Globecomm Systems Announces Fiscal 2005 Third Quarter and Nine Month F

Globecomm Systems Announces Fiscal 2005 Third Quarter and Nine Month Financial Results

    Business Editors

    HAUPPAUGE, N.Y.--(BUSINESS WIRE)--May 11, 2005--Globecomm Systems Inc. (NASDAQ: GCOM):

--	Revenue Increase of 26.6% in the Third Quarter of Fiscal 2005 as Compared to Third Quarter of Fiscal 2004
--	Earnings Per Share of $0.04 in the Third Quarter of Fiscal 2005 as Compared to Loss Per Share of $0.04 in Third Quarter of Fiscal 2004
--	Fourth Consecutive Quarter of Profitability

    Globecomm Systems Inc. (NASDAQ: GCOM), a global provider of end-to-end satellite-based communications solutions, today announced financial results for the fiscal 2005 third quarter and nine months ended March 31, 2005.

    Fiscal 2005 Third Quarter Results

    Revenues for the Company's fiscal 2005 third quarter ended March 31, 2005 increased 26.6% to $28.2 million, compared to $22.3 million in the same period last year. The increase in revenues was primarily the result of increased infrastructure sales activity in the government marketplace, coupled with a general overall improvement in the telecommunications industry segments that the Company serves.
    Net income for the Company's fiscal 2005 third quarter increased to $0.6 million, or $0.04 per diluted share, compared to a net loss of $0.6 million, or $0.04 per diluted share, in the third quarter of fiscal 2004. The turnaround in the Company's net loss to a net profit was primarily driven by an increase in revenues and an improvement in the overall gross margin of the Company.

    Fiscal 2005 Nine Month Results

    Revenues for the Company's fiscal 2005 nine months ended March 31, 2005 increased 24.8% to a record $82.9 million, compared to $66.4 million in the same period last year. The increase in revenues was primarily the result of increased infrastructure sales activity in the government marketplace, coupled with a general overall improvement in the telecommunications industry segments that the Company serves.
    Net income for the first nine months of the Company's fiscal 2005 period ended March 31, 2005 increased to $3.7 million, or $0.25 per diluted share, compared to a net loss of $1.7 million, or $0.13 per diluted share, in the same period last year. The turnaround in the Company's net loss to a net profit was primarily driven by an increase in revenues and an improvement in the overall gross margin of the Company. Net income for the nine months ended March 31, 2005 included $2.4 million ($0.16 per diluted share) in non-recurring gains relating to a settlement with a major customer announced on July 7, 2004, which was reflected as a $1.5 million reduction in general and administrative expenses and a $0.9 million reduction in costs from ground segment systems, networks and enterprise solutions. The net loss for the nine months ended March 31, 2004 was reduced by a $1.0 million ($0.08 per diluted share) cash recovery in connection with a previously announced termination of services by a major customer in the Middle East, which was reflected as a reduction in general and administrative expenses.

    Management's Review of Results

    Commenting on the third quarter financial results, David Hershberg, Chairman and Chief Executive Officer of Globecomm said, "Globecomm capped off the third quarter with the Company's fourth consecutive quarter of profitability and a solid balance sheet. During the quarter, Globecomm launched two new exciting technology platforms. The managed mobile network services platform, based on the Company's award winning patent-pending network architecture, which can be utilized for many different applications as recently demonstrated during the Homeland Security Exercise and Evaluation Program. Our two-way high speed Internet Protocol ("IP") platform based upon the iDirect broadband access solutions, affords us yet another robust IP platform to market on a global basis. The Company also entered into a new vertical market with the recently announced aviation contract award in Egypt. This contract is further evidence of the broad deployment of state-of-the-art IP-based platforms, which provide much more flexibility and speed than legacy networks."
    Mr. Hershberg continued, "With the backdrop of a strong balance sheet, Globecomm is well positioned to invest in new platforms, execute our business plan and capitalize on the communications convergence we are witnessing. IP as a common standard continues to become the dominant transmission medium in the marketplace and is transforming many legacy business models."

    Management's Current Expectations for the Full Year Ending June 30, 2005

    Globecomm currently expects consolidated revenues for the full year ending June 30, 2005 to be in excess of $105 million. The Company anticipates achieving full year profitability at this revenue level, even excluding the net non-recurring gains totaling $2.4 million reflected in the Company's results for the nine months ended March 31, 2005.
    These expectations reflect the Company's results for the nine months ended March 31, 2005 and management's current view of the next three months. Actual results for the fiscal year ending June 30, 2005 will remain susceptible to factors beyond our control in certain areas of the world, including, but not limited to, major disruptions in the marketplaces in which we operate due to political unrest, local violence, global economic recession and changes in United States Government foreign policy and results will also remain susceptible to possible cost overruns on projects.

    About Globecomm Systems

    Globecomm Systems Inc. provides end-to-end value-added satellite-based communication solutions by leveraging its core satellite ground segment systems and network capabilities, with satellite communication services capabilities. The solutions Globecomm offers include general contracted complex communications networks, militarized commercial off the shelf products and services and voice over Internet Protocol (VOIP), video broadcast, business recovery, satellite-based terrestrial restoral, content delivery and other networks on a global basis. Globecomm's customers include communications service providers, commercial enterprises, Internet Service Providers, content providers and government entities.
    Based in Hauppauge, New York, Globecomm Systems also maintains offices in Washington, D.C., Hong Kong, the United Kingdom and the United Arab Emirates.

    This press release contains projections or other forward-looking statements regarding future events or the future financial performance of Globecomm Systems Inc., including, but not limited to, the information contained within the sections entitled "Management's Review of Results" and "Management's Current Expectations for the Full Year Ending June 30, 2005." These statements reflect the current beliefs and expectations of the Company. Some matters addressed in this press release, involve a number of risks and uncertainties. Among the factors that could cause actual results to differ materially from these statements include risks and other factors detailed, from time to time, in the Company's reports filed with the Securities and Exchange Commission, including, but not limited to, the Company's Annual Report on Form 10-K for the year ended June 30, 2004, its Quarterly Reports on Form 10-Q and its Current Reports on Form 8-K, which the Company urges investors to consider. These risks and other factors include, but are not limited to general political and economic instability in the United States and abroad, including the hostilities in Iraq and Afghanistan, reliance on a small number of contracts for a large portion of the Company's revenue, increasing reliance on the government marketplace and the Company's ability to penetrate emerging markets. The Company undertakes no obligation to publicly release the revisions to such forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Globecomm Systems Inc. Consolidated Statements of Operations (In thousands, except per share data) (Unaudited)

Three Months Ended Nine Months Ended March 31, March 31, March 31, March 31, 2005 2004 2005 2004 -------------------- ------------------- Revenues from ground segment systems, networks and enterprise solutions $ 23,443 $ 18,956 $ 69,722 $ 55,878 Revenues from data communications services 4,741 3,305 13,149 10,544 -------------------- ------------------- Total revenues 28,184 22,261 82,871 66,422 -------------------- ------------------- Costs and operating expenses: Costs from ground segment systems, networks and enterprise solutions 19,520 16,180 58,595 49,282 Costs from data communications services 4,186 3,138 11,094 9,611 Selling and marketing 1,476 1,219 4,028 3,461 Research and development 231 242 703 953 General and administrative 2,463 2,118 5,165 5,115 -------------------- ------------------- Total costs and operating expenses 27,876 22,897 79,585 68,422 -------------------- ------------------- Income (loss) from operations 308 (636) 3,286 (2,000) Other income: Interest income 121 63 286 191 Gain on sale of investment - - 40 - Gain on sale of available-for-sale securities 132 - 132 91 -------------------- ------------------- Net income (loss) $ 561 $ (573) $ 3,744 $ (1,718) ==================== ===================

Basic net income (loss) per common share $ 0.04 $ (0.04) $ 0.26 $ (0.13) ==================== =================== Diluted net income (loss) per common share $ 0.04 $ (0.04) $ 0.25 $ (0.13) ==================== ===================

Weighted-average shares used in the calculation of basic net income (loss) per common share 14,517 14,100 14,363 13,080 ==================== =================== Weighted-average shares used in the calculation of diluted net income (loss) per common share 15,143 14,100 14,938 13,080 ==================== ===================

Globecomm Systems Inc. Condensed Consolidated Balance Sheets (In thousands)

March 31, June 30, 2005 2004 ---------------------- (Unaudited) Assets Current assets: Cash and cash equivalents $ 22,433 $ 28,252 Restricted cash 3,856 1,903 Accounts receivable, net 23,430 14,318 Inventories 9,239 3,904 Prepaid expenses and other current assets 892 1,274 Deferred income taxes 83 83 ---------------------- Total current assets 59,933 49,734 Fixed assets, net 15,442 15,441 Goodwill 7,204 7,204 Other assets 1,026 1,096 ---------------------- Total assets $ 83,605 $ 73,475 ======================

Liabilities and Stockholders' Equity Current liabilities $ 24,230 $ 19,682 Deferred liabilities, less current portion 749 987 Total stockholders' equity 58,626 52,806 ---------------------- Total liabilities and stockholders' equity $ 83,605 $ 73,475 ======================

--30--MW/ny*

CONTACT: Globecomm Systems Inc. David Hershberg, 631-231-9800 or Investor Relations: Matthew Byron, 631-457-1301 or Fax: 631-231-1557 info@globecommsystems.com www.globecommsystems.com

KEYWORD: NEW YORK INDUSTRY KEYWORD: HARDWARE TELECOMMUNICATIONS SOFTWARE INTERNET E-COMMERCE EARNINGS SOURCE: Globecomm Systems Inc.

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