Exhibit 99.1
NEWS RELEASE
Media Contacts:
Fred Kornberg, President and Chief Executive Officer
Robert G. Rouse, Chief Financial Officer
(631) 777-8900
info@comtechtel.com
COMTECH TELECOMMUNICATIONS CORP. ANNOUNCES RECORD RESULTS
FOR FISCAL YEAR 2003 FOURTH QUARTER AND FULL YEAR
Melville, New York - September 23, 2003 - Comtech Telecommunications Corp.
(Nasdaq: CMTL) today reported its results for the fourth quarter and fiscal year
ended July 31, 2003. Net sales for the fourth quarter of fiscal 2003 were $51.7
million, compared to $28.5 million in fiscal 2002. Fourth quarter net income was
$3.6 million, or $0.27 per diluted share, in fiscal 2003, as compared to a net
loss in the fourth quarter of fiscal 2002 of $0.3 million, or $0.03 per diluted
share. The fourth quarter of fiscal 2002 included (i) a non-recurring charge of
$2.2 million for acquired in-process research and development in connection with
the acquisition of certain assets and liabilities of Advanced Hardware
Architectures, Inc. in July 2002 and (ii) a tax benefit relating to research and
experimentation credits. Excluding the impact of such items, fourth quarter net
income for fiscal 2002 was $0.5 million, or $0.05 per diluted share. Earnings
before interest, taxes, depreciation and amortization (EBITDA) were $7.6 million
for the fourth quarter of fiscal 2003 and $2.7 million for the fourth quarter of
fiscal 2002, after adjusting for the in-process research and development charge.
Net sales for fiscal 2003 were $174.0 million and net income was $9.7 million,
or $0.80 per diluted share, compared to net sales of $119.4 million and net
income of $1.1 million, or $0.10 per diluted share, in fiscal 2002. Excluding
the impact of the in-process research and development charge and the tax benefit
discussed above, net income for fiscal 2002 was $2.0 million, or $0.17 per
diluted share. EBITDA was $23.1 million for fiscal 2003 and $10.8 million for
fiscal 2002, after adjusting for the in-process research and development charge.
Reference is made to the attached tables for further financial information,
including a reconciliation of non-GAAP financial information to GAAP.
Backlog as of July 31, 2003 was $100.1 million compared to $44.1 million a year
earlier.
Fred Kornberg, President and Chief Executive Officer, observed, "Fiscal 2003 was
a truly remarkable year for our Company. We achieved record levels of sales,
bookings, backlog, EBITDA, profits and earnings per share in an economy that
continues to struggle. Once again, all of our segments were profitable."
Mr. Kornberg added, "Our record results in fiscal 2003 reflect increased demand
from the U.S. Army logistics and battlefield commands for our mobile data
communications products and services, as well as increased interest in our
over-the-horizon microwave systems. In addition, we have recently seen signs of
strengthening in our satellite earth station product lines."
In commenting on fourth quarter results, Mr. Kornberg noted, "The fourth quarter
of fiscal 2003 was stronger than expected as sales and orders received in our
mobile data communications segment continued to far exceed our expectations.
Activity in our telecommunications transmission segment also contributed to an
outstanding fourth quarter."
- more -
4
Mr. Kornberg concluded, "During the fourth quarter of fiscal 2003, we also sold
2.1 million shares of common stock in a private placement transaction. The net
proceeds of $38.2 million were used to prepay all of our long-term debt, which
will reduce our interest expense going forward. We ended fiscal 2003 with no
long-term debt and $48.6 million of unrestricted cash. In addition, the 2.1
million shares issued in the private placement, combined with our three-for-two
stock split in July, significantly increased our shares outstanding."
Comtech Telecommunications Corp. designs, develops, produces and markets
innovative products, systems and services for advanced communications solutions.
The Company conducts its business through three complementary segments:
telecommunications transmission, RF microwave amplifiers, and mobile data
communications. The Company offers niche products, systems and services where it
believes it has technological, engineering, systems design or other expertise
that differentiate its product offerings.
The Company has scheduled an investor conference call for 11:30 AM (ET) on
Tuesday, September 23, 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) 903-0247 (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) 220-1126.
In addition, an updated investor presentation, including updated earnings
guidance, 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:
o Our operating results being difficult to forecast and subject to
volatility;
o Our inability to maintain our government business;
o Our inability to keep pace with technological changes;
o Our dependence on international sales;
o The impact of a continued domestic and foreign economic slow-down
and reduction in telecommunications equipment and systems spending
on the demand for our products, systems and services;
o Our mobile data communications business being in an early stage;
o Our backlog being subject to cancellation or modification;
o Our dependence on component availability, subcontractor availability
and performance by key suppliers;
o Our fixed price contracts being subject to risk;
o The impact of adverse regulatory changes on our ability to sell
products, systems and services;
o The impact of prevailing economic and political conditions on our
businesses;
o Whether we can successfully integrate and assimilate the operations
of acquired businesses;
o The impact of the loss of key technical or management personnel;
o The highly competitive nature of our markets;
o Our inability to protect our proprietary technology;
o Our operations being subject to environmental regulation;
o The impact of recently enacted and proposed changes in securities
laws and regulations on our costs; and
o The impact of terrorist attacks and threats, and government
responses thereto, and threats of war on our businesses.
- tables to follow -
5
COMTECH TELECOMMUNICATIONS CORP.
Consolidated Statements of Operations
Three Months Ended Fiscal Year Ended
July 31, July 31,
----------------------------- ------------------------------
2003 2002 2003 2002
------------ ----------- ------------ ------------
Net sales $ 51,683,000 28,525,000 174,035,000 119,357,000
Costs of sales 33,676,000 17,770,000 114,317,000 78,780,000
------------ ----------- ------------ ------------
Gross profit 18,007,000 10,755,000 59,718,000 40,577,000
------------ ----------- ------------ ------------
Operating expenses:
Selling, general and administrative 8,075,000 6,104,000 28,045,000 22,512,000
Research and development 3,502,000 2,884,000 12,828,000 11,041,000
In-process research and development -- 2,192,000 -- 2,192,000
Amortization of intangibles 499,000 370,000 2,039,000 1,471,000
------------ ----------- ------------ ------------
Total operating expenses 12,076,000 11,550,000 42,912,000 37,216,000
------------ ----------- ------------ ------------
Operating income (loss) 5,931,000 (795,000) 16,806,000 3,361,000
Other (income) expense:
Interest expense 744,000 696,000 2,803,000 3,061,000
Interest income (88,000) (82,000) (275,000) (452,000)
Other, net -- (11,000) -- (28,000)
------------ ----------- ------------ ------------
Income (loss) before provision (benefit) for
income taxes 5,275,000 (1,398,000) 14,278,000 780,000
Provision (benefit) for income taxes 1,688,000 (1,087,000) 4,569,000 (368,000)
------------ ----------- ------------ ------------
Net income (loss) $ 3,587,000 (311,000) 9,709,000 1,148,000
============ =========== ============ ============
Basic income (loss) per share $ 0.30 (0.03) 0.85 0.10
Diluted income (loss) per share $ 0.27 (0.03) 0.80 0.10
Weighted average number of common shares
outstanding-basic computation 11,857,000 11,239,000 11,445,000 11,192,000
Potential dilutive common shares 1,302,000 -- 748,000 516,000
------------ ----------- ------------ ------------
Weighted average number of common and
common equivalent shares outstanding
assuming dilution-diluted computation 13,159,000 11,239,000 12,193,000 11,708,000
============ =========== ============ ============
- more -
6
Non-GAAP Financial Measures
EBITDA and the other non-GAAP operating measures presented below are used by
management in assessing the Company's operating results and ability to meet debt
service requirements. These non-GAAP measures are frequently requested by the
Company's investors and analysts. The Company believes that investors and
analysts may use these non-GAAP measures, along with other information contained
in its SEC filings, in assessing the Company's operating results and ability to
generate cash flow and service debt.
Three Months Ended Fiscal Year Ended
July 31, July 31,
--------------------------- ----------------------------
2003 2002 2003 2002
----------- ---------- ----------- -----------
Reconciliation of Non-GAAP Net Income to
GAAP Net Income (Loss):
Non-GAAP net income $ 3,587,000 532,000 9,709,000 1,991,000
In-process research and development charge,
net of income taxes -- (1,468,000) -- (1,468,000)
Normalization of taxes -- 625,000 -- 625,000
----------- ---------- ----------- -----------
GAAP net income (loss) $ 3,587,000 (311,000) 9,709,000 1,148,000
=========== ========== =========== ===========
Reconciliation of Adjusted EBITDA to
GAAP Net Income (Loss):
Adjusted EBITDA $ 7,572,000 2,702,000 23,064,000 10,783,000
Net interest expense (656,000) (603,000) (2,528,000) (2,581,000)
Depreciation and amortization (1,641,000) (1,305,000) (6,258,000) (5,230,000)
Income taxes (1,688,000) 1,087,000 (4,569,000) 368,000
In-process research and development charge -- (2,192,000) -- (2,192,000)
----------- ---------- ----------- -----------
GAAP net income (loss) $ 3,587,000 (311,000) 9,709,000 1,148,000
=========== ========== =========== ===========
- more -
7
COMTECH TELECOMMUNICATIONS CORP.
Consolidated Balance Sheets
July 31
-------------------------------
Assets 2003 2002
------------- ------------
Current assets:
Cash and cash equivalents $ 48,617,000 15,510,000
Restricted cash 4,288,000 --
Accounts receivable, less allowance for doubtful accounts
of $912,000 in 2003 and $795,000 in 2002 26,696,000 27,435,000
Inventories, net 34,048,000 33,996,000
Prepaid expenses and other current assets 1,742,000 1,407,000
Deferred tax asset - current 5,699,000 2,492,000
------------- ------------
Total current assets 121,090,000 80,840,000
Property, plant and equipment, net 12,328,000 11,889,000
Intangible assets, net 29,079,000 30,628,000
Other assets 390,000 661,000
Deferred tax asset - non-current 1,363,000 2,568,000
------------- ------------
Total assets $ 164,250,000 126,586,000
============= ============
Liabilities and Stockholders' Equity
Current liabilities:
Current installments of capital lease obligations $ 899,000 1,062,000
Accounts payable 11,527,000 9,529,000
Accrued expenses and other current liabilities 13,267,000 9,686,000
Customer advances and deposits 2,491,000 2,173,000
Deferred service revenue 11,160,000 4,343,000
Income taxes payable 6,945,000 2,470,000
------------- ------------
Total current liabilities 46,289,000 29,263,000
Long-term debt, less current installments -- 28,683,000
Capital lease obligations, less current installments 393,000 1,294,000
Other long-term liabilities -- 58,000
------------- ------------
Total liabilities 46,682,000 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 14,020,769 shares in 2003 and 11,404,382 shares in 2002 1,402,000 1,140,000
Additional paid-in capital 107,573,000 67,503,000
Retained earnings (accumulated deficit) 8,884,000 (825,000)
------------- ------------
117,859,000 67,818,000
Less:
Treasury stock (140,625 shares) (185,000) (185,000)
Deferred compensation (106,000) (345,000)
------------- ------------
Total stockholders' equity 117,568,000 67,288,000
------------- ------------
Total liabilities and stockholders' equity $ 164,250,000 126,586,000
============= ============
###
8