March 6, 2014--Comtech Telecommunications Corp. (NASDAQ:CMTL) today
reported its operating results for the three and six months ended
January 31, 2014.
Net sales for the second quarter of fiscal 2014 were $85.5 million
compared to $74.6 million for the second quarter of fiscal 2013. The
period-over-period increase reflects higher sales in the Company's
telecommunications transmission and RF microwave amplifiers segments,
partially offset by lower sales in its mobile data communications
segment. GAAP net income was $6.0 million, or $0.32 per diluted share,
for the second quarter of fiscal 2014 as compared to $2.4 million, or
$0.14 per diluted share, for the second quarter of fiscal 2013.
Net sales for the six months ended January 31, 2014 were $168.9 million
compared to $165.5 million for the six months ended January 31, 2013.
GAAP net income was $11.3 million, or $0.60 per diluted share, for the
six months ended January 31, 2014 as compared to $9.8 million, or $0.51
per diluted share, for the six months ended January 31, 2013.
Based on the Company's year-to-date results and anticipated second half
performance, the Company is maintaining its fiscal 2014 revenue
guidance, which is expected to range from $325.0 million to $345.0
million, and its adjusted EBITDA guidance, which is expected to be in
the range of $55.0 million to $59.0 million. As a result of stock
repurchases, the Company is increasing its GAAP diluted earnings per
share guidance to a range of $1.14 to $1.26.
In commenting on the Company's performance and updated fiscal 2014
business outlook, Fred Kornberg, President and Chief Executive Officer,
stated, “Although market conditions are difficult, we are pleased with
our solid financial performance through the second quarter of fiscal
2014."
Selected Fiscal 2014 Second Quarter Financial Metrics and Other Items
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Backlog as of January 31, 2014 was $168.0 million compared to $182.8
million as of October 31, 2013.
-
Total bookings for the three and six months ended January 31, 2014
were $70.7 million and $147.2 million, respectively, compared to $67.7
million and $138.0 million for the three and six months ended January
31, 2013, respectively.
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Adjusted EBITDA was $15.5 million and $29.8 million for the three and
six months ended January 31, 2014, respectively, as compared to $10.1
million and $28.6 million for the three and six months ended January
31, 2013, respectively. Adjusted EBITDA is a Non-GAAP financial
measure and is defined in the below table.
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The Company's effective income tax rate for the three months ended
January 31, 2014 was 36.4%. The Company’s effective income tax rate
for the twelve months ending July 31, 2014 is expected to approximate
36.5%, excluding any discrete tax adjustments.
-
At January 31, 2014, the Company had $318.0 million of cash and cash
equivalents.
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During the three months ended January 31, 2014, the Company
repurchased 811,239 shares of its common stock in open-market
transactions with an average price per share of $31.46 and at an
aggregate cost of $25.5 million (including transaction costs). Since
establishing the Company’s first repurchase program on September 23,
2010, the Company has repurchased a total of 13,684,892 shares of
common stock for approximately $406.1 million (including transaction
costs), including 351,336 shares of common stock at an aggregate cost
of approximately $11.0 million (including transaction costs)
repurchased during the period February 1, 2014 through March 5, 2014.
The Company can make additional repurchases of up to approximately
$44.0 million pursuant to its existing $100.0 million stock repurchase
program.
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GAAP diluted earnings per share guidance for fiscal 2014 assumes that
the Company's 3.0% convertible senior notes will be redeemed or
repurchased by the Company for cash in May 2014 (the Company's fourth
quarter of fiscal 2014). If the 3.0% convertible senior notes are
converted into common stock in May 2014, the Company's GAAP diluted
earnings per share guidance for fiscal 2014 would be reduced by
approximately $0.08 to reflect the issuance of additional shares of
common stock. The Company's 3.0% convertible senior notes are
reflected as a current liability in its condensed consolidated balance
sheet at January 31, 2014.
-
Additional information about the Company’s updated fiscal 2014
guidance is included in the Company’s second quarter investor
presentation which is located on the Company’s website at www.comtechtel.com.
Conference Call
The Company has scheduled an investor conference call for 8:30 AM (ET)
on Friday, March 7, 2014. Investors and the public are invited to access
a live webcast of the conference call from the Investor Relations
section of the Comtech web site at www.comtechtel.com.
Alternatively, investors can access the conference call by dialing (866)
952-1906 (domestic), or (785) 424-1825 (international) and using the
conference I.D. of “Comtech.” A replay of the conference call will be
available for seven days by dialing (800) 757-4768 or (402) 220-7227. In
addition, an updated investor presentation, including earnings guidance,
is available on the Company’s web site.
About 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, inefficient or too
expensive. The Company conducts business through three complementary
segments: telecommunications transmission, RF microwave amplifiers and
mobile data communications. 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.
Cautionary Statement Regarding Forward-Looking Statements
Certain information in this press release contains forward-looking
statements, including but not limited to, information relating to the
Company's future performance and financial condition, plans and
objectives of the Company's management and the Company's assumptions
regarding such future performance, financial condition, and plans and
objectives that involve certain significant known and unknown risks and
uncertainties and other factors not under the Company's control which
may cause its actual results, future performance and financial
condition, and achievement of plans and objectives of the Company's
management to be materially different from the results, performance or
other expectations implied by these forward-looking statements. These
factors include the nature and timing of receipt of, and the Company's
performance on, new or existing orders that can cause significant
fluctuations in net sales and operating results; the timing and funding
of government contracts; adjustments to gross profits on long-term
contracts; risks associated with international sales; rapid
technological change; evolving industry standards; new product
announcements and enhancements; changing customer demands; changes in
prevailing economic and political conditions; risks associated with the
Company's legal proceedings and other matters; risks associated with
certain U.S. government investigations; risks associated with the
Company's BFT-1 contracts and the post-award audit of its original BFT-1
contract; risks associated with the Company's obligations under its
revolving credit facility; and other factors described in the Company's
filings with the Securities and Exchange Commission.
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COMTECH TELECOMMUNICATIONS CORP.
AND SUBSIDIARIES
Condensed
Consolidated Statements of Operations
(Unaudited)
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Three months ended January 31,
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Six months ended January 31,
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2014
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2013
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2014
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2013
|
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|
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Net sales
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$
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85,499,000
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74,577,000
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168,867,000
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165,530,000
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Cost of sales
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48,130,000
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42,337,000
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95,120,000
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91,487,000
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Gross profit
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37,369,000
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32,240,000
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73,747,000
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74,043,000
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Expenses:
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Selling, general and administrative
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16,349,000
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15,433,000
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32,547,000
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32,243,000
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Research and development
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8,266,000
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9,278,000
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16,765,000
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19,327,000
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Amortization of intangibles
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1,582,000
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1,582,000
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3,164,000
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3,164,000
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26,197,000
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26,293,000
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52,476,000
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54,734,000
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Operating income
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11,172,000
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5,947,000
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21,271,000
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19,309,000
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Other expenses (income):
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Interest expense
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1,998,000
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2,030,000
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4,016,000
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4,141,000
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Interest income and other
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(228,000
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)
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(315,000
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)
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(501,000
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)
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(591,000
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)
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Income before provision for income taxes
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9,402,000
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4,232,000
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17,756,000
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15,759,000
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Provision for income taxes
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3,419,000
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1,867,000
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6,468,000
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5,959,000
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Net income
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$
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5,983,000
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2,365,000
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11,288,000
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9,800,000
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Net income per share:
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Basic
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$
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0.37
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0.14
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0.70
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0.57
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Diluted
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$
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0.32
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0.14
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0.60
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0.51
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Weighted average number of common
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shares outstanding – basic
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15,970,000
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17,300,000
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16,212,000
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17,340,000
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Weighted average number of common
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and common equivalent shares
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outstanding – diluted
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22,487,000
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17,401,000
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22,552,000
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23,394,000
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Dividends declared per issued and
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outstanding common share as of the
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applicable dividend record date
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$
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0.30
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0.275
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0.575
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0.55
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COMTECH TELECOMMUNICATIONS CORP.
AND SUBSIDIARIES
Condensed
Consolidated Balance Sheets
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January 31, 2014
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July 31, 2013
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(Unaudited)
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(Audited)
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Assets
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Current assets:
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Cash and cash equivalents
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$
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317,993,000
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356,642,000
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Accounts receivable, net
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56,879,000
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49,915,000
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Inventories, net
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70,095,000
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65,482,000
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Prepaid expenses and other current assets
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11,846,000
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7,428,000
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Deferred tax asset, net
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10,030,000
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10,184,000
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Total current assets
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466,843,000
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489,651,000
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Property, plant and equipment, net
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20,332,000
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20,333,000
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Goodwill
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137,354,000
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137,354,000
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Intangibles with finite lives, net
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29,341,000
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32,505,000
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Deferred financing costs, net
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471,000
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1,093,000
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Other assets, net
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873,000
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879,000
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Total assets
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$
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655,214,000
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681,815,000
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Liabilities and Stockholders’ Equity
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Current liabilities:
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Convertible senior notes, current
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$
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200,000,000
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200,000,000
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Accounts payable
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18,600,000
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18,390,000
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Accrued expenses and other current liabilities
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25,926,000
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29,892,000
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Dividends payable
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4,731,000
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4,531,000
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Customer advances and deposits
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15,337,000
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14,749,000
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Interest payable
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1,529,000
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1,529,000
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Total current liabilities
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266,123,000
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269,091,000
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Other liabilities
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4,161,000
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3,958,000
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Income taxes payable
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3,162,000
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2,963,000
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Deferred tax liability, net
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1,823,000
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1,741,000
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Total liabilities
|
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275,269,000
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277,753,000
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Commitments and contingencies
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Stockholders’ equity:
|
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Preferred stock, par value $.10 per share; shares authorized and
unissued 2,000,000
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—
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—
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Common stock, par value $.10 per share; authorized 100,000,000
shares;
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issued 29,186,440 shares and 29,066,792 shares at January 31, 2014
and
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July 31, 2013, respectively
|
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2,919,000
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2,907,000
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Additional paid-in capital
|
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366,889,000
|
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363,888,000
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Retained earnings
|
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405,375,000
|
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403,398,000
|
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|
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|
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775,183,000
|
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770,193,000
|
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Less:
|
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Treasury stock, at cost (13,544,493 shares and 12,608,501 shares at
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January 31, 2014 and July 31, 2013, respectively)
|
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(395,238,000
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)
|
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(366,131,000
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)
|
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Total stockholders’ equity
|
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379,945,000
|
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404,062,000
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Total liabilities and stockholders’ equity
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|
$
|
655,214,000
|
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681,815,000
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COMTECH TELECOMMUNICATIONS CORP.
AND SUBSIDIARIES
Reconciliation
of Non-GAAP Financial Measures to GAAP Financial Measures
(Unaudited)
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Three months ended January 31,
|
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Six months ended January 31,
|
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|
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2014
|
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2013
|
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2014
|
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2013
|
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Reconciliation of GAAP Net Income to Adjusted EBITDA(1):
|
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GAAP net income
|
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|
$
|
5,983,000
|
|
|
2,365,000
|
|
|
11,288,000
|
|
|
9,800,000
|
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Income taxes
|
|
|
|
3,419,000
|
|
|
1,867,000
|
|
|
6,468,000
|
|
|
5,959,000
|
|
Net interest expense and other
|
|
|
|
1,770,000
|
|
|
1,715,000
|
|
|
3,515,000
|
|
|
3,550,000
|
|
Amortization of stock-based compensation
|
|
|
|
1,069,000
|
|
|
806,000
|
|
|
2,016,000
|
|
|
1,551,000
|
|
Depreciation and other amortization
|
|
|
|
3,255,000
|
|
|
3,576,000
|
|
|
6,547,000
|
|
|
7,183,000
|
|
Restructuring charges related to the wind-
|
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|
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|
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down of microsatellite product line
|
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|
|
—
|
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|
(253,000
|
)
|
|
—
|
|
|
569,000
|
|
Adjusted EBITDA
|
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|
|
$
|
15,496,000
|
|
|
10,076,000
|
|
|
29,834,000
|
|
|
28,612,000
|
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|
(1)Represents earnings before interest, income taxes,
depreciation and amortization of intangibles and stock-based
compensation and restructuring charges related to the wind-down of the
microsatellite product line of the Company’s mobile data communications
segment. Adjusted EBITDA is a non-GAAP operating metric used by
management in assessing the Company’s operating results. The Company’s
definition of Adjusted 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. Adjusted EBITDA is also a measure
frequently requested by the Company’s investors and analysts. The
Company believes that investors and analysts may use Adjusted EBITDA,
along with other information contained in its SEC filings, in assessing
its ability to generate cash flow and service debt.
ECMTL
Copyright Business Wire 2014