
 Cost of sales      75,087,000   68,869,000  345,472,000  296,687,000
                  ------------- ------------ ------------ ------------
   Gross profit     46,939,000   57,605,000  240,900,000  234,940,000
                  ------------- ------------ ------------ ------------

 Expenses:
   Selling,
    general and
    admini-
    strative        22,162,000   22,232,000  100,171,000   85,967,000
   Research and
    development     11,953,000   10,039,000   50,010,000   40,472,000
   Amortization
    of acquired
    in-process
    research
    and
    development             --           --    6,200,000           --
   Amortization
    of
    intangibles      2,198,000      464,000    7,592,000    1,710,000
                  ------------- ------------ ------------ ------------
                    36,313,000   32,735,000  163,973,000  128,149,000
                  ------------- ------------ ------------ ------------

 Operating
  income            10,626,000   24,870,000   76,927,000  106,791,000

 Other expenses
  (income):
   Interest
    expense          1,749,000      668,000    3,167,000    2,683,000
   Interest
    income and
    other             (431,000)  (2,443,000)  (2,738,000) (14,065,000)
                  ------------- ------------ ------------ ------------

 Income before
  provision for
  income taxes       9,308,000   26,645,000   76,498,000  118,173,000
 Provision for
  income taxes       3,130,000    9,680,000   26,940,000   41,740,000
                  ------------- ------------ ------------ ------------

 Net income       $  6,178,000   16,965,000   49,558,000   76,433,000
                  ============= ============ ============ ============

 Net income
  per share:
   Basic          $       0.22         0.70         1.88         3.17
                  ============= ============ ============ ============
   Diluted        $       0.21         0.61         1.73         2.76
                  ============= ============ ============ ============

 Weighted
  average
  number of
  common shares
  outstanding -
  basic             28,160,000   24,306,000   26,321,000   24,138,000
                  ============= ============ ============ ============

 Weighted
  average
  number of
  common and
  common
  equivalent
  shares
  outstanding -
  diluted           33,549,000   28,381,000   29,793,000   28,278,000
                  ============= ============ ============ ============


                   COMTECH TELECOMMUNICATIONS CORP.
                           AND SUBSIDIARIES
                 Condensed Consolidated Balance Sheets

                                            (Audited)     (Audited)
                                             July 31,      July 31,
                                               2009          2008
                                           -------------  ------------
                Assets

 Current assets:
   Cash and cash equivalents               $485,450,000   410,067,000
   Accounts receivable, net                  79,477,000    70,040,000
   Inventories, net                          95,597,000    85,966,000
   Prepaid expenses and other
    current assets                           13,398,000     5,891,000
   Deferred tax asset                        15,129,000    10,026,000
                                           -------------  ------------
     Total current assets                   689,051,000   581,990,000

 Property, plant and equipment, net          38,486,000    34,269,000
 Goodwill                                   149,253,000    24,363,000
 Intangibles with finite lives, net          55,272,000     7,505,000
 Deferred financing costs, net                6,053,000     1,357,000
 Other assets, net                              556,000     3,636,000
                                           -------------  ------------
     Total assets                          $938,671,000   653,120,000
                                           =============  ============

   Liabilities and Stockholders' Equity

 Current liabilities:
   Accounts payable                        $ 19,233,000    31,423,000
   Accrued expenses and other
    current liabilities                      51,741,000    49,671,000
   Customer advances and deposits            19,571,000    15,287,000
   Current installments of
    other obligations                                --       108,000
   Interest payable                           1,418,000     1,050,000
   Income taxes payable                         563,000            --
                                           -------------  ------------
     Total current liabilities               92,526,000    97,539,000

 Convertible senior notes                   200,000,000   105,000,000
 Other liabilities                            2,283,000            --
 Income taxes payable                         4,267,000     1,909,000
 Deferred tax liability                      10,466,000     5,870,000
                                           -------------  ------------
     Total liabilities                      309,542,000   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 28,390,855 shares and
    24,600,166 shares at July 31, 2009 and
    July 31, 2008, respectively               2,839,000     2,460,000
   Additional paid-in capital               322,636,000   186,246,000
   Retained earnings                        303,839,000   254,281,000
                                           -------------  ------------
                                            629,314,000   442,987,000
   Less:
     Treasury stock (210,937 shares)           (185,000)     (185,000)
                                           -------------  ------------
       Total stockholders' equity           629,129,000   442,802,000
                                           -------------  ------------
       Total liabilities and
        stockholders' equity               $938,671,000   653,120,000
                                           =============  ============


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

                          Three Months             Twelve months
                         Ended July 31,            Ended July 31,
                   ------------------------- -------------------------
                      2009          2008         2009         2008
                   ------------ ------------ ------------ ------------
 Reconciliation
  of Non-GAAP
  Net Income to
  GAAP Net
  Income(1):
   Non-GAAP net
    income         $ 7,871,000   18,798,000   62,133,000   83,425,000
   Amortization
    of acquired
    in-process
    research and
    development             --           --   (6,200,000)          --
   Amortization
    of stock-
    based
    compensation    (2,527,000)  (2,790,000)  (9,576,000) (10,640,000)
   Tax effect of
    stock-based
    compensation
    expense            834,000      957,000    3,201,000    3,648,000
                   ------------ ------------ ------------ ------------
   GAAP net
    income         $ 6,178,000   16,965,000   49,558,000   76,433,000
                   ============ ============ ============ ============

 Reconciliation
  of Non-GAAP
  Diluted
  Earnings Per
  Share to
  GAAP Diluted
   Earnings Per
    Share(1):
   Non-GAAP
    diluted
    earnings
    per share      $      0.26         0.67         2.14         2.98
   Amortization
    of acquired
    in-process
    research and
    development             --           --        (0.21)          --
   Amortization
    of stock-
    based
    compensation         (0.07)       (0.09)       (0.31)       (0.34)
   Tax effect of
    stock-based
    compensation
    expense               0.02         0.03         0.11         0.12
                   ------------ ------------ ------------ ------------
   GAAP diluted
    earnings
    per share      $      0.21         0.61         1.73         2.76
                   ============ ============ ============ ============

 Reconciliation
  of GAAP Net
  Income to
  EBITDA(2):
   GAAP net
    income         $ 6,178,000   16,965,000   49,558,000   76,433,000
   Income taxes      3,130,000    9,680,000   26,940,000   41,740,000
   Net interest
    expense
    (income)
    and other        1,318,000   (1,775,000)     429,000  (11,382,000)
   Amortization
    of acquired
    in-process
    research and
    development             --           --    6,200,000           --
   Amortization
    of stock-
    based
    compensation     2,527,000    2,790,000    9,576,000   10,640,000
   Depreciation
    and other
    amortization     5,685,000    2,922,000   21,615,000   10,906,000
                   ------------ ------------ ------------ ------------
   EBITDA          $18,838,000   30,582,000  114,318,000  128,337,000
                   ============ ============ ============ ============


 (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

This news release was distributed by GlobeNewswire, www.globenewswire.com

SOURCE: Comtech Telecommunications Corp.

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

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