Comtech Telecom, der letzte unterbewertete Telekom-Ausrüster! KGV von 10! - 500 Beiträge pro Seite

[Albatossa]

Hallo Börsen-Mario,

will an dieser Stelle noch einen lukrativen Vertrag zwischen der US-Army und Comtech hier einfügen. Hier geht es um das Movement Tracking System und wird von der Armee dazu benutzt, die Position seiner Einheiten und Verbände permanent zu verfolgen und "real-time"-kommunikation zwischen stationären und mobilen Kommandozentralen zu ermöglichen. Comtech erhielt den Auftrag, der sich auf 418 Mio US$ in den nächsten 8Jahren beläuft.
Es ist schon erstaunlich das Comtech nur mit 100Mio US$ bewertet wird, denn der Jahresumsatz für dieses Jahr beträgt ca. 53Mio US$ und wird nächstes Jahr auf 163Mio US$ hochlaufen! Das KUV wird auf unter 1 fallen und das KGV beträgt gerademal 10 bei einem Aktienkurs von 14US$. Ich halte diesen Telekomausrüster - Comtech Telecom im moment als sehr günstig bewertet!

Gruß Albatossa

[Albatossa]

Hallo Leute,

hier aus dem Yahoo-Board die letzte positive Meldung!
Das Anlegermagazin Taipan hat Comtech mit einem Kursziel von 40 Euro
empfohlen! Taipan hält Comtech als ein konservativen Investment, dies halte ich für einwenig übertrieben. Für mich ist diese Firma als ein spekulatives Investment anzusehen, da die Risiken für diese relative kleine Telekomausrüstungsfirma doch sehr groß sind. Ob Comtech mal ein großer Player wird kann noch nicht mit letzter Gewissheit gesagt werden, aber das potenzial wäre durchaus da.


Gruß Albatossa

Tuesday September 12, 8:25 am Eastern Time
Press Release
Comtech Telecommunications Corp. Receives $1.4 Million Contract for Digital Over-the-Horizon Communication System
- Digital Over-the-Horizon System for Communications Between Off-Shore Oil Platforms -
MELVILLE, N.Y.--(BUSINESS WIRE)--Sept. 12, 2000-- - Part of Refurbishment/Replacement of Existing System -

Comtech Telecommunications Corp. (Nasdaq:CMTL - news) announced today the award to its Florida subsidiary, Comtech Systems, Inc. of a contract valued at approximately $1,400,000 from a Southeast Asian subsidiary of a multi-billion dollar global conglomerate, for a digital over-the-horizon microwave communication system. Under this contract, Comtech will design and replace the existing communication system between the customer`s on-shore facilities and two (2) off-shore oil pumping and collection platforms. The Comtech system will be used to carry both voice and data traffic of up to 8 megabits.

This Southeast Asian oil company chose Comtech Systems to supply the digital over-the-horizon communications system because Comtech is a leading supplier of field proven digital equipment and has proven experience in providing advanced specification compliant digital systems on time. Due to the difficulty of the transmission link, Comtech`s DTR Series 91 Digital Radio, it`s patented adaptive S-575 Digital Tropo Modem will be used in conjunction with its latest power control and performance monitoring equipment. The power control and performance monitoring equipment provides automatic adaptive control which reduces the possibility of frequency interference in high density frequency congested areas.

Fred Kornberg, President and Chief Executive Officer of Comtech Telecommunications, said Comtech is the only U. S. company capable of supplying the digital equipment called for under the contract which requires operation at 8 megabits.

``Our success in winning this replacement contract is fresh evidence of Comtech`s leadership in the over-the-horizon microwave telecommunications field,`` Mr. Kornberg said. ``We are in an excellent position to get more business of this kind as other aging telecommunications systems around the world require refurbishment and replacement.``

Comtech Systems, Inc., an Orlando, Florida based company, specializes in system design, integration, supply and commissioning of turnkey communication systems including troposcatter, satellite, and line of site microwave systems.

Comtech Telecommunications Corp. is an innovative player in domestic and global high-technology markets. Through its operating units, Comtech pursues opportunities in three interrelated 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 line of sight and other wireless communications systems. More than 275 distinct Comtech products are in service in more than 100 countries.

Certain of the statements contained herein, 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 are forward-looking in nature and involve certain significant risks and uncertainties. Actual results could differ materially from such forward-looking information. Included among the factors which might cause such results to differ are: the Company`s ability to keep pace with rapid technological changes; our backlog being subject to customer cancellation or modification; our sales to the U.S. Government being subject to funding, deployment and other risks; our fixed price contracts being subject to risk; the highly competitive nature of our markets; our dependence on component availability, subcontractor availability and performance by key suppliers; our dependence on international sales; our mobile data communications business being in a developmental stage. Additionally, these forward-looking statements are qualified in their entirety by the cautionary statements contained in the Company`s Securities and Exchange Commission filings.

[Albatossa]

Hallo Leute,

wie ich schon berichtete, liegt bei Comtech alles wie ich gesagt habe alles im Plan. Es wird sogar ein Rekordergebnis erwartet! Das 4.th Quartal zeigt jetzt doch sehr deutlich, auch wenn das Ergebnis erst in ein paar Wochen amtlich ist, das der Ertragsschub sich einstellen wird. Wie ich schon sagte, das Kursziel von 40 Euro scheint keine Utopie mehr zu sein sondern Realität!

Im Anhang sind die drei letzten Meldungen aus dem Yahooboard.

Gruß Albatossa



Wednesday October 4, 7:54 am Eastern Time
Comtech sees Q4 charge, record fiscal 2000
MELVILLE, N.Y., Oct 4 (Reuters) - Electronic products maker Comtech Telecommunications Corp. (NasdaqNM:CMTL - news) on Wednesday said it would take a one-time charge of $10.2 million in the fourth quarter and expects record revenues, earnings and earnings per share for the full year, excluding nonrecurring items.
The company, which has completed its integration of Comtech Communications and EF Data, said the fourth-quarter charge would be recorded for EF Data`s in-process research and development. Comtech said it would also post a restructuring charge of about $240,000.
``Excluding nonrecurring items, we expect to report later this month record revenues, earnings and earnings per share for fiscal 2000, which, over the six-year period then ended, is expected to show a compound annual growth rate in revenues and earnings greater than 30 percent,`` President and Chief Executive Fred Kornberg said.
Wednesday October 4, 7:01 am Eastern Time
Press Release


Comtech Telecommunications Corp. Completes EF Data Integration With Its Arizona Subsidiary and Expects to Report Record Results
- Comtech EF Data is the new identity of our powerhouse combination of Comtech Communications and EF Data
MELVILLE, N.Y.--(BUSINESS WIRE)--Oct. 4, 2000-- - Record 2000 revenues, earnings and EPS excluding non-recurring
items, expected to be reported
Comtech Telecommunications Corp. (Nasdaq:CMTL - news) announced today the successful completion of the integration of Comtech Communications and EF Data into a newly formed subsidiary Comtech EF Data.
Fred Kornberg, President and CEO, said, ``Comtech EF Data Corp., the new identity of our powerhouse combination, synergistically meshes the people and operations of the technology innovator of frequency converters, high power amplifiers, transceivers and modems, with those of the premier provider of satellite modems and transceivers, giving systems integrators and network suppliers the one-stop-shop we believe they want and need. We see this significantly enhanced operation as a big building block in Comtech`s future.``
Post closing adjustments, agreed upon with the seller, adjust the final purchase price to $52.5 million from $61.5 million. Comtech expects to report a fourth quarter non-recurring charge of $10.2 million for EF Data`s in-process R&D and a restructuring charge of about $240 thousand primarily for costs associated with remaining lease obligations on the former Comtech Communications Corp. facility and the integration and consolidation of facilities and workforces.
Fred Kornberg, President and CEO said, ``Excluding non-recurring items we expect to report later this month, record revenues, earnings and earnings per share for fiscal 2000 which, over the six-year period then ended, is expected to show a compound annual growth rate in revenues and earnings greater than 30%.``
Comtech Telecommunications Corp. (www.comtechtel.com) is an innovative player in domestic and global high-technology markets. Through its operating units, Comtech pursues opportunities in three interrelated 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 line of sight and other wireless communications systems. More than 275 distinct Comtech products are in service in more than 100 countries.
Certain of the statements contained herein, 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 are forward-looking in nature and involve certain significant risks and uncertainties. Actual results could differ materially from such forward-looking information. Included among the factors which might cause such results to differ are: the Company`s ability to keep pace with rapid technological changes; our backlog being subject to customer cancellation or modification; our sales to the U.S. Government being subject to funding, deployment and other risks; our fixed price contracts being subject to risk; the highly competitive nature of our markets; our dependence on component availability, subcontractor availability and performance by key suppliers; our dependence on international sales; our mobile data communications business being in a developmental stage. Additionally, these forward-looking statements are qualified in their entirety by the cautionary statements contained in the Company`s Securities and Exchange Commission filings.
Tuesday October 3, 7:06 am Eastern Time
Press Release


Comtech Telecommunications Corp. Named To Deloitte & Touche Long Island Technology Fast 50 Award
MELVILLE, N.Y.--(BUSINESS WIRE)--Oct. 3, 2000--Comtech Telecommunications Corp. (NASDAQ:CMTL - news) today announced that it has been named to the 2000 Long Island Technology Fast 50 by Deloitte & Touche.
Now in its fourth year on Long Island, the Technology Fast 50 program recognizes and celebrates the region`s 50 fastest growing technology companies based on the percentage growth in revenues over a five year period (1995-1999).
Comtech`s increase in revenue of 130.2% for the period placed it above the median with a 22nd ranking overall.
Fred Kornberg, President and CEO said ``We are very pleased to have achieved this recognition for the second straight year. Our telecommunications segment has accounted for much of our growth, and with our recent acquisition of EFData, we anticipate this segment`s momentum to continue.``
Kornberg continued, ``We believe strong growth will also come from our mobile datacom segment, which develops technology to track and communicate with mobile units. In short, I am thrilled about the future of Comtech.``
For more information on the Deloitte & Touche Fast 50 program, visit www.Fast50.com.
Comtech Telecommunications Corp. is an innovative player in domestic and global high-technology markets. Through its operating units, Comtech pursues opportunities in three interrelated 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 line of sight and other wireless communications systems. More than 275 distinct Comtech products are in service in more than 100 countries.
Certain of the statements contained herein, 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 are forward-looking in nature and involve certain significant risks and uncertainties. Actual results could differ materially from such forward-looking information. Included among the factors which might cause such results to differ are: the Company`s ability to keep pace with rapid technological changes; our backlog being subject to customer cancellation or modification; our sales to the U.S. Government being subject to funding, deployment and other risks; our fixed price contracts being subject to risk; the highly competitive nature of our markets; our dependence on component availability, subcontractor availability and performance by key suppliers; our dependence on international sales; our mobile data communications business being in a developmental stage. Additionally, these forward-looking statements are qualified in their entirety by the cautionary statements contained in the Company`s Securities and Exchange Commission filings.

[Albatossa]

Hallo Leute,

hier noch was aus dem Yahoo-Board!

Gruß Albatossa

Business Summary
Comtech Telecommunications Corp. designs, develops, produces, and markets sophisticated components and systems that are used by telecommunication and defense systems and telecommunications service providers in a broad range of applications. Revenue growth over the past five years has been driven by the global expansion of telecommunications services such as satellite systems, cable television, cellular telephone systems, PCS telephony and the Internet. The Company meets the high performance requirements of its telecommunications customers by drawing upon proprietary expertise in key microwave amplification and transmission technologies developed over more than 32 years of operations. The Company conducts its business through three decentralized but complementary product and service segments: telecommunications transmission, RF microwave amplifiers, and a development-stage mobile data communication services business acquired in 1998.

More from Market Guide: Expanded Business Description


Financial Summary
Comtech Telecommunications Corp. designs, produces, and markets sophisticated components and systems that are used by telecomunications, defense systems, and service providers in a broad range of applications. For the nine months ended 4/00, revenues rose 45% to $41 million. Net income from continuing operations fell 30% to $2.2 million. Results reflect increased sales of over-the-horizon microwave equipment offset by the absence of a non-recurring deferred tax benefit.

[Albatossa]

Hallo Leute,

was besseres konnte Comtech eigentlich nicht passieren. Das namhafte Anlegermagazin Forbes hat Comtech in seine 200 Besten Small Companies in Amerika aufgenommen. Um dort aufgenommen zu werden müssen die Firmen schon ein einigermaßen gutes Managment vorweisen. Auch an die Richtlinien von Umsatz und Gewinn werden bestimmte Foderungen gestellt.
Alles weiter steht im nachfolgenden Veröffentlichung!

Der Kurs von Comtech ist an der NASDAQ um 21,21% gestiegen!

Gruß Albatossa



Tuesday October 17, 7:08 am Eastern Time
Press Release
Comtech Telecommunications Named to Forbes List of 200 Best Small Companies in America
MELVILLE, N.Y.--(BUSINESS WIRE)--Oct. 17, 2000--COMTECH TELECOMMUNICATIONS CORP. (NASDAQ: CMTL - news), a leading provider of telecommunications transmission products and mobile data communications services, today announced that it has been named one of the ``200 Best Small Companies in America`` by Forbes Magazine.

Comtech ranked 131 overall on the Forbes list based on five year and twelve month return on equity, and five year sales and earnings per share growth. Comtech`s 93% five year average EPS growth achieved a ranking of 19 overall in that category.

To be considered by Forbes for its 200 Best list, companies must have sales between $5 million and $350 million, and must have net income of greater than $1 million during the past four quarters.

Fred Kornberg, President and CEO of Comtech, said, ``Our recognition by Forbes is a testament to our consistent and strong growth over the past five years. I want to thank our employees for their dedication and contribution to Comtech`s success.``

Comtech Telecommunications Corp. is an innovative player in domestic and global high-technology markets. Through its operating units, Comtech pursues opportunities in three interrelated 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 line of sight and other wireless communications systems. More than 275 distinct Comtech products are in service in more than 100 countries.

Certain of the statements contained herein, 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 are forward-looking in nature and involve certain significant risks and uncertainties. Actual results could differ materially from such forward-looking information. Included among the factors which might cause such results to differ are: the Company`s ability to keep pace with rapid technological changes; our backlog being subject to customer cancellation or modification; our sales to the U.S. Government being subject to funding, deployment and other risks; our fixed price contracts being subject to risk; the highly competitive nature of our markets; our dependence on component availability, subcontractor availability and performance by key suppliers; our dependence on international sales; our mobile data communications business being in a developmental stage. Additionally, these forward-looking statements are qualified in their entirety by the cautionary statements contained in the Company`s Securities and Exchange Commission filings.

[Albatossa]

Hallo Leute,

hier die neuste Zahlen von Comtech. Die Quartalzahlen und der Jahresabschluß sind an der NASDQ gut aufgenommen worden!

Gruß Albatossa


Tuesday October 24, 7:04 am Eastern Time
Press Release
Comtech Telecommunications Corp. Announces Record Results for Fiscal Year 2000
MELVILLE, N.Y.--(BUSINESS WIRE)--Oct. 24, 2000--

- Revenues up 75% - Backlog up 31% - Excluding non-recurring items:

Net income up 139% - EPS up 74%
COMTECH TELECOMMUNICATIONS CORP. (NASDAQ: CMTL - news), today reported that revenues for the fiscal year ended July 31, 2000 increased by 75% from $37.9 to $66.4 million, and excluding non-recurring items, net income from continuing operations increased by 139% from $1.8 to $4.2 million and diluted earnings per share increased by 74% from $0.39 to $0.68, each reaching record levels.

In connection with the acquisition of EF Data in the last month of fiscal 2000, Comtech incurred non-recurring charges of $10.2 million for acquired in-process R & D and approximately $240 thousand for expenses associated with the integration of facilities and workforce. Reflecting these non-recurring items aggregating approximately $10.4 million, fiscal 2000 had a net loss of $3.9 million or $0.69 per share diluted. Fiscal 1999 net income of $5.3 million and earnings per share of $1.15 diluted, reflected non-recurring items comprising a total $4.6 million net tax benefit due to a net reduction in the Company`s valuation reserve for deferred tax assets and a $1.2 million loss due to the discontinuance of the operation of the Company`s wireless local loop segment.

Revenues for the fourth quarter of fiscal 2000 were a record $25.5 million, compared to $9.6 million in fiscal 1999. Excluding non-recurring items, fourth quarter net income from continuing operations was $2.1 million for fiscal 2000 and $442 thousand for fiscal 1999 and 2000 diluted earnings per share of $0.26 as compared to $0.09 for the prior year. Including non-recurring items, fiscal 2000 fourth quarter had a net loss of $6.1 million or $0.84 per share diluted and fiscal 1999 fourth quarter had net income of $2.6 million or $0.52 per share diluted.

Reference is made to the attached tables for further information

Backlog as of July 31, 2000 was $50.5 million compared to $38.6 million a year earlier.

Fred Kornberg, President and CEO observed that ``the results for fiscal 2000 truly speak for themselves. Our telecommunications segment was our star performer and the EF Data acquisition has significantly heightened our expectations for this core segment.`` Mr. Kornberg continued: ``We are intensely focused on aggressively executing our strategic plan, which calls for an expansion of our broad line of telecommunications and amplifier product offerings, and the commercial development of our mobile data communications business, to the extent appropriate, against the background of future calls for deliveries under our contract with the U. S. Army.``

Mr. Kornberg concluded: ``Comtech has had a remarkable year. Our core business has been consistently reporting strong growth for over five years. This year we`ve posted record revenues and this month we were named one of the 200 Best Small Companies in America by Forbes Magazine in recognition of our strong revenue and EPS growth as well as our strong return on equity. Both internal growth and acquisitions have been sharing the spotlight, and we expect this to continue. We believe we have arrived at a new staging platform, a springboard from which to move into the future.``

Comtech Telecommunications Corp. is an innovative player in domestic and global high-technology markets. Through its operating units, Comtech pursues opportunities in three interrelated 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 line of sight and other wireless communications systems. More than 275 distinct Comtech products are in service in more than 100 countries.

The Company has scheduled an investor conference call for 11:00AM EDT Tuesday, October 24, 2000. Investors and the public are invited to access a live webcast of the conference call from the news section of the Comtech web site, www.comtechtel.com. A replay of the webcast will be available at the same location for 30 days following the conference call.

Certain of the statements contained herein, 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 are forward-looking in nature and involve certain significant risks and uncertainties. Actual results could differ materially from such forward-looking information. Included among the factors which might cause such results to differ are: the Company`s ability to keep pace with rapid technological changes; our backlog being subject to customer cancellation or modification; our sales to the U. S. Government being subject to funding, deployment and other risks; our fixed price contracts being subject to risk; the highly competitive nature of our markets; our dependence on component availability, subcontractor availability and performance by key suppliers; our dependence on international sales; our mobile data communications business being in a developmental stage. Additionally, these forward-looking statements are qualified in their entirety by cautionary statements contained in the Company`s Securities and Exchange Commission filings.


COMTECH TELECOMMUNICATIONS CORP.
.................Consolidated Statements of Operations
..............................(Unaudited)

........................Three Months Ended........Fiscal Year Ended
.............................July 31 (1)..............July 31 (1)
-----------------------------------------------
............................2000.......1999.......2000.........1999

Net sales................$ 25,494.....9,621....$ 66,444.......37,886

Costs of sales.............16,862.....6,724......45,942.......26,405

Gross profit................8,632.....2,897......20,502.......11,481

Operating expenses:
Selling, general and
..administrative............4,747.....1,679......12,058........6,554
Research and development....1,033.......515.......2,644........2,022
In-process research and
..development..............10,218.......--.......10,218.........--
Amortization of intangibles...160........23.........230...........78

Total operating expenses...16,158.....2,217......25,150........8,654


Operating income (loss)
from continuing
operations (EBIT).........(7,526)......680......(4,648).......2,827
Other (income) expense:
Interest expense..............282........48.........381..........204
Interest income..............(876)......(21).....(1,511).........(65)
Other.........................001.......(27)........201..........(39)

Income (loss) from
continuing operations before
provision (benefit)
for income taxes..........(7,133)......680......(3,719).......2,727
Provision (benefit)
for income taxes..........(1,161)...(2,698).........85.......(3,754)

Income (loss) from
continuing operations.....(5,972)....3,378......(3,804).......6,481
Loss from operations of
discontinued segment (net
of applicable taxes)........(137).....(779).......(137)......(1,216)

Net income (loss)........$ (6,109)....2,599.....$(3,941).......5,265
================================================

Basic income (loss)
per share:
Income (loss) from
continuing operations....$ 00.82)...0.78.....$ (0.67)........1.56
Loss from operations
of discontinued segment....(0.02)..(0.18)......(0.02).......(0.29)

Basic income (loss)
per share................$ (0.84)...0.60.....$ (0.69)........1.27

Diluted income (loss)
per share:
Income (loss) from
continuing operations....$ (0.82)...0.68.....$ (0.67)........1.42
Loss from operations
of discontinued segment....(0.02)..(0.16)......(0.02).......(0.27)

Diluted income (loss)
per share................$ (0.84)...0.52.....$ (0.69)........1.15
===============================================
Weighted average
number of common shares
outstanding-basic
computation............7,265,000..4,330,000..5,663,000....4,143,000
Potential dilutive
common shares............--.........623,000......--.........430,000

Weighted average number
of common and common
equivalent shares
outstanding assuming dilution-
diluted computation.....7,265,000..4,953,000..5,663,000.....4,573,000
================================================
EBITDA (2)...............$ 3,846......1,012....$ 7,955.........4,337
=================================================

(1) In thousands of dollars except for earnings per share and shares
outstanding.

(2) Earnings from continuing operations before interest, taxes,
depreciation and amortization and non-recurring items.

THE FOLLOWING PRO-FORMA SUPPLEMENTAL INFORMATION EXCLUDES
NON-RECURRING ITEMS, DISCONTINUED OPERATIONS AND ASSUMES A STATUTORY
EFFECTIVE TAX RATE:

........................Three Months Ended..........Fiscal Year Ended
.............................July 31.....................July 31
........................2000..........1999..........2000.........1999

Net income excluding
non-recurring items..$ 2,074..........442.......$ 4,242........1,773

Basic net income per
share excluding
non-recurring
items...................0.29.........0.10..........0.75.........0.43

Diluted net income =================================================
per share excluding
non-recurring items.....0.26.........0.09..........0.68.........0.39
=================================================




COMTECH TELECOMMUNICATIONS CORP.
Consolidated Balance Sheets
(Audited)


.................................................July 31..(1)
.........................................-----------------------------
............Assets.........................2000..............1999
..........................----..............----
Current assets:
..Cash and cash equivalents..............$ 12,587.............5,896
..Marketable investment securities.........18,634..............--
..Accounts receivable, less
...allowance for doubtful accounts
....of $806,000 in 2000
....and $145,000 in 1999...................24,204............5,152
..Other receivables.........................9,038...............--
..Inventories, net.........................26,170.............7,879
..Prepaid expenses and
...other current assets.......................583...............138
..Deferred tax asset - current..............3,125.............1,658
.......................................------------......-------------
.........Total current assets..............94,341............20,723

Property, plant and equipment, net.........10,738.............4,310
Intangible assets, net of accumulated
amortization of $308,000 in 2000
..and $78,000 in 1999......................17,669.............1,623
Other assets..................................468...............274
Deferred tax asset - non current............2,815.............2,917

.......................................-------------......------------
.........Total assets..................$..126,031............29,847...
........................................============......============

Liabilities and Stockholders` Equity

Current liabilities:
..Current installments
...of long-term debt....................$..2,100................--
Current installments of capital
...lease obligations (including
...payable to related party of
...$347,000 in 2000 and
...$316,000 in 1999)........................608................605

Accounts payable.........................11,260..............3,763
Accrued expenses and other
..current liabilities....................13,657.............5,831
Income tax payable........................1,449................195
Net liabilities of discontinued operation...--.................137
........................................------------......-------------
........Total current liabilities........29,074.............10,531

Capital lease obligations, less current
..installments (including payable
..to related party of $154,000 in 2000
..and $501,000 in 1999).....................908................959
Long-term debt, less current
..installments...........................37,900................--
Other long-term liabilities.................367................--

.......................................------------......-------------
........Total..labilities................68,249.............11,490

Stockholders` equity:
..Preferred stock, par value $.10
...per share; shares authorized and
...unissued 2,000,000......................--.................--
..Common stock, par value $.10
...per share; authorized 30,000,000
...shares, issued 7,349,176 shares
...in 2000 and 4,471,368 shares in 1999....735.................447
Additional paid-in capital..............66,740..............23,801
Accumulated other
.comprehensive income.....................(113)...............--
Accumulated deficit.....................(8,687).............(4,746)

.......................................------------.......------------
.........................................58,675.............19,502
Less:
.Treasury stock (82,500 shares
..in 2000 and 1999).......................(184)..............(184)
.Deferred compensation....................(709)..............(961)

.......................................------------......-------------
..........Total stockholders` equity.....57,782.............18,357

.......................................------------..... -------------
..........Total liabilities and $ 126,031 29,847
...........stockholders` equity
......................................============.......=============

(1)..In thousands of dollars

[Albatossa]

October 30, 2000

COMTECH TELECOMMUNICATIONS CORP /DE/ (CMTL)
Annual Report (SEC form 10-K)
MANAGEMENT`S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

We design, develop, produce and market sophisticated wireless telecommunications transmissions components and systems and solid state, high-power broadband amplifiers for commercial and government purposes. Our products are used in point-to-point and point-to-multipoint telecommunications and reception applications such as satellite communications, over-the-horizon microwave systems, cellular telephone systems and cable and broadcast television. Our broadband amplifier products are also used in cellular and PCS instrumentation testing and certain defense systems.

Our business consists of three segments: mobile data communications services, telecommunications transmission, and RF microwave amplifiers. We began reporting financial results on a segment basis in fiscal 1999. Our sales of mobile data communications services are expected to increase substantially if, when and as orders are received under our contract with the U.S. Army and we penetrate other government and commercial markets for these services.

Our sales are made to domestic and international customers, both commercial and governmental. International sales (including sales to prime contractors` international customers) are expected to increase in the foreseeable future due to the growing worldwide demand for wireless and satellite telecommunications and our expanded line of product offerings to meet these demands.

A substantial portion of our sales is derived from a limited number of relatively large customer contracts, the timing of which cannot be predicted. Quarterly sales and operating results may be significantly affected by one or more of such contracts. For example, sales to one customer in fiscal 2000 and 1999 accounted for 43.1% and 27.0% of total net sales, respectively. Accordingly, we experience significant fluctuations in sales and operating results from quarter to quarter and, because our backlog is comprised in large part of a small number of large contracts, we expect such fluctuations to continue in the near future.

Sales consist of stand-alone products and systems. For the past five years we have endeavored to achieve greater product sales as a percentage of total sales, because product sales generally have higher gross profit margins than systems sales. In the future, as our installed base of mobile data communications terminals is established, we expect an increasing amount of our sales will be attributable to the recurring revenue component of our mobile data communications services segment.

We generally recognize income under contracts only when the products are shipped. However, when the performance of a contract will extend beyond a 12-month period, income is recognized on the percentage-of-completion method.

Our gross profit is affected by a variety of factors, including the mix of products, systems and equipment sold, production efficiency and price competition.



Selling, general and administrative expenses consist primarily of salaries and benefits for marketing, sales and administrative employees, advertising and trade show costs, professional fees and amortization of deferred compensation. Deferred compensation consists of restricted stock awards granted to certain operating management personnel. Under these grants, the employees purchased shares of our common stock at prices representing a discount to the then market value. The shares vest ten years after issuance, subject to earlier vesting upon achievement of certain operating unit performance goals.

Our research and development expenses relate to both existing product enhancement and new product development. A portion of our research and development efforts is related to specific contracts and is recoverable under those contracts because they are funded by the customers. Such customer-funded expenditures are not included in research and development expenses for financial reporting purposes but are reflected in cost of sales.

As of the end of fiscal 1998, we had a 100% valuation allowance against our gross deferred tax assets. During fiscal 1999, based on our assessment of the recoverability of the deferred tax assets, we concluded that a full valuation allowance was no longer necessary given our estimates of future earnings and the expected timing of temporary difference reversals. Accordingly, we reduced the valuation allowance to $777,000 and recorded a corresponding one-time $4.6 million deferred tax benefit in fiscal 1999. In fiscal 2000, our gross deferred tax asset was $8,340,000 offset by a valuation reserve of $2,400,000, relating to the write off of in-process research and development resulting from the EF Data acquisition.

In the first quarter of fiscal 1999, we acquired the assets and assumed certain liabilities of two businesses through newly formed, wholly-owned subsidiaries: Comtech Mobile Datacom Corp., our mobile data communications services business; and Comtech Wireless, Inc., our wireless local loop business. Both acquisitions were accounted for using the purchase method of accounting. The goodwill resulting from the purchase of the mobile data communications services business (i.e., the excess of the purchase price over the fair value of the net assets acquired and liabilities assumed) is being amortized over a 20-year period. In June 1999, the U.S. Army awarded Comtech Mobile Datacom Corp. a contract which, subject to, among other things, government funding and deployment decisions and additional field testing, provides for the purchase of up to $418.2 million in mobile terminal units and global data communications services over an eight-year period. Sales will be dependent upon annual government funding and deployment decisions. Sales by our mobile data communications services segment in fiscal 2000 and 1999 were approximately $2.2 million and $318,000, respectively.

Comtech Wireless, Inc. designed and manufactured wireless local loop systems for the rural and remote telephony market. Due to disappointing results and uncertain prospects, effective July 31, 1999, we adopted a plan to liquidate Comtech Wireless, Inc. on or about January 31, 2000. The results of operations for the segment have been shown as a discontinued operation in the consolidated financial statements. Comtech Wireless, Inc. did not have any sales in fiscal 1999 and 2000.

In January 2000, we acquired certain assets and assumed certain liabilities of Hill Engineering Inc. ("Hill") in exchange for 50,000 shares of the Company`s common stock. The acquisition is being accounted for under the "purchase method of accounting". The purchase price amounted to approximately $371,000 which principally represents the fair value of the initial 30,000 shares of common stock to be issued to Hill. The remaining 20,000 shares were placed in escrow and will only be released to the sellers if certain profit goals, as defined in the agreement are met and will be recorded at fair value on the date when the profit goals are met. This business will operate in the RF Microwave Amplifiers segment. The excess of the purchase price over the net assets acquired of approximately $606,000 is included in intangible assets in the accompanying consolidated balance sheet and is being amortized over a 15-year period.

In July 2000, we acquired the business of EFData, the satellite communications division of Adaptive Broadband Corporation for cash. The acquisition is being accounted for under the "purchase method" of accounting. Accordingly, we allocated the purchase price to the assets purchased and the liabilities assumed based upon the estimated fair values at the date of the acquisition. The excess of the purchase price over the fair values of the net assets acquired was approximately $26.2 million, of which $10.2 million was allocated to in-process research and development and was expensed as of the acquisition date, $7.5 million was valued as purchased technology, $3.6 million was valued as other purchased intangibles which are being amortized over 5-7 years and



$4.8 has been recorded as goodwill, which is being amortized over ten years. Forty million dollars of the purchase price was supplied through institutional secured borrowings bearing interest at 9.25% due in installments through 2005, and the balance from internal company funds. (See notes 2 and 8 of the Notes to Consolidated Financial Statements).

Results of Operations

The following table sets forth, for the periods indicated, certain income and expense items expressed as a percentage of our net sales:


Year Ended July 31,
-------------------------
2000 1999 1998
---- ---- ----

Net sales 100% 100.0% 100.0%
Gross margin 30.9 30.3 29.2
Selling, general and administrative expenses 18.5 17.5 20.0
Research and development expenses 4.0 5.3 4.4
Operating income (loss) from continuing operations (7.0) 7.5 4.8
Interest expense (income), net (1.7) 0.4 0.7
Income (loss) before income taxes (5.6) 7.2 4.3
Net income (loss) (5.9) 13.9 3.7

The following table sets forth the percentage change in certain of our income and expense items from fiscal 1998 to 1999, and 1999 to 2000, respectively.

Year Ended July 31,
% Change % Change
from 1999 to 2000 from 1998 to 1999
----------------- -----------------
Net sales 75.4% 25.8%
Gross profit 78.6 30.7
Selling, general and administrative
expenses 84.0 9.0
Research and development expenses 30.8 53.3
Operating income (loss) from
continuing operations (264.4) 94.7
Interest expense 86.8 (12.8)
Interest income 2,224.6 80.6
Income (loss) before income taxes (236.4) 112.4
Net income (loss) (174.9) 376.9

Comparison of Fiscal 2000 and 1999
Net Sales Consolidated net sales were $66.4 million and $37.9 million for fiscal 2000 and 1999, respectively, representing an increase of $28.5 million or approximately 75.4%. This increase was due primarily to increased sales by our telecommunications transmission segment, principally to one customer, a major U.S. prime contractor, of over-the-horizon microwave equipment. Sales to this customer were $28.6 million and $10.2 million for fiscal 2000 and 1999, respectively, representing 43.1% and 27.0% of consolidated net sales for fiscal 2000 and 1999, respectively. The total order received from this customer in fiscal 1999 was approximately $43.6 million. The balance of $4.8 million is expected to be recognized as revenue during fiscal 2001. There were no other customers in fiscal 2000 or 1999 that represented 10% or more of consolidated net sales. Included in the telecommunications transmission segment are products for satellite earth stations. Sales of these products increased 162.5% due to additional product offerings which were partly the result of our acquisition of EF Data in July 2000. Sales from our RF microwave amplifier segment declined by approximately 24.0% compared to fiscal 1999, due to the timing of the receipt of expected follow-on orders. Sales from our mobile data communications services segment increased from nominal sales, less than 1%, in fiscal 1999 to 3.3% of consolidated net sales in fiscal 2000. International sales increased by approximately $24.7 million or 107.9%, representing 71.4% and 60.1%, of total net sales for fiscal



2000 and 1999, respectively. Domestic sales increased by $4.0 million or 43.5%, representing 19.8% and 24.3% of total net sales for fiscal 2000 and 1999, respectively. U.S. government sales decreased by $65,000 or 1.1%, representing 8.8% and 15.6% of total net sales for fiscal 2000 and 1999, respectively.

Gross Profit Gross profit was $20.5 million and $11.5 million for fiscal 2000 and 1999, respectively, representing an increase of $9.0 million or approximately 78.6%. The increase was due primarily to the increase in sales volume in fiscal 2000 compared to fiscal 1999. Gross margin as a percentage of net sales was 30.9% and 30.3% in fiscal 2000 and 1999, respectively, due primarily to the increase in sales of products with lower per unit costs, which yield higher gross margins.

Selling, General and Administrative Selling, general and administrative expenses were $12.1 million and $6.6 million in fiscal 2000 and 1999, respectively, representing an increase of $5.5 million or approximately 84.0%. This was due primarily to the increase in costs associated with supporting increased sales such as administrative, selling and marketing salaries and benefits, sales commissions, travel and other related expenses. We also incurred additional expenses related to our acquisition of EF Data including the integration of the facilities and workforce.

Research and Development Research and development expenses were $2.6 million and $2.0 million in fiscal 2000 and 1999, respectively, representing an increase of $600,000 or approximately 30.8%. As an investment for the future we are continually enhancing and developing new products and technologies. In fiscal 2000, the increase is due primarily to expenses incurred by our recently acquired business, for the continuation of research and development for the projects that were underway at the time of the acquisition. Whenever possible, we seek customer funding for research and development to adapt our products to specialized customer requirements. During fiscal 2000 and 1999, customers reimbursed us $4.3 million and $1.8 million, respectively, which amounts are not reflected in the reported research and development expenses.

In-Process Research and Development In connection with the purchase of EF Data, $10.2 million of the purchase price was allocated to in-process research and development. This allocation was part of the overall purchase price allocation performed by an independent third party engaged by us. The value of in-process research and development is based upon new product development projects that were underway at the time of the acquisition and are expected to eventually lead to new products but had not yet established technological feasibility and for which no future alternative use was identified. Our financial statements for fiscal 2000 include a one-time charge of $10.2 million for the write-off of this amount in accordance with generally accepted accounting principles.

Operating Income (Loss) As a result of the foregoing factors, we had an operating loss from continuing operations of $4.6 million for fiscal 2000 as compared to operating income of $2.8 million for fiscal 1999, representing a decrease of $7.4 million.

Interest Expense Interest expense was $381,000 and $204,000 for fiscal 2000 and 1999, respectively, representing an increase of $177,000 or 86.8%. The increase in fiscal 2000 was due primarily to the interest on $40.0 million of long-term debt that we incurred during July 2000 that was used to partially finance the EF Data acquisition. The balance of interest expense in fiscal 2000 and all of the interest expense in fiscal 1999 was interest associated with our capital lease obligations.

Interest Income Interest income was $1.5 million and $65,000 for fiscal 2000 and 1999, respectively, representing an increase of $1.4 million. This increase was due to the increase in the amount of cash available to invest during this period primarily as a result of the proceeds received from a follow-on stock offering completed in the third quarter of fiscal 2000. Interest income was primarily derived from the short term investments of the cash on hand in excess of working capital requirements.

Provision (Benefit) for Income Tax On income from continuing operations we had an income tax provision of $85,000 in fiscal 2000 as compared to an income tax benefit in fiscal 1999 of $3.8 million. Our income tax provision is calculated according to the provisions of SFAS No. 109, "Accounting for Income Taxes". In applying the provisions of SFAS No. 109, temporary differences due to the timing of the deductibility of items for income tax purposes as compared to the timing of deductibility for financial reporting purposes, are recorded as deferred tax assets and liabilities. As a result of these temporary differences , our effective tax rates were 2.2% and (137.6)% for fiscal 2000 and 1999, respectively.



Discontinued Operations We adopted a plan, effective as of July 31, 1999, to liquidate our wireless local loop business. The loss from operations, net of a tax benefit, for fiscal 2000, was $137,000.

Comparison of Fiscal 1999 and 1998

Net Sales Consolidated net sales were $37.9 million and $30.1 million for fiscal 1999 and 1998, respectively, representing an increase of $7.8 million or 25.8%. This increase was due primarily to increased sales by our telecommunications transmission segment of over-the-horizon microwave equipment, principally to one customer, a major U.S. prime contractor. Total sales to this customer during fiscal 1999 were approximately $10.2 million, representing 27.0% of the total net sales. The total order received from this customer in fiscal 1999 was approximately $43.6 million and the contract balance of approximately $33.4 million at July 31, 1999 is expected to be recognized as revenue in fiscal 2000 and 2001. There were no other customers for which total sales in fiscal 1999 represented 10% or more of net sales. In fiscal 1998, sales to a different customer represented 12.2% of total net sales. Included in the telecommunications transmission segment are sales of our satellite equipment products, which increased in fiscal 1999 by approximately 65.8%, due to additional product offerings. Sales from our RF microwave amplifier segment declined by approximately 14.9% compared to fiscal 1998, due to the timing of receipt of follow-on orders. International sales increased by approximately $8.8 million or 62.7%, representing 60.1% and 46.5% of total net sales for fiscal 1999 and 1998, respectively. Domestic sales decreased by $1.0 million or 9.9%, representing 24.3% and 34.0%, of total net sales for fiscal 1999 and 1998, respectively. U.S. government sales increased by $20,000 or .3%, representing 15.6% and 19.5% of total net sales for fiscal 1999 and 1998, respectively.

Gross Profit Gross profit was $11.5 million and $8.8 million for fiscal 1999 and 1998, respectively, representing an increase of $2.7 million or 30.7%. The increase was due primarily to the increase in sales volume in fiscal 1999 compared to fiscal 1998. Gross margin as a percentage of net sales was 30.3% and 29.2% in fiscal 1999 and 1998, respectively, due primarily to increased sales of products coupled with lower per unit costs.

Selling, General and Administrative Selling, general and administrative expenses were $6.6 million and $6.0 million in the fiscal 1999 and 1998, respectively, representing an increase of $541,000 or 9.0%. This increase was due primarily to higher sales commissions, marketing personnel expenses, deferred compensation and other administrative expenses. As a percentage of net sales, these expenses were 17.3% and 20.0% in fiscal 1999 and 1998, respectively. Although increased expenses were required to support the higher sales volume in fiscal 1999 compared to fiscal 1998, these expenses increased at a lower rate than the increase in sales. In addition, the increased expenditures reflect those required by our mobile data communications services segment, which was formed in fiscal 1999.

Research and Development Research and development expenses were $2.0 million and $1.3 million in fiscal 1999 and 1998, respectively, representing an increase of $703,000 or 53.3%. We are continually enhancing and developing new products and technologies. In fiscal 1999, the research and development expenses were primarily for developing additional satellite product offerings and redesigning components of over-the-horizon microwave products. Whenever possible, we seek customer funding for research and development to adapt our products to specialized customer requirements. During fiscal 1999 and 1998, we were reimbursed $1.8 million and $356,000, respectively. These amounts are not reflected in the reported research and development expenses.

Operating Income As a result of the foregoing factors, we had operating income, from continuing operations, of $2.8 million and $1.5 million in fiscal 1999 and 1998, respectively, representing an increase of $1.4 million or 94.7%.

Interest Expense Interest expense was $204,000 and $234,000 for fiscal 1999 and 1998, respectively, representing a decrease of $30,000 or 12.8%. Interest expense in both years was due primarily to interest associated with our capital lease obligations.

Interest Income Interest income was $65,000 and $36,000 for fiscal 1999 and 1998, respectively, representing an increase of $29,000 or 80.6%. The increase was due primarily to the increase in the amount of cash available to invest in fiscal 1999 as compared to fiscal 1998. Interest income was primarily derived from the cash on hand in



excess of working capital requirements that is invested in highly liquid, short-term money-market funds consisting primarily of direct obligations of the U.S. government.

Provision (Benefit) for Income Tax The benefit for income taxes applicable to continuing operations in fiscal 1999 was $3.8 million compared to the provision for income taxes of $180,000 in fiscal 1998. Due to our net operating loss carryforwards and other temporary differences between recognition of income for financial reporting and income tax purposes, we had deferred tax assets of $5.4 and $5.3 million in fiscal 1999 and 1998, respectively. As of July 31, 1998, we assessed a 100% valuation allowance against this deferred tax asset. During fiscal 1999, we concluded that a full valuation allowance was no longer necessary given our estimates of future earnings based on substantial new contracts entered into and the expected timing of temporary difference reversals. Accordingly, we reduced the valuation allowance to $777,000 during fiscal 1999. The effect of this change resulted in a tax benefit to us in fiscal 1999 of $4.6 million, which was partially offset by the provision for the fiscal 1999 income tax expense.

Discontinued Operation We adopted a plan, effective as of July 31, 1999, to liquidate our wireless local loop business. The loss from operations, net of a tax benefit, for fiscal 1999, was $622,000. The loss on the disposition of the segment, net of a tax benefit, was $594,000, which includes a provision of $430,000 for operating losses expected to be incurred during the phase-out period.

Liquidity and Capital Resources

Our cash and cash equivalent position increased by $6.7 million, from $5.9 million at July 31, 1999 to $12.6 million at July 31, 2000. We had marketable investment securities of $18.6 million at July 31, 2000 whereas at July 31, 1999, we did not have any investment in marketable securities. In January 2000, we acquired the assets and assumed certain liabilities of Hill Engineering, Inc. in exchange for 50,000 shares of our common stock. During the third quarter of fiscal 2000, we completed a public offering of 2.6 million shares of our common stock resulting in net proceeds to us of approximately $42.4 million. In July 2000, we acquired the business of EF Data, a division of Adaptive Broadband Corp. for which we paid $61.5 million, subject to post closing adjustments. We financed the acquisition with the proceeds of $40.0 million of secured long-term debt and the remainder of the purchase price was paid out of our then existing cash balances. We also incurred acquisition costs of approximately $1.9 million. Subsequent to the end of fiscal 2000, the post closing adjustments were completed and we received $9.0 million in September 2000 from the seller. This amount is reflected in the financial statements for fiscal 2000 as other receivables.

For the year ended July 31, 2000, cash provided by operating activities, net of the assets and liabilities acquired from Hill Engineering Inc. and EF Data, was $8.0 million. Cash used in investing activities was $83.3 million and cash provided by financing activities was $82.1 million. Working capital at July 31, 2000 was $65.3 million.

Excluding the amounts acquired through our acquisitions in fiscal 2000, our accounts receivable increased by $2.1 million from July 31, 1999 to July 31, 2000, due primarily to the timing of shipments, and the subsequent collections of the related receivable in the following fiscal period. The allowance for doubtful accounts of $145,000 at July 31, 2000 remained the same as July 31, 1999. We review our allowance for doubtful accounts periodically and believe it adequately reflects the collectibility of our receivables based on past experience and our credit standards. Generally, foreign customers are required to secure payment by an irrevocable letter of credit before an order is accepted. As the amount of accounts receivable acquired through recent acquisitions is significantly higher than previous amounts, we have secured a credit insurance policy in the amount of $10.0 million for certain foreign receivables.



Excluding the amounts acquired through our acquisitions, in fiscal 2000, inventory increased by $4.6 million from July 31, 1999 to July 31, 2000 primarily due to increased demand for orders of our products which require shorter delivery times and therefore the necessity to maintain higher levels of inventory. We generally operate on a job-order cost basis, that is, costs are incurred as work-in-process inventory for specific contracts or jobs. Accordingly, inventory levels will vary as a function of our order backlog. Some of our product lines require a more rapid delivery response to customers` requirements and require us to provide for a level of "off-the-shelf" equipment inventory availability. The only other general inventory that we maintain is for basic components which are common to many of our products.

Excluding the amounts acquired through our acquisitions in fiscal 2000, accounts payable increased by $3.0 million from July 31, 1999 to July 31, 2000 primarily due to an increase of inventory purchases.

Excluding the amounts acquired through our acquisitions, accrued expenses and other current liabilities increased by $3.1 million due primarily to increased warranty reserves and higher accrued commissions, both due primarily to the higher sales level.

During fiscal 2000, we made leasehold improvements and purchases of machinery and equipment of $1.8 million, of which $567,000 was financed by capital leases.

At July 31, 2000, we had capital lease obligations, including current portion, of $1.5 million. Our long-term debt, including current portion, is $40.0 million. It is payable over a five-year period and bears an interest rate of 9.25%. Other long-term liabilities are for deferred revenue related to an extended warranty contract.

Our bank credit facility was terminated as of July 10, 2000 as a result of our securing long-term financing of $40.0 million in connection with our acquisition of EF Data. We believe that our cash and cash equivalents and short term investments will be sufficient to meet our operating cash requirements for at least the next year.

Year 2000 Compliance

To date, the Company has not encountered any significant effects of the Y2K problems either internally or with third parties. This does not guarantee that problems will not occur in the future or have not yet been detected.

Risk Factors

Many statements in this Form 10-K constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements include:


o Statements of goals, intentions and expectations;
o Estimates of risks and of future costs and benefits; and
o Statements of the ability to achieve financial and other goals.

These forward-looking statements are subject to significant uncertainties because they are based upon or are affected by:

o Management`s estimates and projections of U.S. and international
economic and business conditions; and
o Future laws and regulations; and
o A variety of other matters, including those described below

Because of these uncertainties, actual future results may be materially different from the results indicated by these forward-looking statements, which are inherently predictive and speculative. The following are some of the risks that could cause actual results to differ significantly from those expressed or implied by such statements.


All of our businesses are subject to rapid technological change; we must keep pace with changes to compete successfully.

We are engaged in businesses characterized by rapid technological change, evolving industry standards, frequent new product announcements and enhancements, and changing customer demands. The introduction of products and services embodying new technologies and the emergence of new industry standards could render our products and services obsolete or non-competitive. The technology used in our products and services evolves rapidly, and our business position depends, in large part, on the continuous refinement of our scientific and engineering expertise and the development, either through internal research and development or acquisitions, of new or enhanced products and technologies. We may not have the economic or technological resources to be successful in such efforts and we may not be able to identify and respond to technological improvements made by our competitors in a timely or cost-effective fashion. A significant technological breakthrough by others, including smaller competitors or new firms, could have a material adverse impact on our business.

Our mobile data communications services business is subject to risk.

Our mobile data communications services business has a limited operating history and to date has generated modest sales. It is subject to all of the risks inherent in the operation of a new business enterprise. Moreover, our business experience has been in producing products, not in providing services. We may not be able to implement and operate our mobile data communications services business successfully. In addition to the other risk factors described in this section, the risk factors applicable to our mobile data communications services business include the following:


o Although the U.S. Army contract obligates us to provide up to 56,000
mobile terminals and worldwide satellite services over an eight year
period as and when ordered by the U.S. Army and at the fixed prices
and other terms set forth in this contract, the U.S. Army is not
obligated to purchase any terminals or services under this contract
and may terminate this contract at its convenience. Sales under the
U.S. Army contract will be subject to unpredictable funding and
deployment decisions. We received our first production orders under
this contract in July 2000 for $3.1 million, but we cannot assure
you that any further orders will be received.

o Certain components that we need have purchasing lead-time of four
months or longer, and the U.S. Army contract requires us to provide
mobile terminals within 30 days after we receive an order.

o Our success in commercial markets will depend on, among other
things, our ability to access the best distribution channels, the
development of applications which create real value for the customer
and our ability to attract and retain qualified personnel. Delays in
delivering terminals could also adversely affect our ability to
obtain and retain commercial customers.

o In general, as we seek to grow our mobile data communications
services business, we anticipate that we will need to maintain a
substantial inventory in order to provide terminals to our customers
on a timely basis. If forecasted orders are not received, we might
be left with large inventories of slow moving or unusable parts or
terminals. This could result in an adverse effect on our business,
results of operations, liquidity and financial position.

o We will lease the satellite capacity necessary to operate our system
from third party satellite networks. We currently have a long-term
lease with a satellite network operator (TMI) for satellite coverage
in North America, Central America and the northern rim of South
America. While several vendors have announced plans for new
satellite systems, only one provider, INMARSAT, presently offers the
global coverage that will be required under the U.S. Army contract.
We cannot assure you that we will be able to obtain sufficient
satellite capacity or geographical coverage from any vendor to
operate our mobile data communications services system on acceptable
terms or on a timely basis.

o There are several existing competitors in the mobile data
communications market that have established systems with sizable
customer bases and much greater financial resources than us. The
largest of these competitors is QUALCOMM Incorporated, which
reported that it had sold more than 350,000 mobile


terminals and provided messaging and maintenance services to more than 850 transportation companies in the United States. Existing competitors, including terrestrial service providers such as PCS vendors, are also aggressively pricing their products and services and may continue to do so in the future. Competitors continue to offer new value added products and services, which we may be unable to match on a timely or cost effective basis. Increased competition may impact margins throughout the industry. We anticipate that new competitors will enter the mobile data communications market in the future.


o We have been granted authority by the Federal Communications
Commission ("FCC") to provide satellite packet data communications
services in the United States on a commercial basis for up to 5000
mobile terminals pursuant to Special Temporary Authority. Our
application for a blanket FCC license to operate up to 25,000 mobile
data terminals is pending.

o All satellite communications are subject to the risk that a
satellite or ground station failure or a natural disaster may
interrupt service. Interruptions in service could have a material
adverse effect on our results of operations. With respect to U.S.
satellite service, satellite network providers have arranged to
provide back-up satellite and ground station service for each other
in the event of catastrophic failure. We expect to establish a
redundant gateway communications center located distant from our
main Germantown facility during fiscal 2001 as our business develops
at an estimated cost of $250,000.

o Our mobile terminals will be manufactured by subcontractors, the
first of which is SCI Systems, Inc. of Huntsville, Alabama, a large
electronics contract manufacturer. While we have successfully
produced limited quantities of terminals, we have not yet produced
significant quantities of terminals or complete assemblies (which
include computers and palm top input/output devices for
user-customized applications) and we cannot assure you that we will
be able to obtain them on a timely or cost-effective basis.

o We believe that we own or have licensed all intellectual property
rights necessary for the operation of our mobile data communications
services business as currently contemplated. If our terminals or
services are found to infringe on protected technology, we could be
required to redesign our terminals, license the protected
technology, and/or pay damages or other compensation to the
infringed party. If we are unable to license protected technology
used in our terminals or if we were required to redesign our
terminals, we could be prohibited from making and selling our
terminals or providing mobile data communications services.

Due to many factors, including the amount of business represented by large contracts, our operating results are difficult to forecast and may be volatile.
We have experienced, and will experience in the future, significant fluctuations in sales and operating results from quarter to quarter. One reason for this is that a significant portion of our business - primarily the over-the-horizon microwave systems and other products of our telecommunications transmission business segment and a portion of our RF microwave amplifier business segment - is derived from a limited number of relatively large customer contracts, the timing of which cannot be predicted. For example, sales to one customer represented 43.1% of our total net sales in fiscal 2000. While we generally recognize income under contracts when the products are shipped, income is recognized on the percentage-of-completion method when the performance of a contract will extend beyond a 12-month period. Our net sales and operating results also may vary significantly from period to period because of the following factors: product mix sold; fluctuating market demand; price competition; new product introductions by our competitors; fluctuations in foreign currency exchange rates; unexpected changes in delivery of components or subsystems; political instability; regulatory developments; and general economic conditions. Accordingly, you should not rely on period-to-period comparisons as indications of our future performance because these comparisons may not be meaningful.



Our dependence on international sales may adversely affect us.

Sales for use by international customers (including sales to prime contractors` international customers) represented approximately 46.5%, 60.1% and 71.4% of our total net sales for the fiscal years ended July 31, 1998, 1999 and 2000, respectively. Approximately 62.7% of our backlog at July 31, 2000 consisted of orders for use by foreign customers. We expect that international sales will continue to be a substantial portion of our total sales. These sales expose us to certain risks, including barriers to trade, fluctuations in foreign currency exchange rates (which may make our products less price competitive), political and economic instability, availability of suitable export financing, tariff regulations, and other U.S. and foreign regulations that may apply to the export of our products and the generally greater difficulties of doing business abroad. We attempt to reduce the risk of doing business in foreign countries by seeking subcontracts with large system suppliers, contracts denominated in U.S. dollars, advance payments and irrevocable letters of credit in our favor.

Foreign defense contracts generally contain provisions relating to termination at the convenience of the government. In addition, certain of our products and systems may require licenses from U.S. government agencies for export from the United States, and some of our products are not permitted to be exported. We cannot be sure of our ability to gain any licenses that may be required to export our products, and failure to receive required licenses could materially reduce our ability to sell our products outside the United States.

Our dependence on component availability, subcontractor availability and performance and key suppliers may adversely affect us.

We do not generally maintain a substantial inventory of components and subsystems. We obtain certain components and subsystems from a single source or a limited number of sources, but believe that most components and subsystems are available from alternative suppliers and subcontractors. A significant interruption in the delivery of such items, however, could have a material effect on our business and results of operations.

Our backlog is subject to customer cancellation or modification.

We currently have a backlog of orders, mostly under contracts that the customer may modify or terminate. We cannot assure you that our backlog will result in net sales.

Our sales to the U.S. government are subject to funding and other risks.

We sell our products and services to agencies of the U.S. government or to contractors or subcontractors under contracts with U.S. agencies. These sales accounted for approximately, 19.5%, 15.6% and 8.8% or our total net sales in fiscal 1998, 1999 and 2000, respectively. As a result of our contract with the U.S.Army, we expect sales to agencies of the U.S. government to increase significantly in the future. As is customary for government sales, these sales are subject to various risks. These risks include the ability of the U.S. government to:


o change government policy which could reduce our business;
o terminate existing contracts for its convenience; and
o audit our contract-related costs and fees, including allocated
indirect costs.

A reduction in government agency budgets could cause us to experience declining net sales, increased pressure on operating margins and, in certain cases, net losses. The loss or significant cutback of a large program in which we participate could also materially adversely affect our future results of operations.
All of our U.S. government contracts can be terminated by the U.S. government for its convenience. Termination for convenience provisions provide only for our recovery of costs incurred or committed, settlement expenses and profit on work completed prior to termination. In addition to the right of the U.S. government to terminate, U.S. government contracts are conditioned upon the continuing approval by Congress of the necessary spending. Congress usually appropriates funds for a given program on a fiscal-year basis even though contract performance may take more than one year. Consequently, at the beginning of a major program, the contract is



usually not fully funded, and additional monies are normally committed to the contract only if, as and when appropriations are made by Congress for future fiscal years.

The U.S. government may review our costs and performance on their contracts, as well as our accounting and general business practices. Based on the results of such audits, the U.S. government may adjust our contract-related costs and fees, including certain financing costs, goodwill, portions of research and development costs, and certain marketing expenses, may not be reimbursable under U.S. government contracts.

We obtain U.S. government contracts through a competitive bidding process. We cannot assure you that we will continue to win competitively awarded contracts or that awarded contracts will generate sufficient net sales to result in profitability.

Acquisitions and strategic investments may divert our resources and management attention; results may fall short of expectations.

We intend to continue pursuing selected acquisitions of and investments in businesses, technologies and product lines as a key component of our growth strategy. Any future acquisition or investment may result in the use of significant amounts of cash, potentially dilutive issuances of equity securities, incurrence of debt and amortization expenses related to goodwill and other intangible assets. Acquisitions involve numerous risks, including:


o difficulties in the integration and assimilation of the
operations, technologies, products and personnel of an
acquired business.

o diversion of management`s attention from other business
concerns; and

o potential loss of key employees or customers of any acquired
business.

Our fixed price contracts subject us to risk.
Almost all of our products and services are sold under fixed price contracts. This means that we bear the risk if unanticipated technological, manufacturing, supply or other problems or price increased delay or increase the cost of performance.

Our markets are highly competitive.

The markets for our products are highly competitive. We cannot assure you that we will be able to successfully compete or that our competitors will not develop new technologies and products that are more commercially effective than our own. We expect the Department of Defense`s increased use of commercial off-the-shelf products and components in military equipment will encourage new competitors to enter the market. Also, although the implementation of advanced telecommunications services is in its early stages in many developing countries, we believe competition may intensify as businesses and foreign governments realize the market potential of telecommunications services. Many of our competitors have financial, technical, marketing, sales and distribution resources greater than ours.

The loss of key technical or management personnel could adversely affect our business.

Our success depends on the continued contributions of key technical management personnel, including the key management at each of our subsidiaries. Many of our key personnel, particularly the key engineers of our subsidiaries, would be difficult to replace, and are not subject to employment or noncompetition agreements. The development of our mobile data communications services business is particularly dependent upon Joel R. Alper, the President of our Comtech Mobile Datacom Corp. subsidiary. The success of our Comtech Systems, Inc. subsidiary is particularly dependent upon Richard L. Burt, its President. Our growth and future success will depend in large part upon our ability to attract and retain highly qualified engineering, sales and marketing personnel. Competition



for such personnel from other companies, academic institutions, government entities and other organizations is intense. Although we believe that we have been successful to date in recruiting and keeping key personnel, we may not be successful in attracting and retaining the personnel we will need to continue to grow and operate profitably. Also, the management skills that have been appropriate for us in the past may not continue to be appropriate if we continue to grow and diversify.

Our success also depends to a significant extent upon our President and Chief Executive Officer, Fred Kornberg. The loss of the services of Mr. Kornberg could have a material adverse effect on us. We have entered into an employment contract with Mr. Kornberg. We have also purchased key man insurance in the amount of $1.0 million on each of Fred Kornberg, Joel R. Alper and Richard L. Burt.

Protection of our intellectual property is limited; we are subject to the risk of third party claims of infringement.

Our businesses rely in large part upon our proprietary scientific and engineering "know-how" and production techniques. Historically, patents have not been an important part of our protection of our intellectual property rights. We rely upon the laws of unfair competition, restrictions in licensing agreements and confidentiality agreements to protect our intellectual property. We limit access to and distribution of our proprietary information. These efforts allow us to rely upon the knowledge and experience of our management and technical personnel to market our existing products and to develop new products. The departure of any of our key management and technical personnel, the breach of their confidentiality and non-disclosure obligations to us or the failure to achieve our intellectual property objectives may have a material adverse effect on our business, financial condition and results of operations.

Our ability to compete successfully and achieve future revenue growth will depend, in part, on our ability to protect our proprietary technology and operate without infringing upon the rights of others. We may fail to do so. In addition, the laws of certain countries in which our products are or may be sold may not protect our products and intellectual property rights to the same extent as the laws of the United States.

Our operations are subject to environmental regulation.

We are subject to a variety of local, state and federal governmental regulations relating to the storage, discharge, handling, emission, generation, manufacture and disposal of toxic or other hazardous substances used to manufacture our products, particularly in the fabrication of fiberglass antennas by our Comtech Antenna Systems, Inc. subsidiary. We believe that we are currently in compliance in all material respects with such regulations and that we have obtained all necessary environmental permits to conduct our business. Nevertheless, the failure to comply with current or future regulations could result in the imposition of substantial fines, suspension or production, alteration of our manufacturing processes or cessation of operations that could materially adversely affect our business, financial condition and results of operations.

Our stock price is volatile.

The stock market in general, and the stock prices of technology-based companies in particular, have experienced extreme volatility that often has been unrelated to the operating performance of any specific public companies. The market price of our common stock has fluctuated significantly in the past and is likely to fluctuate significantly in the future as well. Factors that may have significant impact on the market price of our stock include:


o future announcements concerning us or our competitors;

o receipt or non-receipt of substantial orders for products and
services;

o results of technological innovations;



o new commercial products;

o changes in recommendations of securities analysts;

o government regulations;

o proprietary rights or product or patent litigation;

o changes in market conditions generally, particularly in the
market for small cap stocks; and

o limited public float.

Shortfalls in our revenues or earnings in any given period relative to the levels expected by securities analysts could immediately, significantly and adversely affect the trading price of our common stock.
We have never declared or paid dividends.

We have never declared or paid a cash dividend and do not intend to declare any cash dividends on our common stock in the foreseeable future.


ITEM 7A. QUANTATATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


The Company`s earnings and cash flows are subject to fluctuations due to changes in interest rates primarily from its investment of available cash balances in money market funds. Under its current policies, the Company does not use the interest rate derivative instruments to manage exposure to interest rate changes.

The Company`s exposure to debt price risk relates to its investment in a mutual fund which primarily invests in debt securities. At July 31, 2000, this investment was considered available-for-sale with any unrealized gains or losses deferred as a component of accumulated other comprehensive income. The Company is subject to debt price risk associated with this investment which could ultimately affect the Company`s available cash flow from that investment as well as realized gains and losses upon the ultimate sale of its investment in the mutual fund.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Independent Auditors` Report, Consolidated Financial Statements, Notes to Consolidated Financial Statements and related financial schedule are listed in the index to Consolidated Financial Statements and Schedule annexed hereto.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON


ACCOUNTING AND FINANCIAL DISCLOSURE

None

[Albatossa]

Hallo Leute,

hier eine kurze Erklärung, warum im letzten Quartalbericht negative Zahlen geschrieben wurden und der Kurs sich doch halbwegs stabil geblieben ist.
Aufgrund der Integration von Comtech Telecommunications und der Übernahme von EF Data wird im 4. Quartal eine einmalige Belastung von 10,2 Mio. US$ entstehen. Die Umsätze, Erträge und Erträge pro Aktie sollten dennoch neue Rekordmarken erreichen! Ohne diese Belastung wäre der Jahresgewinn pro Aktie bei 2 US$ gelegen. Durch diesen Zukauf von EF Data weist nun Comtech einen einmaligen Verlust von 0,69 aus.
Für mich bleibt die Aktie auch weiterhin interessant und ich bleibe investiert, weil das Wachstum doch sehr enorm ist. Die Gewinne werden sich mit dem 1. Quartalbericht 2001 auch wieder einstellen.

Gruß Albatossa

[Albatossa]

December 15, 2000

COMTECH TELECOMMUNICATIONS CORP /DE/ (CMTL)
Quarterly Report (SEC form 10-Q)
MANAGEMENT`S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

Certain information contained in this Quarterly Report on Form 10-Q, including, without limitation, information appearing under Part I, Item 2, "Management`s Discussion and Analysis of Financial Condition and Results of Operations," are believed to be forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934). Factors set forth in the Company`s Annual Report on Form 10-K, filed on October 30, 2000, or in the Company`s other Securities and Exchange Commission filings, could affect the Company`s actual results and could cause the Company`s actual results to differ materially from those expressed in any forward-looking statements made by, or on behalf of, the Company in this Quarterly Report on Form 10-Q.

Overview

We design, develop, produce and market sophisticated wireless telecommunications transmissions components and systems and solid state, high-power broadband amplifiers for commercial and government purposes. Our products are used in point-to-point and point-to-multipoint telecommunications and reception applications such as satellite communications, over-the-horizon microwave systems, cellular telephone systems and cable and broadcast television. Our broadband amplifier products are also used in cellular and PCS instrumentation testing and certain defense systems.

Our business consists of three segments: mobile data communications services, telecommunications transmission, and RF microwave amplifiers. We began reporting financial results on a segment basis in fiscal 1999. Our sales of mobile data communications services are expected to increase substantially if, when and as orders are received under our contract with the U.S. Army and we penetrate other government and commercial markets for these services.

Our sales are made to domestic and international customers, both commercial and governmental. International sales (including sales to prime contractors` international customers) are expected to increase in the foreseeable future due to the growing worldwide demand for wireless and satellite telecommunications and our expanded line of product offerings to meet these demands.

A substantial portion of our sales is derived from a limited number of relatively large customer contracts, the timing of which cannot be predicted. Quarterly sales and operating results may be significantly affected by one or more of such contracts. For the quarter ended October 31, 2000, there were no customers for which sales accounted for 10% or more of our consolidated sales. For the quarter ended October 31, 1999, sales to one customer accounted for 58.2% of consolidated sales. Accordingly, we experience significant fluctuations in sales and operating results from quarter to



quarter and, because our backlog is comprised in large part of a small number of large contracts, we expect such fluctuations to continue in the near future.

Sales consist of stand-alone products and systems. For the past five years we have endeavored to achieve greater product sales as a percentage of total sales, because product sales generally have higher gross profit margins than systems sales. In the future, as our installed base of mobile data communications terminals is established, we expect an increasing amount of our sales will be attributable to the recurring revenue component of our mobile data communications services segment.

We generally recognize income under contracts only when the products are shipped. However, when the performance of a contract will extend beyond a 12-month period, income is recognized on the percentage-of-completion method.

Our gross profit is affected by a variety of factors, including the mix of products, systems and equipment sold, production efficiency and price competition.

Selling, general and administrative expenses consist primarily of salaries and benefits for marketing, sales and administrative employees, advertising and trade show costs, professional fees and amortization of deferred compensation. Deferred compensation consists of restricted stock awards granted to certain operating management personnel. Under these grants, the employees purchased shares of our common stock at prices representing a discount to the then market value. The shares vest ten years after issuance, subject to earlier vesting upon achievement of certain operating unit performance goals.

Our research and development expenses relate to both existing product enhancement and new product development. A portion of our research and development efforts is related to specific contracts and is recoverable under those contracts because they are funded by the customers. Such customer-funded expenditures are not included in research and development expenses for financial reporting purposes but are reflected in cost of sales.

In June 1999, the U.S. Army awarded Comtech Mobile Datacom Corp. a contract which, subject to, among other things, government funding and deployment decisions and additional field testing, provides for the purchase of up to $418.2 million in mobile terminal units and global data communications services over an eight-year period. Sales will be dependent upon annual government funding and deployment decisions. In July 2000, we received our initial order under the U.S. Army contract of $3.1 million. Sales by our mobile data communications services segment in the first quarter of fiscal 2001 and 2000 were approximately $3.5 million and $145,000, respectively.

In January 2000, we acquired certain assets and assumed certain liabilities of Hill Engineering, Inc. ("Hill") in exchange for 50,000 shares of the Company`s common stock. The acquisition is being accounted for under the "purchase method" of accounting. The purchase price amounted to approximately $371,000 which principally represents the fair value of the initial 30,000 shares of common stock to be issued to Hill. The remaining 20,000 shares were placed in escrow and will only be released to the sellers if certain profit goals, as defined in the agreement are met and will be recorded at fair value on the date when the profit goals are met. This business operates in the RF Microwave Amplifiers segment. The excess of the purchase price over the net assets acquired of approximately $606,000 is included in intangible assets in the accompanying consolidated balance sheet and is being amortized over a 15-year period. Sales in the first quarter of fiscal 2001 and 2000 for the RF amplifier segment were $3.9 and $2.1 million, respectively, reflecting the higher level of new orders over the past two quarters.

In July 2000, we acquired the business of EF Data, the satellite communications division of Adaptive Broadband Corporation for cash. The acquisition is being accounted for under the "purchase method" of accounting. Accordingly, we allocated the purchase price to the assets purchased and the liabilities assumed based upon the estimated fair values at the date of the acquisition. The excess of the purchase price over the fair values of the net assets acquired was approximately $26.2 million, of which $10.2 million was allocated to in-process research and development and was expensed as of the acquisition date, $7.5 million was valued as purchased technology, $3.6 million was valued as other purchased intangibles which are being amortized over 5-7 years and $4.8 has been recorded as goodwill, which is being amortized over ten years. $40 million of the purchase price was supplied through institutional secured borrowings bearing interest at 9.25% due in installments through 2005, and the balance from internal company funds. We combined these operations with our existing satellite communications operations included in our telecommunications transmission segment. Sales of EF Data products during the first quarter 2001 were approximately $23.0 million.




COMPARISON OF THE RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED OCTOBER 31,

2000 AND OCTOBER 31, 1999


Net Sales. Consolidated net sales were $39.8 million and $11.7 million for the three months ended October 31, 2000 and 1999, respectively, representing an increase of $28.1 million or approximately 239.2%. This increase was due primarily to increased sales by our telecommunications transmission segment of satellite earth station products. The increase in this business segment which was due primarily to the increase generated by the acquisition we completed in July 2000 of EF Data, a division of Adaptive Broadband Corp., was $23.0 million or approximately 243.1%. To a lesser extent we also had higher sales in our other two segments. The increase in our RF microwave amplifier segment was $1.8 million or approximately 81.9% and the increase in our mobile data communications services segment was $3.3 million or approximately 2,315.9%. International sales increased by $9.5 million or approximately 95.0%, representing 49.2% and 85.5% of total net sales for the three-months ended October 31, 2000 and 1999, respectively. Domestic sales increased by $11.2 million or approximately 883.7%, representing 31.4% and 10.8% of total net sales for the three-months ended October 31, 2000 and 1999, respectively. U.S. government sales increased by $7.3 million or approximately 1,705.8%, representing 19.4% and 3.7% of total net sales for the three-months ended October 31, 2000 and 1999, respectively.

Gross Profit. Gross profit was $13.1 million and $3.3 million for the three months ended October 31, 2000 and 1999, respectively, representing an increase of $9.8 million or 292.3%. This increase was due primarily to the increase in sales volume in the three months ended October 31, 2000 as compared to the same period in 1999. Gross profit margin, as a percentage of net sales, was 32.9% and 28.4% in the three-month periods of 2000 and 1999, respectively. The higher gross profit margin was due primarily to the increase in the sale of satellite earth station equipment products by our telecommunications transmission segment, which generally have a lower per unit cost and yield a higher gross profit margin than most other equipment and systems we sell, partially offset by lower gross margins by our RF microwave amplifier segment.

Selling, General and Administrative. Selling, general and administrative expenses were $6.2 million and $1.9 million for the three months ended October 31, 2000 and 1999, respectively, representing an increase of $4.3 million or approximately 220.9%. This increase was due primarily to the additional expenses required to support the increased sales volume resulting from the acquisition of EF Data, including additional personnel, sales and marketing expenses and other administrative expenses. As a percentage of sales, these expenses were 15.5% and 16.4% in the 2000 and 1999 quarters, respectively.

Research and Development. Research and development expenses were $2.8 million and $530,000 for the three-month periods of 2000 and 1999, respectively, representing an increase of $2.3 million or approximately 427.7 %. As an investment for the future we are continually enhancing and developing new products and technologies. In the three-month period of 2000, the increase is due primarily to expenses incurred by our recently acquired EF Data business, for the continuation of research and development for the projects that were underway at the time of the acquisition. Whenever possible, we seek customer funding for research and development to adapt our products to specialized customer requirements. During the three months ended October 31, 2000 and 1999, customers reimbursed us $187,000 and $246,000, respectively, which amounts are not reflected in the reported research and development expenses. Internally funded and customer funded research and development expenses combined, as a percentage of sales, represented approximately 7.5% and 6.6% in the three-month periods of 2000 and 1999, respectively.

Operating Income. As a result of the foregoing factors, we had operating income of $3.6 million in the three months ended October 31, 2000 as compared to $865,000 in the prior year period, representing an increase of approximately $2.7 million.

Interest Expense. Interest expense was $957,000 and $37,000 for the three months ended October 31, 2000 and 1999, respectively, representing an increase of $920,000. The increase was due primarily to the interest on $40.0 million of long-term debt that we incurred during July 2000 in connection with the acquisition of EF Data. The balance of interest expense in the three months ended October 31, 2000 and all of the interest expense in the 1999 period was interest associated with our capital lease obligations.

Interest Income. Interest income was $593,000 and $32,000 for the three months ended October 31, 2000 and 1999, respectively, representing an increase of $561,000. This increase was due to the increase in the amount of cash available to invest during this period primarily as a result of the proceeds received from a follow-on stock offering completed in the third quarter of fiscal 2000. Interest income was primarily derived from the short-term investments of the cash on hand in excess of working capital requirements.

Provision for Income Taxes. The provision for income taxes was $1.2 million and $325,000 for the three months ended October 31, 2000 and 1999, respectively, reflecting an approximate 37% and 38% effective tax rate, respectively. Our income tax



provision is calculated according to the provisions of SFAS No. 109, "Accounting for Income Taxes". In applying the provisions of SFAS No. 109, temporary differences due to the timing of the deductibility of items for income tax purposes as compared to the timing of deductibility for financial reporting purposes, are recorded as deferred tax assets and liabilities.


LIQUITY AND CAPITAL RESOURCES


For the three month period ended October 31, 2000, our cash and cash equivalent position increased by $4.2 million from $12.6 million at July 31, 2000 to $16.8 million at October 31, 2000. Operating activities provided $5.4 million, investing activities used $1.2 million and financing activities used $83,000. The following changes are reflected in the financial statements.

Accounts receivable increased by $11.8 million from July 31, 2000, due primarily to the timing of the shipments, the subsequent collection of the related receivables, and an increase of approximately $1.2 million in unbilled receivables. The allowance for doubtful accounts decreased by $59,000 due to the write-off of certain receivables deemed uncollectible. The Company reviews its allowance for doubtful accounts periodically and believes it is sufficient based on past experience and the Company`s credit standards. We also have a credit insurance policy in the amount of $10.0 million for certain foreign receivables.

Other receivables decreased by $9.0 million as a result of the receipt of this amount from Adaptive Broadband Corp. in accordance with the asset purchase agreement in connection with our acquisition of EF Data.

Net inventories decreased by $540,000, primarily due to the lower levels of inventory required by our telecommunications transmission segment. A significant portion of the Company`s product lines require a competitive delivery response to customers` requirements and require the Company to provide for a level of "off-the-shelf" equipment, thus inventory levels will vary as a function of backlog and new orders. The only other general inventory that the Company maintains is for basic components which are common for most of its products. Inventory reserves are reviewed on an ongoing basis and adjustments are made as needed.

Accounts payable decreased by $429,000 primarily due to the decrease in inventory purchases.

Accrued expenses and other current liabilities increased by $3.7 million due primarily to increases in customer advances and deposits and accrued interest on long-term debt.

Taxes payable increased by $1.5 million due to the additional income taxes associated with the taxable net income earned for the period.

Capital lease obligations, including current portion decreased by $125,000 due to the payments made. We did not enter into any additional capital leases during the period. At October 31, 2000, our capital lease obligation, including current portion, was $1.4 million.

Our long-term debt, including the current portion, is $40.0 million. It bears an interest rate of 9.25% and is payable over a five-year period, with the first principal payment due on June 30, 2001.

Other long-term liabilities are for deferred revenue related to an extended warranty contract.

We believe that our cash and cash equivalents and short-term investments will be sufficient to meet our operating cash requirements for at least the next year.


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


The Company`s earnings and cash flows are subject to fluctuations due to changes in interest rates primarily from its investment of available cash balances in money market funds. Under its current policies, the Company does not use interest rate derivative instruments to manage exposure to interest rate changes.

The Company`s exposure to debt price risks relates to its investment in a mutual fund which primarily invests in debt securities. At October 31, 2000, this investment was considered available-for-sale with any unrealized gains or losses deferred as a component of accumulated other comprehensive income. The Company is subject to debt price risk associated with this investment which could ultimately affect the Company`s available cash flow from that investment as well as realized gains and losses upon the ultimate sale of its investment in the mutual fund.



The Company maintains a minor amount of foreign currency contracts solely to hedge foreign currency receivables. It has established policies, procedures and internal processes governing the management of this hedging to reduce market risks inherent in foreign exchange. Any change in these markets would not materially affect the consolidated financial position, results of operations or cash flows of the Company.

[Albatossa]

Hallo Leute,

will mich mal kurz wieder zu Comtech melden. Ersten hat die
Comtech Telecommunications einen mini Auftrag von $1.5 Million von der EMBRATEL, Brazil`s erhalten. Zweiten haben die Comtech ihre Ertragspronosen weit verfehlt und wiest weiterhin einen Verlust von 0,41$ pro Aktie aus. Aus der sogenannten einmalige Belastung ist eine Verbrennungsfirma geworden. Warum der Taipan immernoch große Stücke auf Comtech hält ist mir absolut schleierhaft. Ausser Verluste und gigantische Vorstandsgehälter erbringt diese Firma leider nicht viel mehr. Hier mal die Gehälter der Vorstände:
FY2000 Compensation.......................Pay............ Exer
Fred Kornberg, 64 Chairman, CEO and Pres....$552K.....$25K
J. Preston Windus, Jr., 57 Sr. VP and CFO....245K.....625K
Richard Burt, 59 Sr. VP......................406K.....209K
Robert McCollum, 51 Sr. VP Comtech...........1.0M..... --
Gail Segui, 54 Treasurer and Sec.............127K......--

Wer sich dies Gehälter anschaut, wird feststellen warum eigentlich die Comtech keinen Gewinn mehr erwirtschaften kann. Bei 3,189 Mio. US$ an Gehälter für fünf Wasserköpfe kann natürlich für die Aktionäre nicht viel mehr übrig bleiben. Diese fünf Manager sind fast die bestbezahltesten Personen in der Telecomminications Branche. Wie wollen die jemals Geld verdienen? Hier erweist der Taipan seine Leser ansichtlich einen Bärendienst!

Gruß Albatossa




March 16, 2001

COMTECH TELECOMMUNICATIONS CORP /DE/ (CMTL)
Quarterly Report (SEC form 10-Q)
MANAGEMENT`S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

Certain information in this Quarterly Report on Form 10-Q 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. Included among the factors which might cause such results to differ are: among others, the Company`s mobile data communications business being in a developmental stage; our inability to keep pace with rapid technological changes; our backlog being subject to customer cancellation or modification; our sales to the U.S. government being subject to funding, deployment and other risks; our fixed price contracts being subject to risks; our dependence on component availability, subcontractor availability and performance by key suppliers; the highly competitive nature of our markets; our dependence on international sales; and other risk factors detailed in the Company`s Form 10-K and other cautionary statements contained in the Company`s Securities and Exchange Commission filings.

Overview

We design, develop, produce and market sophisticated wireless telecommunications transmission components and systems and solid state, high-power broadband amplifiers for commercial and government purposes. Our products are used in point-to-point and point-to-multipoint telecommunications and reception applications such as satellite communications, over-the-horizon microwave systems, cellular telephone systems and cable and broadcast television. Our broadband amplifier products are also used in cellular and PCS instrumentation testing and certain defense systems.



Our business consists of three segments: mobile data communications services, telecommunications transmission, and RF microwave amplifiers. We began reporting financial results on a segment basis in fiscal 1999. Our sales of mobile data communications services are expected to increase substantially if, when and as orders are received under our contract with the U.S. Army and we penetrate other government and commercial markets for these services.

Our sales are made to domestic and international customers, both commercial and governmental. International sales (including sales to prime contractors` international customers) are expected to increase in the foreseeable future due to the growing worldwide demand for wireless and satellite telecommunications and our expanded line of product offerings to meet these demands.

A substantial portion of our sales is derived from a limited number of relatively large customer contracts, the timing of which cannot be predicted. Quarterly sales and operating results may be significantly affected by one or more of such contracts. For the quarter ended January 31, 2001, there were no customers for which sales accounted for 10% or more of our consolidated sales. For the quarter ended January 31, 2000, sales to one customer accounted for 46.4% of consolidated sales. Accordingly, we experience significant fluctuations in sales and operating results from quarter to quarter and, because our backlog is comprised in large part of a small number of large contracts, we expect such fluctuations to continue in the near future.

Sales consist of stand-alone products and systems. For the past five years we have endeavored to achieve greater product sales as a percentage of total sales, because product sales generally have higher gross profit margins than systems sales. In the future, as our installed base of mobile data communications terminals is established, we expect an increasing amount of our sales will be attributable to the recurring revenue component of our mobile data communications services segment.

We generally recognize income under contracts only when the products are shipped. However, when the performance of a contract will extend beyond a 12-month period, income is recognized on the percentage-of-completion method.

Our gross profit is affected by a variety of factors, including the mix of products, systems and equipment sold, production efficiency and price competition.

Selling, general and administrative expenses consist primarily of salaries and benefits for marketing, sales and administrative employees, advertising and trade show costs, professional fees and amortization of deferred compensation. Deferred compensation consists of restricted stock awards granted to certain operating management personnel. Under these grants, the employees purchased shares of our common stock at prices representing a discount to the then market value. The shares vest ten years after issuance, subject to earlier vesting upon achievement of certain operating unit performance goals.

Our research and development expenses relate to both existing product enhancement and new product development. A portion of our research and development efforts is related to specific contracts and is recoverable under those contracts because they are funded by the customers. Such customer-funded expenditures are not included in research and development expenses for financial reporting purposes but are reflected in cost of sales.

In June 1999, the U.S. Army awarded Comtech Mobile Datacom Corp. a contract which, subject to, among other things, government funding and deployment decisions and additional field testing, provides for the purchase of up to $418.2 million in mobile terminal units and global data communications services over an eight-year period. Sales will be dependent upon annual government funding and deployment decisions. As of January 31, 2001, we have received orders under the U.S. Army contract of approximately $7.1 million. Sales by our mobile data communications services segment in the six months ended January 31, 2001 and 2000 were approximately $5.4 million and $787,000, respectively.

In January 2000, we acquired certain assets and assumed certain liabilities of Hill Engineering, Inc. ("Hill") in exchange for 50,000 shares of the Company`s common stock. The acquisition is being accounted for under the "purchase method" of accounting. The purchase price amounted to approximately $371,000 which principally represents the fair value of the initial 30,000 shares of common stock issued to Hill. The remaining 20,000 shares were placed in escrow and will only be released to the sellers if certain profit goals, as defined in the agreement are met and will be recorded at fair value on the date when the profit goals are met. This business operates in the RF Microwave Amplifiers segment. The excess of the purchase price over the net assets acquired of approximately $606,000 is included in intangible assets in the accompanying consolidated balance sheet and is being amortized over a 15-year period.



In July 2000, we acquired the business of EF Data, the satellite communications division of Adaptive Broadband Corporation for cash. The acquisition is being accounted for under the "purchase method" of accounting. Accordingly, we allocated the purchase price to the assets purchased and the liabilities assumed based upon the estimated fair values at the date of the acquisition. The excess of the purchase price over the fair values of the net assets acquired was approximately $26.2 million, of which $10.2 million was allocated to in-process research and development and was expensed as of the acquisition date, $7.5 million was recorded as purchased technology, $3.6 million was recorded as other purchased intangibles which are being amortized over 5-7 years and $4.9 million has been recorded as goodwill, which is being amortized over ten years. $40 million of the purchase price was supplied through institutional secured borrowings bearing interest at 9.25% due in semiannual installments through 2005, and the balance from internal company funds. We combined this operation with our existing satellite communications operations included in our telecommunications transmission segment.

On March 5, 2001 we announced that the Company entered into an agreement to acquire certain assets and product lines of MPD Technologies, Inc. The purchase price is $11 million, subject to adjustment. The closing of the acquisition is expected to occur in April 2001. The Company intends to combine these operations with its Comtech PST subsidiary and include it in its RF Microwave Amplifiers segment. The acquisition will be accounted for under the purchase method of accounting.


COMPARISON OF THE RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JANUARY 31,

2001 AND JANUARY 31, 2000


Net Sales. Consolidated net sales were $33.1 million and $13.7 million for the three months ended January 31, 2001 and 2000, respectively, representing an increase of $19.4 million or approximately 141.4%. This increase was due primarily to increased sales by our telecommunications transmission segment of satellite earth station products. The increase in this business segment, which was due primarily to the increase generated by the acquisition we completed in July 2000 of EF Data, a division of Adaptive Broadband Corp., was $17.4 million or approximately 166.9%. To a lesser extent we also had higher sales in our other two segments. The increase in our RF microwave amplifier segment was $671,000 or approximately 25.5% and the increase in our mobile data communications services segment was $1.3 million or approximately 202.8%. International sales increased by $7.3 million or approximately 78.6%, representing 50.0% and 67.6% of total net sales for the three months ended January 31, 2001 and 2000, respectively. Domestic sales increased by $7.2 million or approximately 202.5%, representing 32.2% and 25.5% of total net sales for the three months ended January 31, 2001 and 2000, respectively. U.S. government sales increased by $4.9 million or approximately 522.6%, representing 17.8% and 6.9% of total net sales for the three months ended January 31, 2001 and 2000, respectively.

Gross Profit. Gross profit was $12.7 million and $4.1 million for the three months ended January 31, 2001 and 2000, respectively, representing an increase of $8.5 million or 205.6%. This increase was due partially to the increase in sales volume in the three months ended January 31, 2001 as compared to the same period in 2000 and also to the change in the product mix for the respective periods. Gross profit margin, as a percentage of net sales, was 38.2% and 30.2% in the three-month periods of 2001 and 2000, respectively. The higher gross profit margin was due primarily to the increase in the sale of satellite earth station equipment products by our telecommunications transmission segment, which generally have a lower per unit cost and yield a higher gross profit margin than most other equipment and systems we sell.

Selling, General and Administrative. Selling, general and administrative expenses were $6.2 million and $2.5 million for the three months ended January 31, 2001 and 2000, respectively, representing an increase of $3.7 million or approximately 149.4%. This increase was due primarily to the additional expenses required to support the increased sales volume resulting from the acquisition of EF Data, including additional personnel, sales and marketing expenses and other administrative expenses. As a percentage of sales, these expenses were 18.8% and 18.2% in the 2001 and 2000 quarters, respectively.

Research and Development. Research and development expenses were $2.6 million and $581,000 for the three-month periods of 2001 and 2000, respectively, representing an increase of $2.0 million or approximately 350.6 %. As an investment for the future we are continually enhancing and developing new products and technologies. In the three-month period of 2001, the increase is due primarily to expenses incurred by our recently acquired EF Data business, for the continuation of research and development for the projects that were underway at the time of the acquisition as well as new projects. Whenever possible, we seek customer funding for research and development to adapt our products to specialized customer requirements. During the three months ended January 31, 2001 and 2000, customers reimbursed us $173,000 and $208,000, respectively, which amounts are not reflected in the reported research and development expenses. Internally funded and customer funded research and development expenses combined, as a percentage of net sales, represented approximately 8.4% and 5.8% in the three-month periods of 2001 and 2000, respectively.



Operating Income. As a result of the foregoing factors, we had operating income of $3.2 million in the three months ended January 31, 2001 as compared to $1.0 million in the prior year period, representing an increase of approximately $2.2 million.

Interest Expense. Interest expense was $920,000 and $34,000 for the three months ended January 31, 2001 and 2000, respectively, representing an increase of $886,000. The increase was due primarily to the interest on the $40.0 million of long-term debt that we incurred during July 2000 in connection with the acquisition of EF Data. The balance of interest expense in the three months ended January 31, 2001 and all of the interest expense in the 2000 period was interest associated with our capital lease obligations.

Interest Income. Interest income was $812,000 and $21,000 for the three months ended January 31, 2001 and 2000, respectively, representing an increase of $791,000. This increase was due primarily to the increase in the amount of cash available to invest during this period principally as a result of the proceeds received from a follow-on stock offering completed in the third quarter of fiscal 2000. Interest income was primarily derived from the short-term investments of the cash on hand in excess of working capital requirements.

Provision for Income Taxes. The provision for income taxes was $1.4 million and $369,000 for the three months ended January 31, 2001 and 2000, respectively, reflecting an approximate 42% and 36% effective tax rate, respectively. The increase in the effective tax rate for the three month period ended January 31, 2001 compared to the corresponding period of the prior year is due primarily to the increased profitability of the Company and an increase in the Company`s effective state income tax rate. Such increases are attributable to the acquisition of EF Data in July 2000. Our income tax provision is calculated according to the provisions of SFAS No. 109, "Accounting for Income Taxes". In applying the provisions of SFAS No. 109, temporary differences due to the timing of the deductibility of items for income tax purposes as compared to the timing of deductibility for financial reporting purposes, are recorded as deferred tax assets and liabilities.


COMPARISON OF THE RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JANUARY 31,

2001 AND JANUARY 31, 2000


Net Sales. Consolidated net sales were $73.0 million and $25.5 million for the six months ended January 31, 2001 and 2000, respectively, representing an increase of $47.5 million or approximately 186.5%. This increase was due primarily to increased sales by our telecommunications transmission segment of satellite earth station products. The increase in this business segment which was due primarily to the increase generated by the acquisition we completed in July 2000 of EF Data, a division of Adaptive Broadband Corp., was $40.4 million or approximately 203.1%. To a lesser extent we also had higher sales in our other two segments. The increase in our RF microwave amplifier segment was $2.4 million or approximately 50.8% and the increase in our mobile data communications services segment was $4.7 million or approximately 592.1%. International sales increased by $16.8 million or approximately 87.1%, representing 49.6% and 75.9% of total net sales for the six months ended January 31, 2001 and 2000, respectively. Domestic sales increased by $18.4 million or approximately 385.7%, representing 31.7% and 18.7% of total net sales for the six months ended January 31, 2001 and 2000, respectively. U.S. government sales increased by $12.3 million or approximately 891.5%, representing 18.7% and 5.4% of total net sales for the six months ended January 31, 2001 and 2000, respectively.

Gross Profit. Gross profit was $25.8 million and $7.5 million for the six months ended January 31, 2001 and 2000, respectively, representing an increase of $18.3 million or 244.3%. This increase was due partially to the increase in sales volume in the six months ended January 31, 2001 as compared to the same period in 2000 and also to the change in the product mix for the respective periods. Gross profit margin, as a percentage of net sales, was 35.3% and 29.4% in the six-month periods of 2001 and 2000, respectively. The higher gross profit margin was due primarily to the increase in the sale of satellite earth station equipment products by our telecommunications transmission segment, which generally have a lower per unit cost and yield a higher gross profit margin than most other equipment and systems we sell.

Selling, General and Administrative. Selling, general and administrative expenses were $12.4 million and $4.4 million for the six months ended January 31, 2001 and 2000, respectively, representing an increase of $8.0 million or approximately 180.5%. This increase was due primarily to the additional expenses required to support the increased sales volume resulting from the acquisition of EF Data, including additional personnel, sales and marketing expenses and other administrative expenses. As a percentage of sales, these expenses were 17.0% and 17.3% in the 2001 and 2000 periods, respectively.

Research and Development. Research and development expenses were $5.4 million and $1.1 million for the six-month periods of 2001 and 2000, respectively, representing an increase of $4.3 million or approximately 387.5 %. As an investment for the future we are continually enhancing and developing new products and technologies. In the six-month period of 2001, the increase is due primarily to expenses incurred by our recently acquired EF Data business, for the continuation of research and development for the projects that were underway at the time of the acquisition as well as new projects. Whenever possible, we seek customer funding for research and development to adapt our products to specialized customer



requirements. During the six months ended January 31, 2001 and 2000, customers reimbursed us $360,000 and $454,000, respectively, which amounts are not reflected in the reported research and development expenses. Internally funded and customer funded research and development expenses combined, as a percentage of net sales, represented approximately 7.9% and 6.1% in the six-month periods of 2001 and 2000, respectively.

Operating Income. As a result of the foregoing factors, we had operating income of $6.8 million in the six months ended January 31, 2001 as compared to $1.9 million in the prior year period, representing an increase of approximately $4.9 million.

Interest Expense. Interest expense was $1.9 million and $71,000 for the six months ended January 31, 2001 and 2000, respectively, representing an increase of $1.8 million. The increase was due primarily to the interest on the $40.0 million of long-term debt that we incurred during July 2000 in connection with the acquisition of EF Data. The balance of interest expense in the six months ended January 31, 2001 and all of the interest expense in the 2000 period was interest associated with our capital lease obligations.

Interest Income. Interest income was $1.4 million and $53,000 for the six months ended January 31, 2001 and 2000, respectively, representing an increase of $1.4 million. This increase was due primarily to the increase in the amount of cash available to invest during this period principally as a result of the proceeds received from a follow-on stock offering completed in the third quarter of fiscal 2000. Interest income was primarily derived from the short-term investments of the cash on hand in excess of working capital requirements.

Provision for Income Taxes. The provision for income taxes was $2.5 million and $694,000 for the six months ended January 31, 2001 and 2000, respectively, reflecting an approximate 39.5% and 37% effective tax rate, respectively. The increase in the effective tax rate for the six month period ended January 31, 2001 compared to the corresponding period of the prior year is due primarily to the increased profitability of the Company and an increase in the Company`s effective state income tax rate. Such increases are attributable to the acquisition of EF Data in July 2000. Our income tax provision is calculated according to the provisions of SFAS No. 109, "Accounting for Income Taxes". In applying the provisions of SFAS No. 109, temporary differences due to the timing of the deductibility of items for income tax purposes as compared to the timing of deductibility for financial reporting purposes, are recorded as deferred tax assets and liabilities.


LIQUIDITY AND CAPITAL RESOURCES


For the six month period ended January 31, 2001, our cash and cash equivalent position increased by $2.8 million from $12.6 million at July 31, 2000 to $15.4 million at January 31, 2001. Operating activities provided $4.7 million, investing activities used $2.1 million and financing activities provided $246,000. The following changes are reflected in the financial statements.

Accounts receivable increased by $8.3 million from July 31, 2000, due primarily to the timing of the shipments and the subsequent collection of the related receivables. The allowance for doubtful accounts increased by $101,000. The Company reviews its allowance for doubtful accounts periodically and believes it is sufficient based on past experience and the Company`s credit standards. We also have a credit insurance policy in the amount of $10.0 million for certain foreign receivables.

Other receivables decreased by $9.0 million as a result of the receipt of this amount from Adaptive Broadband Corp. in accordance with the asset purchase agreement in connection with our acquisition of EF Data.

Net inventories increased by $3.2 million, primarily due to the higher levels of inventory required by our mobile data communications segment for the U.S. Army contract. A significant portion of the Company`s product lines require a competitive delivery response to customers` requirements and require the Company to provide for a level of "off-the-shelf" equipment. Thus, inventory levels will vary as a function of backlog and new orders. The only other general inventory that the Company maintains is for basic components which are common for most of its products. Inventory reserves are reviewed on an ongoing basis and adjustments are made as needed.

Accounts payable decreased by $1.0 million primarily due to the timing of the inventory purchases.

Taxes payable increased by $1.9 million primarily due to the additional income taxes associated with the increase in taxable income for the period.

We entered into new capital leases during the period in the amount of $326,000 for the purchase of capital equipment. At January 31, 2001, our capital lease obligation, including current portion, was $1.5 million.



Our long-term debt, including the current portion, is $40.0 million. It bears an interest rate of 9.25% and is payable semi annually over a five-year period, with the first principal payment due on June 30, 2001. We may seek to increase our long-term borrowings in connection with the acquisition of certain assets and product lines of MPD Technologies, Inc., referred to above.

Other long-term liabilities are for deferred revenue related to an extended warranty contract to be recognized over the life of the warranty contract.

We believe that our cash and cash equivalents and short-term investments will be sufficient to meet our operating cash requirements for at least the next year.


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


The Company`s earnings and cash flows are subject to fluctuations due to changes in interest rates primarily from its investment of available cash balances in money market funds. Under its current policies, the Company does not use interest rate derivative instruments to manage exposure to interest rate changes.

The Company`s exposure to debt price risks relates to its investment in a mutual fund which primarily invests in debt securities. At January 31, 2001, this investment was considered available-for-sale with any unrealized gains or losses deferred as a component of accumulated other comprehensive loss. The Company is subject to debt price risk associated with this investment which could ultimately affect the Company`s available cash flow from that investment as well as realized gains and losses upon the ultimate sale of its investment in the mutual fund.

When applicable, the Company may enter into foreign currency contracts solely to hedge foreign currency receivables. It has established policies, procedures and internal processes governing the management of this hedging to reduce market risks inherent in foreign exchange. Any change in these markets would not materially affect the consolidated financial position, results of operations or cash flows of the Company.