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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON , D.C. 20549

FORM 10-K

FOR ANNUAL AND TRANSITION REPORTS

PURSUANT TO SECTIONS 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934.
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934
For the fiscal year ended July 31, 1999
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934
Commission file number: 0-7928
COMTECH TELECOMMUNICATIONS CORP.

(Exact Name of Registrant as Specified in its Charter)
Delaware 11-2139466

(State or Other Jurisdiction of (I.R.S. Employer Identification No.)

Incorporation or Organization)
105 Baylis Road

Melville, New York

(Address of Principal Executive Offices)

11747

(Zip Code)
Registrant's telephone number, including area code (516) 777-8900
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:

Common Stock, par value $.10 per share

Series A Junior Participating Cumulative Preferred

Stock par value $.10 per share

(Title of Class)
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. YES: |X| NO: |_|
Indicate by check mark if disclosure of delinquent filers pursuant to Item

405 of Regulation S-K is not contained herein, and will not be contained, to the

best of registrant's knowledge, in definitive proxy or information statements

incorporated by reference in Part III of this Form 10-K or any amendment to this

Form 10-K. |X|
The aggregate market value of the registrant's voting stock held by

non-affiliates of the registrant, computed by reference to the closing sales

price as quoted on the Nasdaq National Market on October 22, 1999 was

approximately $52,208,352.
DOCUMENTS INCORPORATED BY REFERENCE.
Certain portions of the document listed below have been incorporated by

reference into the indicated Part of this Annual Report on Form 10-K:
Proxy Statement for Annual Meeting

of Shareholders to be held December 14, 1999 Part III
INDEX
PART I
ITEM 1. BUSINESS 1
Overview 1

Telecommunications Transmission Business

Segment Overview 2

RF Microwave Amplifier Business Segment Overview 3

Mobile Data Communications Services Business

Segment Overview 4

Sales, Marketing and Customer Support 5

Compliance with Federal, State and Local Environment

Protection Laws 5

Backlog 5

Manufacturing and Service 6

Patents and Licenses 6

Competition 7

Key Personnel/Employees 7

Disclosure Regarding Forward-Looking Statements 7
ITEM 2. PROPERTIES 8
ITEM 3. LEGAL PROCEEDINGS 8
ITEM 4. SUBMISSION OF MATTERS TO A VOTE

OF SECURITY HOLDERS 8
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON

EQUITY AND RELATED STOCKHOLDER MATTERS 8
Dividends 9

Approximate Number of Equity Security Holders 9
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA 9

i
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF

OPERATIONS 11
Overview 12

Results of Operations

Comparison of Fiscal 1999 and 1998 12

Comparison of Fiscal 1998 and 1997 13

Liquidity and Capital Resources 14

Year 2000 Compliance 15
ITEM 8. FINANCIAL STATEMENTS AND

SUPPLEMENTARY DATA 16
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH

ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 16
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS

OF REGISTRANT 16
ITEM 11. EXECUTIVE COMPENSATION 16
ITEM 12. SECURITY OWNERSHIP OF CERTAIN

BENEFICIAL OWNERS AND MANAGEMENT 16
ITEM 13. CERTAIN RELATIONSHIPS AND

RELATED TRANSACTIONS 16
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT

SCHEDULE AND REPORTS ON FORM 8-K 17
SIGNATURE 19
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

AND SCHEDULE F-1

ii
Note: As used in this Annual Report on Form 10-K, the terms "Comtech,"

"we" and "our company" mean Comtech Telecommunications Corp., Comtech's

subsidiaries and Comtech's predecessor corporation.
All shares and per share information has been adjusted to reflect the

three-for-two stock split that occurred in July 1999. See Comtech's Form 8-K

dated July 6, 1999.
PART I
ITEM 1. BUSINESS
Overview
We design, develop, produce and market 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. We meet the high

performance requirements of our telecommunications customers by drawing upon

proprietary expertise in key microwave amplification and transmission

technologies developed over more than 32 years of operations.
A majority of our sales in fiscal 1999 were of products developed by us

within the last 5 years, including, for example, linear amplifiers sold to

cellular and PCS telephony system manufacturers for testing their systems'

amplifiers, and turbo codec modems sold to satellite systems integrators and

service providers for use in voice, data, video and fax transmission. Our

internally funded and customer funded research and development expenses

aggregated $3.8 million, $1.7 million and $1.5 million in fiscal 1999, 1998 and

1997, representing 10.0%, 5.6% and 6.0% of our net sales in those fiscal years.
We conduct our business through three decentralized but complementary

product and service segments: telecommunications transmission, RF microwave

amplifiers, and our development-stage mobile data communication services

business that we acquired in 1998.
Telecommunications transmission -- modems, frequency up converters

and down converters, solid state, high-power amplifiers, satellite very

small aperture (VSAT) transceivers and antennas for satellite ground

station applications and adaptive modems and microwave radios for

over-the-horizon microwave communications systems. Customers include,

among others, satellite systems integrators and communication service

providers and oil companies.
RF microwave amplifiers -- solid state, high-power, broadband

amplifier products in the microwave and radio frequency (RF) spectrums for

a wide range of applications, including testing amplifiers used in the

cellular and wireless industries and amplifiers in jamming and

identification, friend or foe (IFF) defense systems. Customers include,

among others, communication service providers, cellular and PCS telephony

manufacturers and defense contractors.
Mobile data communications services -- Secure, real time two-way

messaging links between mobile platforms, such as land vehicles, rail and

aircraft, remotely placed fixed site sensors and user headquarters through

our Germantown, Maryland gateway satellite earth station. The network

employs leased satellite capacity and direct line or Internet links

between our gateway and user headquarters. Depending upon the end-user's

needs, our system can be configured to provide a wide range of non-voice

applications, ranging from simple location tracking to messaging, e-mail,

broadcasting of information, meter and other sensor reading, and monitor

and control of gauges and sensors.
In June 1999, the U. S. Army awarded us a contract which, subject to

government funding and deployment decisions, provides for the purchase of

up to $418.2 million in mobile transceiver units and global data messaging

communication services over an eight-year period. We have not yet received

significant orders under this contract, which can be terminated by the

U.S. Army at any time for its convenience, and we cannot assure you that

we will receive any such orders.
Sales for use by international customers represented approximately

60.1%, 46.5%, and 57.3% of our net sales in fiscal years 1999, 1998 and

1997, respectively. We believe that the global expansion of

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telecommunications, particularly in developing countries in Asia, South America,

the Middle East and Europe, represents a key opportunity for the continued

growth of our telecommunications business. Included as international sales are

sales made to domestic companies for inclusion in products which will be sold to

international customers.
Our product designs are based on both analog and digital microwave

technologies. Digital microwave technology can significantly enhance performance

of telecommunications systems. We have invested significant resources in

developing our technological expertise, and work closely with customers and

potential customers to develop product lines in market niches where we believe

our expertise can enable us to become a leading supplier.
Our three business segments -- telecommunications transmission, RF

microwave amplifiers and our development-stage mobile data communications

services business -- operate through individual operating units, each of which

maintains its own sales, marketing, product development and manufacturing

functions. We believe that this organizational structure allows the key

personnel of each operating unit to be more responsive to their particular

markets and customers. Brief descriptions of our business segments and operating

units follow.
Telecommunications Transmission Business Segment
The demand for telecommunications is increasing worldwide as emerging

economies seek to modernize their infrastructure and as increasingly

information-intensive markets introduce new telecommunications services. The

telecommunications industry has expanded rapidly during the last decade due to

technological advances and deregulation. Advances in technology have lowered

per-unit communications costs, increased product reliability and encouraged a

proliferation of new and enhanced communications products and services.
In making procurement decisions, customers for telecommunications

equipment must weigh the relative costs and advantages of the six presently

available transmission technologies: copper cable, fiber optic cable, high

frequency radio systems, wireless microwave systems, over-the-horizon microwave

systems and satellite systems. Rarely is a complete communications network or

system based solely on one of these technologies. Transmission can be routed

through a combination of technologies, each employed where most cost-effective.

Our products are used in satellite, over-the-horizon microwave, terrestrial

line-of-sight microwave and wireless.
Satellite communications systems have grown and diversified in

response to demand for efficient and accurate long distance voice

and video communication and digital information exchange. In a

satellite communications system, information is relayed to and from

microwave transmitting and receiving stations on the ground by means

of a low earth orbit (LEO), medium earth orbit (MEO), or

geostationary earth orbit (GEO) satellites, which are generally

placed in an orbit from 600 to 22,300 miles above the earth's

equator. Satellite communications systems are particularly useful

where long-range, high capacity and high quality point-to-point or

point-to-multipoint communication is desirable. As few as three GEO

satellites can provide global communications coverage. These

systems, which use microwave technology, are well suited for rapid

introduction of service in remote areas or where communication

alternatives are unavailable, such as mobile, shipboard or defense

applications.
Over-the-horizon microwave communication systems transmit signals

over distances from 30 to 600 miles by reflection of the transmitted

signals off the troposphere, an atmospheric layer located

approximately seven miles above the earth's surface. The net effect

is that the signal is reflected by a large number of scattering

particles in the troposphere which, in turn, directs a portion of

the transmitted signal energy well beyond line-of-sight. Such

systems offer a high level of reliability and security.
Wireless and line-of-sight microwave communications systems,

generally used for point-to-point communications, employ signals

with extremely short wave-lengths which travel only in line-of-sight

paths over relatively short distances, generally under 30 miles, can

be quickly and easily installed, require relatively low initial

capital investment and can be upgraded and expanded over time.

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High frequency (HF) radio systems employ long wavelengths which are

propagated beyond line-of-sight distances either by surface waves

traveling along the earth's perimeter or by skywave reflection of

the transmitted waves off different layers of the ionosphere.
Fiber optic cable is best suited to high-volume, point-to-point,

short- or long-distance links where its advantages -- capacity,

quality and security -- justify the long lead time and high cost to

equip and install a network.
Copper cable, the traditional transmission medium most familiar to

consumers, is being replaced and supplemented by the other media,

particularly for high-volume and long distance transmissions where

it has substantial capacity, cost and reliability limitations.
Our Comtech Systems, Inc. subsidiary, located in St. Cloud, Florida,

designs, markets, manufactures and installs telecommunication products for

domestic and international applications. It also supplies telecommunication
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