Globecomm Systems Announces Record Revenues For Fiscal 2005 Second Qua

Globecomm Systems Announces Record Revenues For Fiscal 2005 Second Quarter And Six-Month Financial Results

    Business Editors

    HAUPPAUGE, N.Y.--(BUSINESS WIRE)--Feb. 2, 2005--Globecomm Systems Inc. (NASDAQ: GCOM)

--	Revenue Increase of 23.3% in the Second Quarter of Fiscal 2005 as Compared to Second Quarter of Fiscal 2004
--	Earnings Per Share of $0.07 in the Second Quarter of Fiscal 2005, or $0.03 Excluding Non-Recurring Gain, as Compared to Loss Per Share of $0.05 in Second Quarter of Fiscal 2004

    Globecomm Systems Inc. (NASDAQ: GCOM), a global provider of end-to-end satellite-based communications solutions, today announced financial results for the fiscal 2005 second quarter and six-months ended December 31, 2004.

    Fiscal 2005 Second Quarter Results

    Revenues for the Company's fiscal 2005 second quarter ended December 31, 2004 increased 23.3% to a record $29.2 million, compared to $23.7 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 second quarter increased 252% to $1.0 million, or $0.07 per diluted share, compared to a net loss of $0.7 million, or $0.05 per diluted share, in the second quarter of fiscal 2004. Net income for the second quarter of fiscal 2005 included a $0.5 million non-recurring gain relating to a settlement with a major customer announced on July 7, 2004, or $0.04 per diluted share, which is reflected as a reduction in costs from ground segment systems, networks and enterprise solutions.
    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 Six-Month Results

    Revenues for the Company's fiscal 2005 six-months ended December 31, 2004 increased 23.8% to a record $54.7 million, compared to $44.2 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 six-months of the Company's fiscal 2005 period ended December 31, 2004 increased 378.0% to $3.2 million, or $0.21 per diluted share, compared to a net loss of $1.1 million, or $0.09 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 six-months ended December 31, 2004 includes $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 is 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 six-months ended December 31, 2003 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 is reflected as a reduction in general and administrative expenses.

    Management's Review of Results

    David Hershberg, Chairman and Chief Executive Officer of Globecomm said, "With our third consecutive quarter of profitability, the breadth and diversity of Globecomm's product and service offerings are beginning to be reflected in the Company's financial results. We see end-user demand for products and services designed around Internet Protocol ("IP") continuing to grow. Satellite and terrestrial networks ranging from requirements for the battlefield, homeland security initiatives, next generation networks and voice over the Internet, amongst other IP applications, open up an array of opportunities to the Company in the future. As we explore these opportunities, the Company remains committed to our core customer base in providing the best-of-breed infrastructure integration and service capabilities in the marketplace."
    Mr. Hershberg continued, "Globecomm entered the third quarter with $30 million of cash, no debt and no amounts outstanding under the new $16.5 million credit facility announced during the second quarter other than secured letters of credit. The strength of our balance sheet should support the Company's current growth phase for the foreseeable future. We are better positioned to benefit from the macro trends that we are witnessing in the marketplace than ever before and are excited about our future prospects."

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

    Globecomm continues to expect 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, excluding the non-recurring gains totaling $2.4 million reflected in the Company's results for the six-months ended December 31, 2004. The Company further anticipates quarterly income statement fluctuations resulting from the nature of the business and the size of certain contracts in backlog.
    These expectations reflect the Company's results for the six-months ended December 31, 2004 and management's current view of the next six-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. These may include, but are 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. 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 Government contracts 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 Six Months Ended December December December December 31, 31, 31, 31, 2004 2003 2004 2003 ------- -------- -------- --------

Revenues from ground segment systems, networks and enterprise solutions $24,693 $19,891 $46,279 $36,922 Revenues from data communications services 4,535 3,809 8,408 7,239 ------------------ ----------------- Total revenues 29,228 23,700 54,687 44,161 ------------------ ----------------- Costs and operating expenses: Costs from ground segment systems, networks and enterprise solutions 21,013 17,798 39,075 33,102 Costs from data communications services 3,714 3,255 6,908 6,473 Selling and marketing 1,383 1,126 2,552 2,242 Research and development 174 236 472 711 General and administrative 2,074 2,103 2,702 2,997 ------------------ ----------------- Total costs and operating expenses 28,358 24,518 51,709 45,525 ------------------ ----------------- Income (loss) from operations 870 (818) 2,978 (1,364) Other income: Interest income 92 66 165 128 Gain on sale of investment 40 - 40 - Gain on sale of available-for-sale securities - 91 - 91 ------------------ ----------------- Net income (loss) $ 1,002 $ (661) $ 3,183 $(1,145) ================== =================

Basic net income (loss) per common share $ 0.07 $ (0.05) $ 0.22 $ (0.09) ================== ================= Diluted net income (loss) per common share $ 0.07 $ (0.05) $ 0.21 $ (0.09) ================== =================

Weighted-average shares used in the calculation of basic net income (loss) per common share 14,396 12,575 14,289 12,576 ================== ================= Weighted-average shares used in the calculation of diluted net income (loss) per common share 14,975 12,575 14,842 12,576 ================== =================

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

December June 31, 30, 2004 2004 ----------- -------- (Unaudited) Assets Current assets: Cash and cash equivalents $27,040 $28,252 Restricted cash 2,484 1,903 Accounts receivable, net 20,642 14,318 Inventories 11,014 3,904 Prepaid expenses and other current assets 1,025 1,274 Deferred income taxes 83 83 ---------------------- Total current assets 62,288 49,734 Fixed assets, net 15,475 15,441 Goodwill 7,204 7,204 Other assets 1,097 1,096 ---------------------- Total assets $86,064 $73,475 ======================

Liabilities and Stockholders' Equity Current liabilities $27,751 $19,682 Deferred liabilities, less current portion 828 987 Total stockholders' equity 57,485 52,806 ---------------------- Total liabilities and stockholders' equity $86,064 $73,475 ======================

--30--BS/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: COMPUTERS/ELECTRONICS BANKING SOFTWARE INTERNET E-COMMERCE EARNINGS SOURCE: Globecomm Systems Inc.

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