Comtech Telecommunications Posts Strong Gains in Third Quarter of Fiscal Year 2000; Revenues up 48%, Net Income up 95%.Business Editors MELVILLE, N.Y.--(BUSINESS WIRE)--June 6, 2000 Comtech 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 $971,000 or $0.13 per share, 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 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 $968,000 and sales of $15.5 million for the third quarter of its 2000 fiscal year. The quarter ended on April 30, 2000. A year earlier, Comtech had net income of $498,000 or $0.11 per share. Operating earnings from continuing operations totaled $837,000 and sales were $10.5 million in the same period. Applying a 35% effective tax rate, 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 third quarter of fiscal 1999 was $365,000 or $0.08 per share. For the first nine months of fiscal 2000, the Company reported net income of $2.2 million or $0.38 per share, operating earnings from continuing operations of $2.9 million, and sales of $ 41.0 million. This compares with net income of $2.7 million or $0.60 per share, inclusive of inclusive of prep. Taking into consideration or account; including. a non-recurring tax benefit of $1.4 million (see explanation below) , operating earnings of $2.1 million, and sales of $28.3 million in the previous year's first nine months. Applying a 35% effective tax rate and eliminating the non-recurring tax benefit, pro forma net income for the year-earlier nine months amounted to $894,000 or $0.20 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 April 30, 2000 was $35.3 million, compared to $43.7 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 third quarter and first nine months of the current fiscal year increased by 48% and 45% respectively over the year-earlier totals. Operating earnings from continuing operations increased by 16% in this year's third quarter compared to last year's, and 34% in the first nine months. Pro forma net income increased 166% in the third quarter compared to last year's and 143% in the first nine months. The non-recurring gain of $1.4 million in the first nine months 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. carry-forward See Loss Carry-Back. . 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 carry-forward. 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 satellite industry served by Comtech is clearly in a period of excellent growth, with demand accelerating not only in traditional markets but also across broader geographical areas such as 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 Asia. Against this background Comtech's telecommunications segment is showing strong gains in sales and earnings, 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 fiscal year. "I am pleased to note that this quarter's reported revenue and 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. from continued operations were the largest in Comtech's history. EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. was 63% higher than in the third quarter of fiscal 1999 on a pro-forma fully taxed basis despite the fact that February's follow-on offering Follow-On Offering An offering of additional shares after a company has had an initial public offering. Notes: This sometimes means the company is strapped for cash. So they need to issue more shares to pay bills or finance a new project. significantly increased the total number of shares outstanding. We continue to run at a rate which will make fiscal 2000 a record year in all respects - revenues, operating profits, and fully taxed EPS." Last week, after the end of the third quarter, Comtech announced an agreement, which is subject to certain conditions to closing, for the purchase of the business of EFData, the Arizona-based satellite communications division of Adaptive Broadband broadband Term describing the radiation from a source that produces a broad, continuous spectrum of frequencies (contrasted with a laser, which produces a single frequency or very narrow range of frequencies). Corporation. EFData had revenues of approximately $92 million in the 12 months ended March 31, 2000, and designs, develops and manufactures a wide range of satellite communications products for the transmission of voice, data, facsimile and video. Mr. Kornberg said today that EFData would bring significant strategic benefits to Comtech in the telecommunications transmission part of its business. Among these are: - Increased share of the market for modems and transceivers. - Access to a large customer base. - A proven sales force that could contribute to the distribution of Comtech's other products. - Increased manufacturing and research and development capabilities through the integration of EFData and the Comtech Communications Corporation operating unit (both organizations produce satellite communications products and are based in Tempe, Arizona). - Entry into the high-growth satellite solutions network business. Commenting on the status of the Company's contract with the U. S. Army for mobile data communications services, Mr. Kornberg said operational readiness evaluation An evaluation of the operational capability and effectiveness of a unit or any portion thereof. and Army personnel training have been successfully completed. A final report is expected by the end of July, 2000, with initial orders possibly 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 business market position in Europe, South America and Asia," he said. "Overall, we're making excellent progress in the execution of our strategy." A February 2000 follow-on offering of common stock raised net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). of approximately $42 million after underwriting commissions Underwriting Commission The fee investment bankers charge for underwriting a security issue. and expenses. 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 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 April 30
2000 1999 1999(2)
---- ---- --------
Net sales $ 15,485,000 10,473,000 10,473,000
=============== =============== ===========
Operating earnings from
continuing operations 968,000 837,000 837,000
Other income (expense) - net 555,000 (30,000) (30,000)
--------------- --------------- -----------
Income from continuing
operations before provision
(benefit) for income taxes 1,523,000 807,000 807,000
Provision (benefit)
for income taxes 552,000 149,000 282,000
--------------- --------------- -----------
Income from
continuing operations 971,000 658,000 525,000
Loss from operations of
discontinued segment, net of
applicable tax benefit -- (160,000) (160,000)
--------------- --------------- -----------
Net income $ 971,000 498,000 365,000
=============== =============== ===========
Basic income (loss)
per share: (1)
Income from continuing
operations $ 0.15 0.16 0.13
Loss from operations
of discontinued segment -- (0.04) (0.04)
--------------- --------------- -----------
Basic income per share $ 0.15 0.12 0.09
=============== =============== ===========
Diluted income (loss)
per share: (1)
Income from continuing
operations $ 0.13 0.14 0.11
Loss from operations
of discontinued segment -- (0.03) (0.03)
--------------- --------------- ----------
Diluted income per share $ 0.13 0.11 0.08
=============== =============== ==========
Weighted average number
of common and common
equivalent shares outstanding: (1)
Basic computation 6,513,000 4,232,000 4,232,000
=============== =============== ==========
Diluted computation 7,202,000 4,622,000 4,622,000
=============== =============== ==========
Nine Months Ended April 30
2000 1999 1999 (2)
---- ---- --------
Net sales 40,950,000 28,265,000 28,265,000
=============== ============= ===============
Operating earnings from
continuing operations 2,878,000 2,147,000 2,147,000
Other income (expense)-net 536,000 (100,000) (100,000)
---------------- -------------- ---------------
Income from continuing
operations before provision
(benefit) for income taxes 3,414,000 2,047,000 2,047,000
Provision (benefit)
for income taxes 1,246,000 (1,056,000) 716,000
---------------- --------------- --------------
Income from
continuing operations 2,168,000 3,103,000 1,331,000
Loss from operations of
discontinued segment, net of
applicable tax benefit -- (437,000) (437,000)
---------------- --------------- --------------
Net income 2,168,000 2,666,000 894,000
================ =============== ==============
Basic income (loss)
per share: (1)
Income from continuing
operations $ 0.42 0.76 0.33
Loss from operations
of discontinued segment -- (0.11) (0.11)
---------------- --------------- -------------
Basic income per share $ 0.42 0.65 0.22
================ =============== =============
Diluted income (loss)
per share: (1)
Income from continuing
operations $ 0.38 0.70 0.30
Loss from operations
of discontinued segment -- (0.10) (0.10)
---------------- --------------- ------------
Diluted income per share $ 0.38 0.60 0.20
================ =============== ============
Weighted average number
of common and common
equivalent shares outstanding:
Basic computation 5,120,000 4,080,000 4,080,000
--------------- ------
================ =============== ============
Diluted computation 5,772,000 4,467,000 4,467,000
================ =============== ============
(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)
Actual
------------------------------------
April 30, July 31,
2000 (3) 2000
Assets
Cash and short-term investments $ 10,483,000 5,896,000
Marketable investment securities 35,857,000 --
Other current assets 20,787,000 14,827,000
Property, plant and equipment- net 4,708,000 4,310,000
Deferred tax asset-non current 2,917,000 2,917,000
Intangible and other assets 2,396,000 1,897,000
--------------- -----------------
Total assets $ 77,148,000 29,847,000
=============== =================
Liabilities and Stockholders' Equity
Current Liabilities $ 12,288,000 10,531,000
Long-term debt,
less current installments 824,000 959,000
Other long-term liabilities 394,000 --
Stockholders' equity 63,642,000 18,357,000
--------------- -----------------
Total liabilities and
stockholders' equity $ 77,148,000 29,847,000
=============== ==================
(3) Reflects the sale of 2,645,000 shares of common stock at $17.50
per share in February and March 2000.
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