Comtech Telecommunications Posts Strong Gains in Second Quarter of Fiscal Year 2000.Business Editors MELVILLE, N.Y.--(BUSINESS WIRE)--March 6, 2000 Revenues up 52% Operating Earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before up 49% Comtech Comtech Computer Technology Telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. Corp. (Nasdaq: CMTL CMTL Chief Military Training Leader CMTL Center for Mathematics, Teaching and Learning ) today reported net income of $662,000 or $0.13 per share, operating earnings from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the of $1.0 million, and sales of $13.7 million for the second quarter of its 2000 fiscal year. The quarter ended on January January: see month. 31, 2000. A year earlier, in the second quarter of its 1999 fiscal year, Comtech had net income of $1.8 million or $0.40 per share, inclusive of inclusive of prep. Taking into consideration or account; including. a non-recurring tax benefit of $1.4 million. Operating earnings from continuing operations totaled $702,000 and sales were $9.1 million in the same period. Applying a 35% effective tax rate and eliminating the $1.4 million tax benefit, pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma net income for the year-earlier quarter amounted to $244,000 or $0.05 per share. For the first six months of fiscal 2000, the Company reported net income of $1.2 million or $0.23 per share, operating earnings from continuing operations of $1.9 million, and sales of $ 25.5 million. This compares with net income of $2.2 million or $0.56 per share, inclusive of the non-recurring tax benefit, operating earnings of $1.3 million, and sales of $17.8 million in the previous year's first half. Applying a 35% effective tax rate and eliminating the non-recurring tax benefit, pro forma net income for the year earlier half amounted to $529,000 or $0.12 per share. Reference is made to the attached tables for further information. 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 January 31, 2000 was $30.8 million, compared to $49.3 million a year earlier and $38.6 million on July 31, 1999. The backlog was unusually high in fiscal 1999 as the result of a large order that was reported in the first quarter of that year. Revenues for the second quarter and first half of the current fiscal year increased by 52% and 43% respectively over the year-earlier totals. Operating earnings from continuing operations increased by 49% in this year's second quarter compared to last year's, and 46% in the first half. Pro forma net income increased 171% in the second quarter compared to last year's and 126% in the half. The non-recurring gain of $1.4 million or $0.32 per share in the second quarter and first half of fiscal 1999 resulted from a reduction, required by applicable accounting principles, in the Company's valuation allowance against approximately $4.2 million of its $11.5 million net operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. carryforward carryforward 1. A business operating loss that, for tax purposes, may be claimed a certain number of years in the future, often up to 15 years. . This reduction was appropriate because it was determined to be more likely than not that the Company would generate sufficient taxable income Under the federal tax law, gross income reduced by adjustments and allowable deductions. It is the income against which tax rates are applied to compute an individual or entity's tax liability. The essence of taxable income is the accrual of some gain, profit, or benefit to a taxpayer. prior to the expiration EXPIRATION. Cessation; end. As, the expiration of, a lease, of a contract, or statute. 2. In general, the expiration of a contract puts an end to all the engagements of the parties, except to those which arise from the non- fulfillment of obligations created of the relevant portion of its net operating loss carryforward. Fred 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, said the sales and earnings gains of fiscal 2000 have been driven primarily by Comtech's telecommunications transmission segment, partly offset by a weakness in the radio frequency microwave amplifier segment, which is expected to strengthen later in calendar 2000. "Net earnings were negatively affected by expenses associated with the start-up Start-up The earliest stage of a new business venture. of 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. services segment," Mr. Kornberg said. "Such expenses are expected to continue impacting results for at least the balance of this year." Commenting on the status of the Company's contract with the U. S. Army for mobile data communications services, Mr. Kornberg said the operational readiness evaluation An evaluation of the operational capability and effectiveness of a unit or any portion thereof. and Army personnel training are expected to be completed by April 2000, with initial orders beginning in the fourth quarter of this fiscal year. "In addition to focusing on our new satellite mobile data communications services business and the implementation of the Army contract, which has a potential total value of $418.2 million over eight years, we are continuing to strengthen our core market segment positions in Europe, South America South America, fourth largest continent (1991 est. pop. 299,150,000), c.6,880,000 sq mi (17,819,000 sq km), the southern of the two continents of the Western Hemisphere. and the Mid East," he said. "Overall, we're making excellent progress in the execution of our strategy." In late February 2000 the Company successfully completed a public offering of 2,300,000 shares of its common stock at a price of $17.50 per share. In early March the Company sold an additional 345,000 shares pursuant to the Underwriters over allotment A portion, share, or division. The proportionate distribution of shares of stock in a corporation. The partition and distribution of land. ALLOTMENT. Distribution by lot; partition. Merl. Rep. h.t. option at the same price per share. Underwriters of the offering were ABN AMRO ABN AMRO Algemene Bank Nederland-Amsterdam Roterdam Bank (Dutch bank) Rothschild, a division of ABM ABM: see guided missile. ABM - Asynchronous Balanced Mode AMRO AMRO Regional Office for the Americas (WHO, Washington DC) AMRO American Robin (species) AMRO Amsterdam-Rotterdam Bank (now ABN AMRO) AMRO Association Maladie de Rendu-Osler Incorporated; Stifel, Nicolaus & Company, and HCFP/Brenner Securities, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control . Comtech Telecommunications Corp. is an innovative and increasingly significant player in domestic and global high-technology markets. Through its operating units operating unit A type of operating company that engages in transactions with outsiders and that is owned by another business. For example, in 1995 the stockholders of Capital Cities/ABC approved a $19 billion merger with the Walt Disney Company, whereupon , Comtech pursues opportunities in three interrelated in·ter·re·late tr. & intr.v. in·ter·re·lat·ed, in·ter·re·lat·ing, in·ter·re·lates To place in or come into mutual relationship. in market segments: telecommunications transmission, RF microwave amplifiers, and - newest and fastest growing of all - mobile data communications services. In each of these segments, growth is driven by increasing demand for telecommunications infrastructure and network and messaging services. The company's specialties include the design and manufacture of advanced products and networks used for transmission of voice, data and video using satellite, over the horizon microwave, terrestrial Dealing with the earth. See terrestrial link. line of site and other wireless communications wireless communications System using radio-frequency, infrared, microwave, or other types of electromagnetic or acoustic waves in place of wires, cables, or fibre optics to transmit signals or data. systems. More than 250 distinct Comtech products are in service in more than 100 countries. Certain information contained herein includes information that is forward-looking. The matters referred to in 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. may be affected by the risks and uncertainties involved in the Company's business. These forward-looking statements are qualified in their entirety The whole, in contradistinction to a moiety or part only. When land is conveyed to Husband and Wife, they do not take by moieties, but both are seised of the entirety. by the cautionary statements contained in the Company's Securities and Exchange Commission filings.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
2000 1999 1999(2)
---- ---- -------
Net sales $ 13,717,000 9,057,000 9,057,000
============ ============ ============
Operating earnings from
continuing operations 1,044,000 702,000 702,000
Other income (expense) - net (13,000) (40,000) (40,000)
------------ ------------ ------------
Income from continuing
operations before provision
(benefit) for income taxes 1,031,000 662,000 662,000
Provision (benefit)
for income taxes 369,000 (1,298,000) 232,000
------------ ------------ ------------
Income from continuing
operations 662,000 1,960,000 430,000
Loss from operations of
discontinued segment, ---
net of applicable tax benefit (186,000) (186,000)
------------ ------------ ------------
Net income $ 662,000 1,774,000 244,000
============ ============ ============
Basic income (loss)
per share: (1)
Income from continuing
operations $ 0.15 0.48 0.11
Loss from operations ---
of discontinued segment (0.05) (0.05)
------------ ------------ ------------
Basic income per share $ 0.15 0.43 0.06
============ ============ ============
Diluted income (loss)
per share: (1)
Income from continuing
operations $ 0.13 0.44 0.09
Loss from operations ---
of discontinued segment (0.04) (0.04)
------------ ------------ ------------
Diluted income per share $ 0.13 0.40 0.05
============ ============ ============
Weighted average number of
common and common equivalent
shares outstanding: (1)
Basic computation 4,478,000 4,082,000 4,082,000
============ ============ ============
Diluted computation 5,214,000 4,477,000 4,477,000
============ ============ ============
Six Months Ended
2000 1999 1999(2)
---- ---- -------
Net sales $ 25,464,000 17,792,000 17,792,000
============ ============ ============
Operating earnings from
continuing operations 1,909,000 1,311,000 1,311,000
Other income (expense) - net (18,000) (71,000) (71,000)
------------ ------------ ------------
Income from continuing
operations before provision
(benefit) for income taxes 1,891,000 1,240,000 1,240,000
Provision (benefit)
for income taxes 694,000 (1,205,000) 434,000
------------ ------------ ------------
Income from continuing
operations 1,197,000 2,445,000 806,000
Loss from operations of
discontinued segment, ---
net of applicable tax benefit (277,000) (277,000)
------------ ------------ ------------
Net income $ 1,197,000 2,168,000 529,000
============ ============ ============
Basic income (loss)
per share: (1)
Income from continuing
operations $ 0.27 0.61 0.20
Loss from operations ---
of discontinued segment (0.07) (0.07)
------------ ------------ ------------
Basic income per share $ 0.27 0.54 0.13
============ ============ ============
Diluted income (loss)
per share: (1)
Income from continuing
operations $ 0.23 0.56 0.18
Loss from operations ---
of discontinued segment (0.06) (0.06)
------------ ------------ ------------
Diluted income per share $ 0.23 0.50 0.12
============ ============ ============
Weighted average number of
common and common equivalent
shares outstanding: (1)
Basic computation 4,438,000 4,004,000 4,004,000
============ ============ ============
Diluted computation 5,120,000 4,372,000 4,372,000
============ ============ ============
(1) Reflects a three-for-two stock split effective July 1999.
(2) Pro-forma results excluding tax benefit resulting from a
reduction in the Company's valuation allowance against deferred
tax assets and a loss from discontinued operations and with an
effective tax rate of 35.0% applied for comparison purposes with
FY 2000.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
As Adjusted(3) Actual
------------ -------------------------
January 31, January 31, July 31,
2000 2000 1999
---- ---- ----
Assets
Cash and short-term
investments $ 46,695,000 3,902,000 5,896,000
Current assets (other
than cash and
short-term investments) 19,345,000 19,577,000 14,827,000
Property, plant and
equipment - net 4,336,000 4,336,000 4,310,000
Deferred tax asset-non current 2,917,000 2,917,000 2,917,000
Intangible and other assets 1,814,000 1,814,000 1,897,000
------------ ------------ ------------
Total assets $ 75,107,000 32,546,000 29,847,000
============ ============ ============
Liabilities and Stockholders'
Equity
Current liabilities $ 11,466,000 11,466,000 10,531,000
Long-term debt, less
current installments 702,000 702,000 959,000
Other long-term liabilities 421,000 421,000 ---
Stockholders' equity 62,518,000 19,957,000 18,357,000
------------ ------------ ------------
Total liabilities and
stockholders' equity $ 75,107,000 32,546,000 29,847,000
============ ============ ============
(3) Reflects the sale of 2,645,000 shares of common stock at $17.50
in February and March,2000.
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