UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20459

Form 10-Q

(Mark One)

\|X\|	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended October 31, 2003

\|_\|	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from _______________ to _______________

Commission File Number: 0-7928

COMTECH TELECOMMUNICATIONS CORP.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction
of incorporation /organization)

11-2139466
(I.R.S. Employer
Identification Number)

105 Baylis Road, Melville, New York
(Address of principal executive offices)

11747
(Zip Code)

(631) 777-8900
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. |X| Yes |_| No

Indicate by check mark whether registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). |X| Yes |_| No

APPLICABLE ONLY TO CORPORATE ISSUERS:

As of December 2, 2003, the number of outstanding shares of Common Stock, par value $.10 per share, of the Registrant was 14,063,183.

COMTECH TELECOMMUNICATIONS CORP.

INDEX

		Page
PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Consolidated Balance Sheets – October 31, 2003 (Unaudited) and July 31, 2003		2

Consolidated Statements of Operations – Three Months Ended October 31, 2003		3
and 2002 (Unaudited)

Consolidated Statements of Cash Flows – Three Months Ended October 31, 2003
and 2002 (Unaudited)

Notes to Consolidated Financial Statements		5-9

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		9-13

Item 3. Quantitative and Qualitative Disclosures about Market Risk		14

Item 4. Controls and Procedures		14

PART II. OTHER INFORMATION		14

Item 6. Exhibits and Reports on Form 8-K		14

Signature Page		15

Certifications		16-19

PART I
FINANCIAL INFORMATION
COMTECH TELECOMMUNICATIONS CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

Item 1.	October 31, 2003		July 31, 2003
Assets	(Unaudited)
Current assets:
Cash and cash equivalents	$ 49,604,000		48,617,000
Restricted cash	4,280,000		4,288,000
Accounts receivable, less allowance for doubtful accounts of $714,000
at October 31, 2003 and $912,000 at July 31, 2003	34,336,000		26,696,000
Inventories, net	33,517,000		34,048,000
Prepaid expenses and other current assets	2,198,000		1,742,000
Deferred tax asset – current	5,699,000		5,699,000

Total current assets	129,634,000		121,090,000

Property, plant and equipment, net	12,502,000		12,328,000
Goodwill and other intangibles with indefinite lives	17,726,000		17,726,000
Intangibles with definite lives, net of accumulated amortization of
$5,220,000 at October 31, 2003 and $4,720,000 at July 31, 2003	10,853,000		11,353,000
Other assets, net	378,000		390,000
Deferred tax asset – non-current	1,363,000		1,363,000

Total assets	$ 172,456,000		164,250,000


Liabilities and Stockholders’ Equity
Current liabilities:
Current installments of capital lease obligations	$ 706,000		899,000
Accounts payable	13,296,000		11,527,000
Accrued expenses and other current liabilities	12,497,000		13,267,000
Customer advances and deposits	2,516,000		2,491,000
Deferred service revenue	11,279,000		11,160,000
Income taxes payable	7,614,000		6,945,000

Total current liabilities	47,908,000		46,289,000

Capital lease obligations, less current installments	320,000		393,000

Total liabilities	48,228,000		46,682,000

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 14,194,233 shares at October 31, 2003 and 14,020,769 shares
at July 31, 2003	1,419,000		1,402,000
Additional paid-in capital	108,468,000		107,573,000
Retained earnings	14,627,000		8,884,000

	124,514,000		117,859,000

Less:
Treasury stock (140,625 shares)	(185,000	)	(185,000	)
Deferred compensation	(101,000	)	(106,000	)

Total stockholders’ equity	124,228,000		117,568,000

Total liabilities and stockholders’ equity	$ 172,456,000		164,250,000

Commitments and contingencies

See accompanying notes to consolidated financial statements.

COMTECH TELECOMMUNICATIONS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS

	Three months ended October 31, (Unaudited)
	2003			2002
Net sales	$	56,296,000			31,273,000
Cost of sales		35,316,000			19,596,000

Gross profit		20,980,000			11,677,000


Expenses:
Selling, general and administrative		8,574,000			6,328,000
Research and development		3,541,000			3,016,000
Amortization of intangibles		500,000			526,000

		12,615,000			9,870,000


Operating income		8,365,000			1,807,000

Other expense (income):
Interest expense		24,000			691,000
Interest income		(105,000	)		(59,000	)


Income before provision for income taxes		8,446,000			1,175,000
Provision for income taxes		2,703,000			376,000


Net income	$	5,743,000			799,000

Net income per share:
Basic	$	0.41			0.07

Diluted	$	0.37			0.07

Weighted average number of common shares
outstanding – basic		13,953,000			11,265,000
Potential dilutive common shares		1,407,000			395,000


Weighted average number of common and
common equivalent shares outstanding assuming
dilution – diluted		15,360,000			11,660,000

See accompanying notes to consolidated financial statements.

COMTECH TELECOMMUNICATIONS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

	Three months ended October 31, (Unaudited)
	2003			2002
Cash flows from operating activities:
Net income	$	5,743,000			799,000
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		1,562,000			1,539,000
Provision for doubtful accounts		13,000			23,000
Provision for inventory reserves		589,000			453,000
Changes in assets and liabilities:
Restricted cash securing letter of credit obligations		8,000			—
Accounts receivable		(7,653,000	)		(1,450,000	)
Inventories		(58,000	)		884,000
Prepaid expenses and other current assets		(456,000	)		102,000
Other assets		12,000			96,000
Accounts payable		1,769,000			(2,661,000	)
Accrued expenses and other current liabilities		(770,000	)		48,000
Customer advances and deposits		25,000			5,525,000
Deferred service revenue		119,000			235,000
Income taxes payable		669,000			456,000
Other liabilities		—			(27,000	)

Net cash provided by operating activities		1,572,000			6,022,000

Cash flows from investing activities:
Purchases of property, plant and equipment		(1,231,000	)		(870,000	)
Purchase of technology license		—			(75,000	)

Net cash used in investing activities		(1,231,000	)		(945,000	)

Cash flows from financing activities:
Principal payments on capital lease obligations		(266,000	)		(263,000	)
Proceeds from exercises of stock options, warrants and
employee stock purchase plan shares		912,000			51,000

Net cash provided by (used in) financing activities		646,000			(212,000	)

Net increase in cash and cash equivalents		987,000			4,865,000
Cash and cash equivalents at beginning of period		48,617,000			15,510,000

Cash and cash equivalents at end of period	$	49,604,000			20,375,000


Supplemental cash flow disclosure:

Cash paid during the period for:
Interest	$	24,000		$	46,000
Income taxes	$	2,034,000			—

See accompanying notes to consolidated financial statements.

COMTECH TELECOMMUNICATIONS CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)

General

The accompanying consolidated financial statements at and for the three months ended October 31, 2003 and 2002 are unaudited. In the opinion of management, the information furnished reflects all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results for the unaudited interim periods. The results of operations for such periods are not necessarily indicative of the results of operations to be expected for the full year.

These consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Company for the fiscal year ended July 31, 2003 and the notes thereto contained in the Company’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission, and the Company’s other filings with the Securities and Exchange Commission.

(2)	Reclassification

Certain reclassifications have been made to previously reported statements to conform to the Company’s current financial statement format.

(3)	Accounts Receivable

Accounts receivable consist of the following:	October 31, 2003		July 31, 2003
Accounts receivable from commercial customers	$	13,917,000	10,952,000
Unbilled receivables (including retainages) on contracts-in-progress		12,282,000	10,084,000
Amounts receivable from the United States government and its
agencies		8,851,000	6,572,000

		35,050,000	27,608,000
Less allowance for doubtful accounts		714,000	912,000

Accounts receivable, net	$	34,336,000	26,696,000

The amount of retainages included in unbilled receivables was $72,000 at October 31, 2003. In the opinion of management, substantially all of the unbilled balances will be billed and collected within one year.

(4)	Inventories

Inventories consist of the following:	October 31, 2003		July 31, 2003
Raw materials and components	$	17,297,000		16,431,000
Work-in-process and finished goods		21,531,000		22,716,000

		38,828,000		39,147,000
Less:
Reserve for anticipated losses on contracts and inventory reserves		5,311,000		5,099,000

Inventories, net	$	33,517,000		34,048,000

Inventories directly related to long-term contracts were $9,329,000 and $13,742,000 at October 31, 2003 and July 31, 2003, respectively.

(5)	Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following:

	October 31, 2003
Accrued wages and benefits	$	5,040,000	5,724,000
Accrued commissions		2,359,000	1,993,000
Accrued warranty		3,382,000	3,139,000
Other		1,716,000	2,411,000

	$	12,497,000	13,267,000

Changes in the Company’s product warranty liability during the three months ended October 31, 2003 and 2002 were as follows:

	Three months ended October 31,
	2003		2002
Balance at beginning of period	$	3,139,000	2,975,000