Exhibit 99.1 Media Contacts: COMTECH TELECOMMUNICATIONS CORP. ANNOUNCES Melville, New York - September 20, 2006- Comtech Telecommunications Corp. (NASDAQ: CMTL) today reported record results for the fiscal year ended July 31, 2006. Net sales, operating profit, EBITDA, net income, diluted earnings per share and ending backlog for fiscal 2006 were at all-time highs. Net sales for the fourth quarter of fiscal 2006 were $100.2 million compared to $98.3 million in the fourth quarter of fiscal 2005. Non-GAAP net income, which excludes stock option expense, was $12.9 million, or $0.48 per diluted share, for the three months ended July 31, 2006. GAAP net income was $11.8 million, or $0.45 per diluted share, for the three months ended July 31, 2006 compared to $11.0 million, or $0.42 per diluted share, for the three months ended July 31, 2005. No stock option expense was recorded for GAAP purposes prior to fiscal 2006. Fiscal 2006 fourth quarter sales and gross profit were favorably impacted by $4.1 milion and $3.8 million, respectively, due to a gross profit adjustment to the MTS contract in our mobile data communications segment. The adjustment, as well as other adjustments affecting the full year results in both periods, is more fully described in our Form 10-K filed today. Net sales for fiscal 2006 were $391.5 million compared to $307.9 million in fiscal 2005. Non-GAAP net income, excluding stock option expensing, was $49.6 million, or $1.86 per diluted share, for fiscal 2006. GAAP net income was $45.3 million, or $1.72 per diluted share, for fiscal 2006 compared to $36.7 million, or $1.42 per diluted share, for fiscal 2005. GAAP net income for the fourth quarter and fiscal year ended July 31, 2006 includes $1.5 million and $5.7 million, respectively, of pre-tax compensation expense related to the adoption of Statement of Financial Accounting Standards No. 123(R) which requires the expensing of stock-based awards. Earnings before interest, taxes, depreciation and amortization (EBITDA) were $20.3 million and $18.2 million for the three months ended July 31, 2006 and 2005, respectively. EBITDA was $78.3 million for fiscal 2006 versus $59.7 million for fiscal 2005. Cash flows from operating activities were $44.3 million for fiscal 2006 compared to $56.1 million in fiscal 2005. Backlog as of July 31, 2006 was $186.0 million compared to $153.3 million as of July 31, 2005. Bookings for the quarter and fiscal year ended July 31, 2006 were $147.9 million and $424.2 million, respectively. In commenting on the Company’s performance during the fourth quarter of fiscal 2006, Fred Kornberg, President and Chief Executive Officer of Comtech Telecommunications Corp., said, “Our strong fourth quarter results solidified fiscal 2006 as our most successful year ever.” Mr. Kornberg added, “Our businesses continue to perform well and we believe fiscal 2007 is well-positioned to be another record year for Comtech.” - more - |
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. The Company has scheduled an investor conference call for 8:30 AM (ET) on Thursday, September 21, 2006.Investors and the public are invited to access a live webcast of the conference call from the news section of the Comtech web site atwww.comtechtel.com.Alternatively, investors can access the conference call by dialing(877) 707-9628(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) 220-6083. In addition, an updated investor presentation, including earnings guidance, will be available on our web site shortly after the 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 are difficult to forecast and subject to volatility; |
• | Our ability to maintain the level of our U.S. government business; |
• | If we are unable to comply with U.S. government regulations, we could be disqualified as a supplier to the U.S. government; |
• | Our dependence on international sales and international sales agents; |
• | Our ability to keep pace with technological changes; |
• | The impact of a domestic or 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 is subject to unique risks; |
• | Our backlog is subject to cancellation or modification; |
• | Our dependence on component availability, subcontractor availability and their performance and key suppliers, including the core manufacturing expertise of our high-volume technology manufacturing center located in Tempe, Arizona; |
• | Contract cost growth on our fixed price contracts and other contracts may not be recoverable; |
• | The impact of adverse regulatory changes on our ability to sell products, systems and services; |
• | Acquisitions and strategic investments may divert our resources and management attention; |
• | We have investments in recorded goodwill as a result of prior acquisitions, which could become impaired; |
• | The impact of losing key technical or management personnel; |
• | We may not be able to continuously manage growth in our businesses; |
• | The highly competitive nature of our markets; |
• | Our ability to protect our proprietary technology; |
• | Our operations being subject to environmental regulation; |
• | Our fiscal 2004 Federal income tax return is currently under audit; |
• | The impact of recently enacted and proposed changes in securities laws and regulations on our costs; |
• | The impact of ongoing internal control provisions of Section 404 of the Sarbanes-Oxley Act of 2002; |
• | The impact of recent changes to financial accounting standards related to stock option expensing on our reported results; |
• | The impact of prevailing economic and political conditions on our businesses; |
• | The impact of terrorist attacks and threats, and government responses thereto, and threats of war, on our businesses; |
• | The inability to effectuate a change in control of the Company due to provisions in its certificate of incorporation and by-laws, stockholders’ rights plan and Delaware law; |
• | Our inability to satisfy our debt obligations, including the convertible senior notes; |
• | Our stock price is volatile; and |
• | Our current intention not to declare or pay any cash dividends. |
COMTECH TELECOMMUNICATIONS CORP. |
Three Months Ended July 31, | Fiscal Year Ended July 31, | |||||||||||||
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2006 | 2005 | 2006 | 2005 | |||||||||||
Net sales | $ | 100,206,000 | 98,293,000 | 391,511,000 | 307,890,000 | |||||||||
Cost of sales | 56,413,000 | 59,816,000 | 232,210,000 | 180,524,000 | ||||||||||
Gross profit | 43,793,000 | 38,477,000 | 159,301,000 | 127,366,000 | ||||||||||
Expenses: | ||||||||||||||
Selling, general and administrative | 19,801,000 | 15,707,000 | 67,071,000 | 51,819,000 | ||||||||||
Research and development | 6,942,000 | 5,980,000 | 25,834,000 | 21,155,000 | ||||||||||
Amortization of intangibles | 669,000 | 594,000 | 2,465,000 | 2,328,000 | ||||||||||
27,412,000 | 22,281,000 | 95,370,000 | 75,302,000 | |||||||||||
Operating income | 16,381,000 | 16,196,000 | 63,931,000 | 52,064,000 | ||||||||||
Other expenses (income): | ||||||||||||||
Interest expense | 670,000 | 674,000 | 2,687,000 | 2,679,000 | ||||||||||
Interest income | (2,839,000 | ) | (1,333,000 | ) | (9,243,000 | ) | (4,072,000 | ) | ||||||
Income before provision for income taxes | 18,550,000 | 16,855,000 | 70,487,000 | 53,457,000 | ||||||||||
Provision for income taxes | 6,771,000 | 5,830,000 | 25,218,000 | 16,802,000 | ||||||||||
Net income | $ | 11,779,000 | 11,025,000 | 45,269,000 | 36,655,000 | |||||||||
Net income per share: | ||||||||||||||
Basic | $ | 0.52 | 0.50 | 1.99 | 1.69 | |||||||||
Diluted | $ | 0.45 | 0.42 | 1.72 | 1.42 | |||||||||
Weighted average number of common shares | ||||||||||||||
outstanding - basic | 22,830,000 | 22,176,000 | 22,753,000 | 21,673,000 | ||||||||||
Weighted average number of common and | ||||||||||||||
common equivalent shares outstanding | ||||||||||||||
assuming dilution - diluted | 27,289,000 | 27,449,000 | 27,324,000 | 27,064,000 | ||||||||||
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Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures |
Three Months Ended July 31, | Fiscal Year Ended July 31, | |||||||||||||
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2006 | 2005 | 2006 | 2005 | |||||||||||
Reconciliation of Non-GAAP Net Income, | ||||||||||||||
Excluding Stock-based Compensation | ||||||||||||||
Expense, To GAAP Net Income(1): | ||||||||||||||
Non-GAAP net income, excluding stock- | ||||||||||||||
based compensation expense | $ | 12,912,000 | 11,025,000 | 49,638,000 | 36,655,000 | |||||||||
Pre-tax stock-based compensation expense | (1,469,000 | ) | — | (5,681,000 | ) | — | ||||||||
Tax effect of stock-based compensation | ||||||||||||||
expense | 336,000 | — | 1,312,000 | — | ||||||||||
GAAP net income | $ | 11,779,000 | 11,025,000 | 45,269,000 | 36,655,000 | |||||||||
Reconciliation of Non-GAAP Diluted Earnings | ||||||||||||||
Per Share, Excluding Stock-based | ||||||||||||||
Compensation Expense, To GAAP Diluted | ||||||||||||||
Earnings Per Share(1): | ||||||||||||||
Non-GAAP diluted earnings per share, | ||||||||||||||
excluding stock-based compensation | $ | 0.48 | 0.42 | 1.86 | 1.42 | |||||||||
Pre-tax stock-based compensation expense | (0.04 | ) | — | (0.19 | ) | — | ||||||||
Tax effect of stock-based compensation | ||||||||||||||
expense | 0.01 | — | 0.05 | — | ||||||||||
GAAP diluted earnings per share | $ | 0.45 | 0.42 | 1.72 | 1.42 | |||||||||
Reconciliation of GAAP Net Income to | ||||||||||||||
EBITDA(2): | ||||||||||||||
GAAP net income | $ | 11,779,000 | 11,025,000 | 45,269,000 | 36,655,000 | |||||||||
Income taxes | 6,771,000 | 5,830,000 | 25,218,000 | 16,802,000 | ||||||||||
Net interest income | (2,169,000 | ) | (659,000 | ) | (6,556,000 | ) | (1,393,000 | ) | ||||||
Amortization of stock-based compensation | 1,469,000 | — | 5,681,000 | — | ||||||||||
Depreciation and amortization | 2,443,000 | 2,034,000 | 8,707,000 | 7,643,000 | ||||||||||
EBITDA | $ | 20,293,000 | 18,230,000 | 78,319,000 | 59,707,000 | |||||||||
(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 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 and stock-based compensation. 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. |
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COMTECH TELECOMMUNICATIONS CORP. |
July 31, | ||||||||
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2006 | 2005 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 251,587,000 | 214,413,000 | |||||
Restricted cash | 1,003,000 | 1,034,000 | ||||||
Accounts receivable, net | 70,047,000 | 56,052,000 | ||||||
Inventories, net | 61,043,000 | 45,103,000 | ||||||
Prepaid expenses and other current assets | 7,178,000 | 4,387,000 | ||||||
Deferred tax asset - current | 7,591,000 | 8,092,000 | ||||||
Total current assets | 398,449,000 | 329,081,000 | ||||||
Property, plant and equipment, net | 24,732,000 | 18,683,000 | ||||||
Goodwill | 22,244,000 | 22,244,000 | ||||||
Intangibles with finite lives, net | 6,855,000 | 9,123,000 | ||||||
Deferred financing costs, net | 2,449,000 | 2,995,000 | ||||||
Other assets, net | 537,000 | 277,000 | ||||||
Total assets | $ | 455,266,000 | 382,403,000 | |||||
Liabilities and Stockholders’ Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 28,337,000 | 23,577,000 | |||||
Accrued expenses and other current liabilities | 41,230,000 | 34,497,000 | ||||||
Customer advances and deposits | 3,544,000 | 5,282,000 | ||||||
Deferred service revenue | 9,896,000 | 8,210,000 | ||||||
Current installments of other obligations | 154,000 | 235,000 | ||||||
Interest payable | 1,050,000 | 1,050,000 | ||||||
Income taxes payable | 5,252,000 | 1,540,000 | ||||||
Total current liabilities | 89,463,000 | 74,391,000 | ||||||
Convertible senior notes | 105,000,000 | 105,000,000 | ||||||
Other obligations, less current installments | 243,000 | 396,000 | ||||||
Deferred tax liability - non-current | 6,318,000 | 5,987,000 | ||||||
Total liabilities | 201,024,000 | 185,774,000 | ||||||
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 and 30,000,000 shares at July 31, 2006 and July 31, 2005, | ||||||||
respectively; issued 23,052,593 shares and 22,781,678 shares at | ||||||||
July 31, 2006 and 2005, respectively | 2,305,000 | 2,278,000 | ||||||
Additional paid-in capital | 139,487,000 | 127,170,000 | ||||||
Retained earnings | 112,635,000 | 67,366,000 | ||||||
254,427,000 | 196,814,000 | |||||||
Less: | ||||||||
Treasury stock (210,937 shares) | (185,000 | ) | (185,000 | ) | ||||
Total stockholders’ equity | 254,242,000 | 196,629,000 | ||||||
Total liabilities and stockholders’ equity | $ | 455,266,000 | 382,403,000 | |||||
ECMTL ### |