Comtech Telecommunications Corp. Announces Record Results for the First Quarter of Fiscal 2006.MELVILLE, N.Y. -- Comtech Comtech Computer Technology Telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. Corp. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : CMTL CMTL Chief Military Training Leader CMTL Center for Mathematics, Teaching and Learning ) today reported its operating results for the three months ended October October: see month. 31, 2005. Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight , operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. , EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become , net income and diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of were at all-time all-time adj. Exceeding all others up to the present time: an all-time speed skating record. all-time Adjective Informal highs. The record results for the quarter were driven by strong performances in all three of the Company's business segments. Net sales for the first quarter of fiscal 2006 surpassed the $100.0 million mark for the first time in the Company's history to $106.6 million, compared to $56.1 million in the first quarter of fiscal 2005. GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). net income in the first quarter of fiscal 2006 was $11.5 million, or $0.43 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, a significant increase over the first quarter of fiscal 2005 net income of $7.1 million, or $0.28 per diluted share. GAAP net income in the first quarter of fiscal 2006 included $1.3 million of pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta compensation expense related to the adoption of Statement of Financial Accounting Standards No. 123(R) which requires the expensing of stock option awards. Excluding stock-based compensation expense, diluted earnings per share for the first quarter of fiscal 2006 were $0.47. Earnings before interest, income taxes, depreciation and amortization (including the amortization of stock-based compensation), or EBITDA, were $20.1 million for the first quarter of fiscal 2006 versus $12.2 million for the same period in fiscal 2005. Cash flow from operating activities for the first quarter of fiscal 2006 was $7.2 million compared to $20.3 million for the first quarter of fiscal 2005, reflecting an increase in accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying on certain large contracts during the fiscal 2006 period and the liquidation The collection of assets belonging to a debtor to be applied to the discharge of his or her outstanding debts. A type of proceeding pursuant to federal Bankruptcy of a significant receivable in the fiscal 2005 period. Backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. as of October 31, 2005 was $156.8 million compared to $153.3 million at July July: see month. 31, 2005. Bookings for the first quarter of fiscal 2006 were $110.1 million. In commenting on the Company's record performance during the first quarter of fiscal 2006, Fred (Friendly Rollabout Engineered for Doctors) A mobile medical conferencing unit. See videoconferencing. 1. FRED - Robert Carr. Language used by Framework, Ashton-Tate. 2. Kornberg Korn·berg , Arthur Born 1918. American biochemist. He shared a 1959 Nobel Prize for work on the biological synthesis of nucleic acids. , President and Chief Executive Officer of Comtech Telecommunications Corp., said, "The first quarter of fiscal 2006 was yet another remarkable quarter for Comtech. Achieving in excess of $100.0 million of sales in a quarter, when our annual sales just a few short years ago were less than $120.0 million, is tangible evidence of the strong leadership positions we enjoy in the markets we serve, and the dedication and talent of our management team and employees." Mr. Kornberg added, "As expected, the first quarter of fiscal 2006 benefited from strong backlog and pent-up pent-up adj. Not given expression; repressed: pent-up emotions. pent-up Adjective not released; repressed: demand, particularly relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the MTS (1) See Microsoft Transaction Server. (2) (Modular TV System) The stereo channel added to the NTSC standard, which includes the SAP audio channel for special use. 1. MTS - Message Transport System. 2. contract in our mobile data communications data communications, application of telecommunications technology to the problem of transmitting data, especially to, from, or between computers. In popular usage, it is said that data communications make it possible for one computer to "talk" with another. segment and the improvised explosive device Noun 1. improvised explosive device - an explosive device that is improvised I.E.D., IED explosive device - device that bursts with sudden violence from internal energy jamming contract in our RF microwave amplifier segment. As I've I've Contraction of I have. I've I have I've have mentioned many times before, our quarterly sales and earnings can fluctuate dramatically from quarter-to-quarter, based on the timing of the receipt, and subsequent performance, on large contracts." Mr. Kornberg concluded, "We remain optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about our businesses and continue to believe that fiscal 2006 is well-positioned to be another record year for Comtech." Comtech Telecommunications Corp. designs, develops, produces and markets innovative products, systems and services for advanced communications solutions addressing commercial and government markets. The Company conducts its business through three complementary segments: telecommunications transmission, mobile data communications and RF microwave amplifiers. The Company offers specialized spe·cial·ize v. spe·cial·ized, spe·cial·iz·ing, spe·cial·iz·es v.intr. 1. To pursue a special activity, occupation, or field of study. 2. 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 Tuesday: see week. , December December: see month. 6, 2005. 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. 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 (877) 210-6102 (domestic), or (785) 830-1921 (international) and using the conference I.D. of "Comtech." A replay of the conference call will be available for seven days by dialing (402) 220-2982. 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 forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , 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 being difficult to forecast and subject to volatility; --Our inability to maintain our government business; --Our inability to keep pace with technological changes; --Our dependence on international sales; --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 being subject to unique risks; --Our backlog being subject to cancellation or modification; --Our dependence on component availability, subcontractor One who takes a portion of a contract from the principal contractor or from another subcontractor. When an individual or a company is involved in a large-scale project, a contractor is often hired to see that the work is done. availability and performance by key suppliers; --Our fixed price contracts being subject to risk; --The impact of adverse regulatory changes on our ability to sell products, systems and services; --The impact of prevailing economic and political conditions on our businesses; --Whether we can successfully integrate and assimilate as·sim·i·late v. 1. To consume and incorporate nutrients into the body after digestion. 2. To transform food into living tissue by the process of anabolism. the operations of acquired businesses; --The impact of the loss of key technical or management personnel; --The highly competitive nature of our markets; --Our inability to protect our proprietary technology; --Our operations being subject to environmental regulation; --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 See SOX. of 2002; --The impact of terrorist attacks and threats, and government responses thereto there·to adv. 1. To that, this, or it. 2. Archaic In addition to that; furthermore. thereto Adverb Formal 1. to that or it 2. , and threats of war on our businesses; --The inability to effectuate ef·fec·tu·ate tr.v. ef·fec·tu·at·ed, ef·fec·tu·at·ing, ef·fec·tu·ates To bring about; effect. [Medieval Latin effectu a change in control of the Company due to provisions in its certificate of incorporation certificate of incorporation n. some states issue a certificate to prove a corporation's existence upon the filing of Articles of Incorporation. In most states the Articles are sufficient proof. and by-laws BY-LAWS. Rules and ordinances made by a corporation for its own government. 2. The power to make by-laws is usually conferred by express terms of the charter creating the corporation, though, when not expressly granted, it is given by implication, and it is , stockholders' rights plan and Delaware Delaware, state, United States Delaware (dĕl`əwâr, –wər), one of the Middle Atlantic states of the United States, the country's second smallest state (after Rhode Island). law; --Our inability to satisfy our debt obligations, including the convertible senior notes; --The impact on our reported results of recent changes to financial reporting standards related to stock option expensing; --Our stock price being volatile; and --Our current intention not to declare or pay any cash dividends.
COMTECH TELECOMMUNICATIONS CORP.
Consolidated Statements of Operations
(Unaudited)
Three months ended
October 31,
-------------------------
2005 2004
------------ -----------
Net sales $106,567,000 56,122,000
Cost of sales 66,363,000 29,001,000
------------- -----------
Gross profit 40,204,000 27,121,000
------------- -----------
Expenses:
Selling, general and administrative 16,048,000 11,224,000
Research and development 6,749,000 4,896,000
Amortization of intangibles 596,000 569,000
------------- -----------
23,393,000 16,689,000
------------- -----------
Operating income 16,811,000 10,432,000
Other expense (income):
Interest expense 674,000 669,000
Interest income (1,775,000) (643,000)
------------- -----------
Income before provision for income taxes 17,912,000 10,406,000
Provision for income taxes 6,448,000 3,330,000
------------- -----------
Net income $ 11,464,000 7,076,000
============= ===========
Net income per share:
Basic $ 0.51 0.33
============= ===========
Diluted $ 0.43 0.28
============= ===========
Weighted average number of common shares
outstanding - basic 22,646,000 21,363,000
============= ===========
Weighted average number of common and common
equivalent shares outstanding assuming
dilution - diluted 27,379,000 26,460,000
============= ===========
Reconciliations of Non-GAAP Financial Measures to
GAAP Financial Measures
--------------------------------------------------
Three months ended
October 31,
-----------------------
2005 2004
------------ ----------
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 $12,486,000 7,076,000
Pre-tax stock-based compensation expense (1,296,000) -
Tax effect of stock-based compensation
expense 274,000 -
------------ ----------
GAAP net income $11,464,000 7,076,000
============ ==========
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 $ 0.47 0.28
Pre-tax stock-based compensation expense (0.05) -
Tax effect of stock-based
compensation expense 0.01 -
------------ ----------
GAAP diluted earnings per share $ 0.43 0.28
============ ==========
Reconciliation of GAAP Net Income to EBITDA(2):
GAAP net income $11,464,000 7,076,000
Income taxes 6,448,000 3,330,000
Net interest expense (income) (1,101,000) 26,000
Stock-based compensation expense 1,296,000 -
Depreciation and amortization 1,967,000 1,814,000
----------- ----------
EBITDA $20,074,000 12,246,000
=========== ===========
(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 (including the amortization of 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 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.
COMTECH TELECOMMUNICATIONS CORP.
Consolidated Balance Sheets
October 31, July 31,
2005 2005
------------ ------------
Assets (Unaudited)
Current assets:
Cash and cash equivalents $220,043,000 214,413,000
Restricted cash 1,003,000 1,034,000
Accounts receivable, net 69,531,000 56,052,000
Inventories, net 49,343,000 45,103,000
Prepaid expenses and other current assets 5,032,000 4,387,000
Deferred tax asset - current 8,092,000 8,092,000
------------ ------------
Total current assets 353,044,000 329,081,000
Property, plant and equipment, net 20,220,000 18,683,000
Goodwill 22,244,000 22,244,000
Intangibles with definite lives, net 8,640,000 9,123,000
Deferred financing costs, net 2,858,000 2,995,000
Other assets, net 279,000 277,000
------------ ------------
Total assets $407,285,000 382,403,000
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 28,792,000 23,577,000
Accrued expenses and other current
liabilities 32,178,000 34,497,000
Customer advances and deposits 6,090,000 5,282,000
Deferred service revenue 9,878,000 8,210,000
Current installments of other obligations 226,000 235,000
Interest payable 525,000 1,050,000
Income taxes payable 7,636,000 1,540,000
------------ ------------
Total current liabilities 85,325,000 74,391,000
Convertible senior notes 105,000,000 105,000,000
Other obligations, less current installments 348,000 396,000
Deferred tax liability - non-current 5,653,000 5,987,000
------------ ------------
Total liabilities 196,326,000 185,774,000
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 30,000,000 shares, issued
22,919,422 shares and 22,781,678 shares
at October 31, 2005 and July 31, 2005,
respectively 2,292,000 2,278,000
Additional paid-in capital 130,022,000 127,170,000
Retained earnings 78,830,000 67,366,000
------------ ------------
211,144,000 196,814,000
Less:
Treasury stock (210,937 shares) (185,000) (185,000)
------------ ------------
Total stockholders' equity 210,959,000 196,629,000
------------ ------------
Total liabilities and
stockholders' equity $407,285,000 382,403,000
============ ============
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