Comtech Telecommunications Corp. Announces Results for Fiscal 2006 Fourth Quarter and Full Year.

MELVILLE, N.Y. -- 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 million 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."

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 at www.comtechtel.com. Alternatively, investors can access the conference call by dialing [phone] (domestic) or [phone] (international) and using the conference I.D. of "Comtech." A replay of the conference call will be available for seven days by dialing [phone]. 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.
                           AND SUBSIDIARIES
                 Consolidated Statements of Operations

                     Three Months Ended         Fiscal Year Ended
                           July 31,                 July 31,
                       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
                   ============= =========== ============ ============
Reconciliation of Non-GAAP Financial Measures to
                        GAAP Financial Measures

                         Three Months Ended      Fiscal Year Ended
                              July 31,                July 31,
                       ----------------------- -----------------------
                          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.

COMTECH TELECOMMUNICATIONS CORP.
                           AND SUBSIDIARIES
                      Consolidated Balance Sheets

                                                     July 31,
                                             -------------------------
                   Assets                        2006        2005
                                             ------------ ------------
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