Comtech Telecommunications Corp. Announces Results for the Second Quarter of Fiscal 2006

Net sales for the second quarter of fiscal 2006 were $95.7million, compared to $78.1 million in the second quarter of fiscal2005. GAAP net income in the second quarter of fiscal 2006 was $13.3million, or $0.50 per diluted share, a significant increase over thesecond quarter of fiscal 2005 net income of $10.2 million, or $0.39per diluted share.

Net sales for the six months ended January 31, 2006 were $202.3million, compared to $134.2 million for the six months ended January31, 2005. GAAP net income for the six months ended January 31, 2006was $24.8 million, or $0.94 per diluted share, a significant increaseover the corresponding period of fiscal 2005 net income of $17.3million, or $0.68 per diluted share.

The fiscal 2006 second quarter results were favorably impacted bygross profit adjustments to certain contracts in the mobile datacommunications and RF microwave amplifiers segments, partially offsetby a warranty accrual in the mobile data communications segment. Theseadjustments are more fully described in our Form 10-Q filed earliertoday and contributed sales of $6.7 million and net after-tax earningsof $3.1 million. The second quarter results for fiscal 2005 wereimpacted by favorable adjustments to certain contracts in thetelecommunications transmission and mobile data communicationssegments that contributed sales of $5.9 million and net after-taxearnings of $2.2 million.

GAAP net income in the three and six months ended January 31, 2006included $1.5 million and $2.8 million, respectively, of pre-taxcompensation expense related to the adoption of Statement of FinancialAccounting Standards No. 123(R) which requires the expensing of stockoption awards. Excluding stock-based compensation expense, dilutedearnings per share for the three and six months ended January 31, 2006were $0.54 and $1.01, respectively.

Earnings before interest, income taxes, depreciation andamortization (including the amortization of stock-based compensation),or EBITDA, were $22.3 million and $42.4 million for the three and sixmonths ended January 31, 2006 versus $16.6 million and $28.8 millionfor the three and six months ended January 31, 2005. Cash flow fromoperating activities for the six months ended January 31, 2006 was$6.3 million compared to $40.5 million for the six months endedJanuary 31, 2005, reflecting an increase in accounts receivable oncertain large contracts during the fiscal 2006 period and theliquidation of a significant receivable in the fiscal 2005 period.

Backlog as of January 31, 2006 was $151.0 million compared to$153.3 million at July 31, 2005. Bookings for the three and six monthsended January 31, 2006 were $89.9 million and $200.0 million,respectively.

In commenting on the Company's performance during the three monthsended January 31, 2006, Fred Kornberg, President and Chief ExecutiveOfficer of Comtech Telecommunications Corp., said, "The second quarterof fiscal 2006 was another outstanding showing for Comtech. Ourleadership positions in the markets we serve continue to pay bigdividends. As can be seen from our segment level results, the strengthhas been experienced across all of our businesses."

Comtech Telecommunications Corp. designs, develops, produces andmarkets innovative products, systems and services for advancedcommunications solutions addressing commercial and government markets.The Company conducts its business through three complementarysegments: telecommunications transmission, mobile data communicationsand RF microwave amplifiers. The Company offers specialized products,systems and services where it believes it has technological,engineering, systems design or other expertise that differentiate itsproduct offerings.

The Company has scheduled an investor conference call for 8:30 AM(ET) on Thursday, March 9, 2006. Investors and the public are invitedto access a live webcast of the conference call from the news sectionof the Comtech web site at www.comtechtel.com. A replay of the webcastwill be available at the same location for 30 days following theconference call. Alternatively, investors can access the conferencecall by dialing (877) 707-9628 (domestic), or (785) 832-2422(international) and using the conference I.D. of "Comtech." A replayof the conference call will be available for seven days by dialing(402) 220-4973. In addition, an updated investor presentation,including earnings guidance, will be available on our web site shortlyafter the conference call.

Certain information in this press release contains forward-lookingstatements, including but not limited to, information relating to thefuture performance and financial condition of the Company, the plansand objectives of the Company's management and the Company'sassumptions regarding such performance and plans that areforward-looking in nature and involve certain significant risks anduncertainties. Actual results could differ materially from suchforward-looking information. The Company's Securities and ExchangeCommission filings identify many such risks and uncertainties, whichinclude 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 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 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 of 2002;

-- 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;

-- 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 Six months ended
January 31, January 31,
2006 2005 2006 2005
---------- ----------- ----------- ------------

Net sales $95,741,000 78,087,000 202,308,000 134,209,000
Cost of sales 54,650,000 45,797,000 121,013,000 74,798,000
---------- ----------- ----------- ------------
Gross profit 41,091,000 32,290,000 81,295,000 59,411,000
---------- ----------- ----------- ------------

Expenses
Selling, general
and administrative 15,809,000 12,033,000 31,857,000 23,257,000
Research and
development 6,007,000 4,954,000 12,756,000 9,850,000
Amortization of
intangibles 603,000 568,000 1,199,000 1,137,000
---------- ----------- ----------- ------------
22,419,000 17,555,000 45,812,000 34,244,000
---------- ----------- ----------- ------------

Operating income 18,672,000 14,735,000 35,483,000 25,167,000

Other expense (income):
Interest expense 672,000 667,000 1,346,000 1,336,000
Interest income (2,172,000) (905,000) (3,947,000) (1,548,000)
---------- ----------- ----------- ------------

Income before
provision for income
taxes 20,172,000 14,973,000 38,084,000 25,379,000
Provision for income
taxes 6,868,000 4,791,000 13,316,000 8,121,000
---------- ----------- ----------- ------------

Net income $13,304,000 10,182,000 24,768,000 17,258,000
========== =========== =========== ============

Net income per share
Basic $ 0.59 0.47 1.09 0.80
========== ========== ============ ===========
Diluted $ 0.50 0.39 0.94 0.68
========== ========== ============ ===========

Weighted average
number of common
shares outstanding -
basic 22,741,000 21,486,000 22,694,000 21,441,000
========== =========== =========== ============

Weighted average number
of common and common
equivalent shares
outstanding assuming
dilution - diluted 27,354,000 27,021,000 27,367,000 26,756,000
========== =========== =========== ============

Reconciliations of Non-GAAP Financial Measures to GAAP
------------------------------------------------------
Financial Measures
------------------

Three months ended Six months ended
January 31, January 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 $14,491,000 10,182,000 26,977,000 17,258,000

Pre-tax stock-based
compensation expense (1,538,000) - (2,834,000) -

Tax effect of stock-
based compensation
expense 351,000 - 625,000 -
----------- ----------- ----------- -----------
GAAP net income $13,304,000 10,182,000 24,768,000 17,258,000
=========== =========== =========== ===========
Three months ended Six months ended
January 31, January 31,
---------------------- ------------------------
2006 2005 2006 2005
---------- ----------- ----------- ------------
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 $ 0.54 0.39 1.01 0.68

Pre-tax stock-based
compensation expense (0.05) - (0.09) -

Tax effect of
stock-based
compensation
expense 0.01 - 0.02 -
----------- ----------- ----------- -----------
GAAP diluted
earnings per share $ 0.50 0.39 0.94 0.68
========== =========== =========== ===========
Three months ended Six months ended
January 31, January 31,
---------------------- ------------------------
2006 2005 2006 2005
---------- ---------- ------------ -----------
Reconciliation of GAAP
Net Income to EBITDA
(2):

GAAP net income $13,304,000 10,182,000 24,768,000 17,258,000

Income taxes 6,868,000 4,791,000 13,316,000 8,121,000

Net interest
expense (income) (1,500,000) (238,000) (2,601,000) (212,000)

Stock-based
compensation
expense 1,538,000 - 2,834,000 -

Depreciation and
amortization 2,107,000 1,852,000 4,074,000 3,666,000
---------- ---------- ----------- ----------

EBITDA $22,317,000 16,587,000 42,391,000 28,833,000
========== ========== ============ ===========




(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 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.

Consolidated Balance Sheets

January 31, July 31,
2006 2005
------------ ------------
Assets (Unaudited)
Current assets:
Cash and cash equivalents $218,677,000 214,413,000
Restricted cash 1,003,000 1,034,000
Accounts receivable, net 75,989,000 56,052,000
Inventories, net 53,920,000 45,103,000
Prepaid expenses and other current assets 5,846,000 4,387,000
Deferred tax asset - current 8,047,000 8,092,000
----------- ------------
Total current assets 363,482,000 329,081,000

Property, plant and equipment, net 20,435,000 18,683,000
Goodwill 22,244,000 22,244,000
Intangibles with definite lives, net 8,121,000 9,123,000
Deferred financing costs, net 2,722,000 2,995,000
Other assets, net 315,000 277,000
----------- ------------
Total assets $417,319,000 382,403,000
=========== ============

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 21,951,000 23,577,000
Accrued expenses and other current
liabilities 35,990,000 34,497,000
Customer advances and deposits 5,093,000 5,282,000
Deferred service revenue 10,245,000 8,210,000
Current installments of other obligations 210,000 235,000
Interest payable 1,050,000 1,050,000
Income taxes payable 3,696,000 1,540,000
----------- ------------
Total current liabilities 78,235,000 74,391,000

Convertible senior notes 105,000,000 105,000,000
Other obligations, less current installments 306,000 396,000
Deferred tax liability - non-current 6,592,000 5,987,000
----------- ------------
Total liabilities 190,133,000 185,774,000

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 January 31, 2006
and July 31, 2005, respectively; issued
22,994,853 shares and 22,781,678 shares
at January 31, 2006 and July 31, 2005,
respectively 2,299,000 2,278,000
Additional paid-in capital 132,938,000 127,170,000
Retained earnings 92,134,000 67,366,000
----------- ------------
227,371,000 196,814,000
Less:
Treasury stock (210,937 shares) (185,000) (185,000)
----------- ------------
Total stockholders' equity 227,186,000 196,629,000
----------- ------------
Total liabilities and stockholders'
equity $417,319,000 382,403,000
=========== ============

ECMTL