Exhibit 99.1
[GRAPHIC OMITTED]
GSI GLOBECOMM SYSTEMS
GSI GLOBECOMM SYSTEMS ANNOUNCES RECORD REVENUES FOR FISCAL 2006
SECOND QUARTER AND SIX-MONTH FINANCIAL RESULTS
o Diluted Earnings Per Share of $0.06 in the Second Quarter of Fiscal 2006
as Compared to Diluted Earnings Per Share of $0.03
in the Second Quarter of Fiscal 2005,
Excluding a $0.04 Non-Recurring Gain
o Network Services Revenues Increase 61% from the Prior Year's Quarter
o Seventh Consecutive Quarter of Profitability
HAUPPAUGE, N.Y.--(BUSINESS WIRE)--February 9, 2006--Globecomm Systems Inc.
(NASDAQ: GCOM-News), a global provider of end-to-end satellite-based
communications solutions, today announced financial results for the fiscal 2006
second quarter and six-months ended December 31, 2005.
FISCAL 2006 SECOND QUARTER RESULTS
Revenues for the Company's fiscal 2006 second quarter increased 2.3% to a record
$29.9 million, compared to $29.2 million in the same period last year. Revenues
by the Company's network services division increased 61.1% to $7.3 million,
driven primarily by continued growth in voice over Internet protocol minutes,
coupled with the addition of certain large customers over the same period last
year. Revenues for ground segment systems, network and enterprise solutions
decreased by 8.5% to $22.6 million, primarily due to the timing of shipments and
milestones relating to large projects.
Net income for the Company's fiscal 2006 second quarter was $0.9 million, or
$0.06 per diluted share, compared to net income of $1.0 million, or $0.07 per
diluted share, in the second quarter of fiscal 2005 on the basis of generally
accepted accounting principles. However, the Company's net income for the second
quarter of fiscal 2005 included a $0.5 million non-recurring gain, or $0.04 per
diluted share, which is reflected as a reduction in costs from ground segment
systems, networks and enterprise solutions. Excluding this non-recurring gain,
net income in the second quarter of fiscal 2005 was $0.5 million, or $0.03 per
diluted share.
FISCAL 2006 SIX-MONTH RESULTS
Revenues for the Company's fiscal 2006 six-months ended December 31, 2005
increased 8.8% to a record $59.5 million, compared to $54.7 million in the same
period last year. The increase in revenues was primarily driven by a 64.9%
increase in revenues by the network service division due to a significant
increase in voice over Internet Protocol minutes, coupled with the addition of
certain large customers over the same period last year. Revenue for ground
segment systems, network and enterprise solutions remained relatively consistent
at $45.6 million as compared to $46.3 million in the same period last year.
Net income for the Company's first six-months of fiscal 2006 was $1.8 million,
or $0.11 per diluted share, compared to net income of $3.2 million, or $0.21 per
diluted share, in the same period last year on the basis of generally accepted
accounting principles. However, the Company's net income for the first
six-months of fiscal 2005 included a non-recurring gain of $2.4 million relating
to a recovery from a client, which was reflected as a $1.5
million reduction in general and administrative expense and a $0.9 million
reduction in costs from ground segment systems, networks and enterprise
solutions. Excluding this non-recurring gain, net income for the first
six-months of fiscal 2005 was $0.8 million, or $0.05 per diluted share.
MANAGEMENT'S REVIEW OF RESULTS
David Hershberg, Chairman and Chief Executive Officer of Globecomm said: "Growth
in the network services division has been the highlight of the first six-months
of fiscal 2006, helping fuel the Company to its seventh consecutive profitable
quarter. Globecomm's business model is predicated around building a total
communication solution for our customers. This provides the Company with a
recurring revenue stream once we complete the required network infrastructure.
The Company is gaining traction in providing voice over Internet Protocol
minutes on multiple networks Globecomm has designed and installed. Globecomm
recently announced another large contract with a major government prime, which
will also have a service component once the final contract negotiations are
complete. This trend is favorable to Globecomm's success over the long-term as
service contracts tend to be multi-year in nature. In addition, during the
second quarter, Globecomm received an order for eight lightweight, rapid deploy
flyaway terminals for secure broadband communications from a major United States
Government customer. This is a very exciting contract as the Company has
invested significant time and resources into developing and marketing this
product and we believe it is gaining market acceptance as demonstrated by this
order. We have identified multiple opportunities for this product and intend to
vigorously pursue them."
Mr. Hershberg continued, "Globecomm's ability to generate record revenues, while
maintaining a strong balance sheet is a testimony to the Company's focus,
ability to grow the business, develop new products and penetrate new markets. We
are proud of this and look forward to continued profitability for the
foreseeable future."
MANAGEMENT'S CURRENT EXPECTATIONS FOR THE FISCAL YEAR ENDING JUNE 30, 2006
Globecomm continues to expect consolidated revenues for fiscal year 2006 to be
in excess of $125 million, or a 14% increase over fiscal 2005, and diluted
earnings per share to be in excess of $0.25 per share, representing a 79%
increase over fiscal 2005 diluted earnings per share, excluding net
non-recurring gains.
These expectations reflect the Company's results for the six-months ended
December 31, 2005 and management's current view of the next six months. Actual
results for fiscal year 2006 will remain susceptible to factors in certain areas
of the world. These may include, but are not limited to, major disruptions in
the marketplaces due to political unrest, local violence, global economic
recession and changes in United States Government foreign policy. Results will
also remain susceptible to possible cost overruns on projects, unfavorable
product mix and timing of or failure to book and recognize revenue on certain
projects included in the projections. The Company further anticipates quarterly
income statement fluctuations resulting from the nature of the business and the
size of certain contracts in backlog.
About Globecomm Systems
Globecomm Systems Inc. provides end-to-end value-added satellite-based
communication solutions by leveraging its core satellite ground segment systems
and network capabilities, with satellite communication services capabilities.
The solutions Globecomm offers include general contracted complex communications
networks, militarized commercial off the shelf products and services and voice
over Internet Protocol (VoIP), video broadcast, business recovery,
satellite-based terrestrial restoral, content delivery and other networks on a
global basis. Globecomm's customers include communications service providers,
commercial enterprises, Internet Service Providers, content providers and
government entities.
Based in Hauppauge, New York, Globecomm Systems also maintains offices in
Washington D.C., Hong Kong, the United Kingdom and the United Arab Emirates.
This press release contains projections or other forward-looking statements
regarding future events or the future financial performance of Globecomm Systems
Inc. These statements reflect the current beliefs and expectations of the
Company. Some matters addressed in this press release, involve a number of risks
and uncertainties. Among the factors that could cause actual results to differ
materially from these statements include risks and other factors detailed, from
time to time, in the Company's reports filed with the Securities and Exchange
Commission, including, but not limited to, the Company's Annual Report on Form
10-K for the year ended June 30, 2005, its Quarterly Reports on Form 10-Q, and
its Current Reports on Form 8-K, which the Company urges investors to consider.
These risks and other factors include, but are not limited to general political
and economic instability in the United
States and abroad, including the hostilities in Iraq and Afghanistan, reliance
on a small number of contracts for a large portion of the Company's revenue,
increasing reliance on the government marketplace and the Company's ability to
penetrate emerging markets. The Company undertakes no obligation to publicly
release the revisions to such forward-looking statements that may be made to
reflect events or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.
CONTACT: Globecomm Systems Inc.
David Hershberg, 631-231-9800
or
Investor Relations:
Matthew Byron, 631-457-1301
or
Fax: 631-231-1557
info@globecommsystems.com
- -------------------------
www.globecommsystems.com.
- ------------------------
SOURCE: Globecomm Systems Inc.
GLOBECOMM SYSTEMS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2005 2004 2005 2004
------------------------------ ---------------------------
Revenues from ground segment systems,
networks and enterprise solutions $ 22,604 $ 24,693 $ 45,623 $ 46,279
Revenues from data communications services 7,308 4,535 13,865 8,408
------------------------------ ---------------------------
Total revenues 29,912 29,228 59,488 54,687
------------------------------ ---------------------------
Costs and operating expenses:
Costs from ground segment systems,
networks and enterprise solutions 18,701 21,013 38,226 39,075
Costs from data communications 6,143 3,714 11,711 6,908
services
Selling and marketing 1,615 1,383 3,129 2,552
Research and development 161 174 270 472
General and administrative 2,552 2,074 4,808 2,702
------------------------------ ---------------------------
Total costs and operating expenses 29,172 28,358 58,144 51,709
------------------------------ ---------------------------
Income from operations 740 870 1,344 2,978
Interest income 227 92 456 165
Gain on sale of investment -- 40 -- 40
------------------------------ ---------------------------
Income before income taxes 967 1,002 1,800 3,183
Provision for income taxes 30 -- 50 --
------------------------------ ---------------------------
Net income $ 937 $ 1,002 $ 1,750 $ 3,183
============================== ===========================
Basic net income per common share $ 0.06 $ 0.07 $ 0.12 $ 0.22
============================== ===========================
Diluted net income per common share $ 0.06 $ 0.07 $ 0.11 $ 0.21
============================== ===========================
Weighted-average shares used in the
calculation of basic net income
per common share 15,005 14,396 14,860 14,289
============================== ===========================
Weighted-average shares used in the
calculation of diluted net income
per common share 15,606 14,975 15,477 14,842
============================== ===========================
GLOBECOMM SYSTEMS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
DECEMBER 31, JUNE 30,
2005 2005
--------------------------
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents $ 25,310 $ 25,609
Accounts receivable, net 26,771 22,700
Inventories 17,153 12,886
Prepaid expenses and other current assets 981 858
Deferred income taxes 38 38
--------------------------
Total current assets 70,253 62,091
Fixed assets, net 15,506 16,050
Goodwill 7,204 7,204
Other assets 1,017 1,033
--------------------------
Total assets $ 93,980 $ 86,378
==========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 29,741 $ 25,571
Deferred liabilities, less current portion 512 670
Total stockholders' equity 63,727 60,137
--------------------------
Total liabilities and stockholders' equity $ 93,980 $ 86,378
==========================
