Filed pursuant to Rule 424(b)(1)
Registration No. 333-109928
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PROSPECTUS
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123,172 SHARES
COMTECH TELECOMMUNICATIONS CORP (GRAPHICS)
COMMON STOCK
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This prospectus covers 123,172 shares of our common stock that may be
offered and sold from time to time by the selling stockholders named in this
prospectus. We will not receive any proceeds from the sale of the shares of
common stock covered by this prospectus. We will bear the costs relating to the
registration of the shares of common stock, which we estimate will be
approximately $28,000.
The selling stockholders may offer their shares through public or
private transactions on or off the Nasdaq National Market at prevailing market
prices or at privately negotiated prices. The selling stockholders may make
sales directly to purchasers or through brokers, agents, dealers or underwriters
or through a combination of these methods. The selling stockholders will bear
all commissions and other compensation paid to brokers in connection with the
sale of their shares.
Our common stock is traded on the Nasdaq National Market under the
symbol CMTL. On November 19, 2003, the closing sale price of our common
stock was $29.68 per share.
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INVESTING IN OUR COMMON STOCK INVOLVES RISKS.
SEE "RISK FACTORS" BEGINNING ON PAGE 3.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed on the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
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The date of this prospectus is November 19, 2003
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TABLE OF CONTENTS
Page
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THE COMPANY..................................................................1
THE OFFERING.................................................................2
RISK FACTORS.................................................................3
FORWARD-LOOKING STATEMENTS..................................................10
USE OF PROCEEDS.............................................................10
SELLING STOCKHOLDERS........................................................11
PLAN OF DISTRIBUTION........................................................12
LEGAL MATTERS...............................................................13
EXPERTS.....................................................................13
WHERE YOU CAN FIND MORE INFORMATION.........................................14
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You should rely only on the information contained in this prospectus.
We have not, and the selling stockholders have not, authorized anyone to provide
you with information different from that contained in this prospectus. The
selling stockholders are not making an offer to sell or seeking offers to buy
these securities in any jurisdiction where the offer or sale is not permitted.
The information contained in this prospectus is complete and accurate as of the
date of this prospectus, but the information may have changed since that date.
Unless the context otherwise indicates, the terms "Comtech," "we" and
"our company" mean Comtech Telecommunications Corp. and Comtech's subsidiaries.
All share and per share information has been adjusted to reflect the 3-for-2
stock split that occurred on July 14, 2003.
i
THE COMPANY
We design, develop, produce and market innovative products, systems and
services for advanced communications solutions. We offer niche product lines
where we believe we have technological, engineering, systems design or other
expertise that differentiate our product offerings. We believe we are leaders in
the market segments that we serve.
We conduct our business through three complementary business segments:
telecommunications transmission, mobile data communications and RF microwave
amplifiers:
Our TELECOMMUNICATIONS TRANSMISSION segment, which is our largest
business segment, provides sophisticated equipment and systems for satellite,
over-the-horizon microwave and wireless line-of-sight telecommunications
systems. Our telecommunications transmission products are used in a wide variety
of commercial and defense applications including the transmission of voice,
video and data over the Internet (such as voice over Internet Protocol and
broadband video), long distance telephone, broadcast, cable and highly secure
defense applications.
Our MOBILE DATA COMMUNICATIONS segment provides satellite-based mobile
tracking and messaging services and mobile satellite transceivers primarily for
defense applications, including logistics, support and battlefield command and
control. Our system provides location, tracking and near real-time messaging
with mobile assets. These services are provided through leased satellite
capacity, utilizing our network, mobile transceivers and satellite earth station
gateways. Our system and mobile transceivers can be used on a variety of
vehicles, including trucks, jeeps, tanks and helicopters and allow communication
globally using the L-Band satellite frequency.
Our RF MICROWAVE AMPLIFIER segment designs, manufactures and markets
solid-state high power, broadband RF microwave amplifier products. Our
amplifiers reproduce signals with greater power, current or voltage amplitude
and are extremely complex and critical to the performance of the systems into
which they are incorporated. We sell our amplifiers to domestic and foreign
commercial and government users. We believe we are one of the largest
independent companies designing, developing, manufacturing and marketing
solid-state high power, broadband amplifiers in the microwave and RF spectrums.
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Our principal executive offices are located at 105 Baylis Road,
Melville, New York 11747. The headquarters' telephone number is (631) 777-8900.
Our website can be accessed at www.comtechtel.com. This internet address is
provided for information purposes only and the information contained in our
website does not constitute part of this prospectus. We are incorporated in the
state of Delaware.
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THE OFFERING
Common stock offered by the selling
stockholders.......................... 123,172 shares
Offering Price.......................... All or part of the shares offered
hereby may be sold from time to
time by the selling stockholders.
Risk Factors............................ For a discussion of certain risks
you should consider before
investing in the shares, see
"Risk Factors" beginning on page
3.
Nasdaq National Market symbol........... CMTL
We have filed a registration statement with the SEC, of which this
prospectus forms a part, to permit the public resale of our common stock subject
to this prospectus from time to time under Rule 415 under the Securities Act.
Subject to the restrictions described in this prospectus, the selling
stockholders may offer our common stock being offered under this prospectus for
resale from time to time. In addition, subject to the restrictions described in
this prospectus, the selling stockholders may sell, transfer or otherwise
dispose of all or a portion of our common stock being offered under this
prospectus in transactions exempt from the registration requirements of the
Securities Act. See "Plan of Distribution."
2
RISK FACTORS
You should carefully consider the risks described below before deciding
to invest in our common stock. These risks could have a material and adverse
impact on our business, results of operations and financial condition. If that
were to happen, the trading price of our common stock could decline, and you
could lose all or part of your investment. The risks described below are not the
only ones we face. Our business operations could also be impaired by additional
risks and uncertainties that are not presently known to us, or that we currently
consider immaterial.
RISKS RELATED TO OUR BUSINESS
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 of our telecommunications transmission
business segment, a portion of our RF microwave amplifier business segment and
the majority of our mobile data communications segment - is derived from a
limited number of relatively large customer contracts, the timing of which
cannot be predicted. While we generally recognize revenue on contracts when the
products are shipped, revenue 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 BUSINESS, RESULTS OF OPERATIONS, LIQUIDITY AND FINANCIAL POSITION DEPEND ON
OUR ABILITY TO MAINTAIN OUR LEVEL OF GOVERNMENT BUSINESS.
The recent slowdown in our commercial business, particularly in the
telecommunications and aviation sectors, has increased our dependence on U.S.
government business. Our sales to the U.S. government (including sales to prime
contractors to the U.S. government) accounted for approximately 44.2%, 33.8% and
23.1% of our total net sales for the fiscal years ended 2003, 2002 and 2001,
respectively. We expect such business to represent a significant portion of our
revenues for the foreseeable future. U.S. government business exposes us to
various risks, including:
o unexpected contract or project terminations or suspensions;
o unpredictable order placements, reductions or cancellations;
o reductions in government funds available for our projects due to
government policy changes, budget cuts and other spending
priorities;
o penalties arising from post-award contract audits;
o cost audits in which the value of our contracts may be reduced;
o higher-than-expected final costs, particularly relating to
software and hardware development, for work performed under
contracts where we commit to specified deliveries for a fixed
price; and
o unpredictable cash collections of unbilled receivables that may be
subject to acceptance of contract deliverables by the customer and
contract close-out procedures, including government approval of
final indirect rates.
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 may not be 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.
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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.
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.
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, results of
operations and financial condition.
OUR DEPENDENCE ON INTERNATIONAL SALES MAY ADVERSELY AFFECT US.
Sales for use by international customers (including sales to prime
contractors' international customers) represented approximately 39.7%, 41.2% and
46.2% of our total net sales for the fiscal years ended July 31, 2003, 2002 and
2001, respectively. Approximately 52.7% of our backlog at July 31, 2003
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, exposure to public
health epidemics (such as Severe Acute Respiratory Syndrome ("SARS")),
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 systems suppliers, contracts denominated in U.S. dollars, advance or
milestone payments and irrevocable letters of credit in our favor. However, we
may not be able to reduce the economic risk of doing business in foreign
countries, in all instances.
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.
A SLOWING ECONOMY AND CONTINUED REDUCTION IN TELECOMMUNICATIONS EQUIPMENT AND
SYSTEMS SPENDING MAY NEGATIVELY AFFECT OUR REVENUES, PROFITABILITY AND THE
RECOVERABILITY OF OUR ASSETS, INCLUDING INTANGIBLE ASSETS.
Since the second half of fiscal 2001, our revenues from commercial
customers have been negatively affected by the uncertain economic environment
both in the overall market, and more specifically in the telecommunications and
aviation sectors. If the economy continues to slow, some of our customers may
further reduce their budgets for spending on telecommunications equipment and
systems. As a consequence, our current customers and other prospective customers
may postpone, reduce or even forego the purchase of our products and systems,
which could adversely affect our revenues, profitability and the recoverability
of our assets, including intangible assets, particularly in our
telecommunications transmission and RF microwave amplifier segments, which are
exposed to the telecommunications and aviation sectors.
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OUR MOBILE DATA COMMUNICATIONS BUSINESS IS SUBJECT TO RISK.
Although fiscal 2003 sales and earnings increased significantly over
prior years, our mobile data communications business has a relatively limited
operating history compared to our other business segments. It is subject to all
of the risks inherent in the operation of a new business enterprise. 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 satellite
services and hardware, including mobile satellite transceivers and
computers, 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. Sales under the U.S. Army contract could be subject to
unpredictable funding and deployment decisions. Through July 31,
2003, we have received orders for $71.5 million under this
contract.
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 90 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 or licensing of applications which create 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
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 and financial
position.
o We lease the satellite capacity necessary to operate our system
from third party satellite networks. We currently have a long-term
lease that expires on June 30, 2005 with a satellite network
operator, Mobile Satellite Ventures, for satellite coverage in
North America, Central America and the northern rim of South
America. We have leases with other vendors for satellite coverage
in other parts of the world as required by 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, Inc. Existing
competitors, including terrestrial service providers, 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. This could impact our entry into the commercial market
in a significant way.
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 impact on our business, results of operations and
financial condition. At present, one of our satellite providers is
operating without a full in-orbit back-up capability in the event
of a failure of one of its two satellites in operation. Should we
be obliged to restore service on another system in the event of a
satellite failure, our costs would increase and could have an
adverse effect on our business, results of operation, liquidity
and financial position.
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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 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
adverse impact on our business, results of operations and financial condition.
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 of unanticipated technological,
manufacturing, supply or other problems, price increases or increases in the
cost of performance.
ADVERSE REGULATORY CHANGES COULD IMPAIR OUR ABILITY TO SELL PRODUCTS.
Our products are incorporated into wireless communications systems that
must comply with various government regulations, including those of the Federal
Communications Commission ("FCC"). Regulatory changes, including changes in the
allocation and availability of frequency spectrum, and in the military standards
and specifications that define the current satellite networking environment,
could materially harm our business by (1) restricting development efforts by us
and our customers, (2) making our current products less attractive or obsolete,
or (3) increasing the opportunity for additional competition.
Changes in, or our failure to comply with, applicable regulations could
materially harm our business. In addition, the increasing demand for wireless
communications has exerted pressure on regulatory bodies worldwide to adopt new
standards and reassign bandwidth for these products and services. The reduced
number of available frequencies for other products and services and the time
delays inherent in the government approval process of new products and services
have caused and may continue to cause our customers to cancel, postpone or
reschedule their installation of communications systems including their
satellite, over-the-horizon microwave, or terrestrial line-of-sight microwave
communication systems. This, in turn, could have a material adverse effect on
our sales of products to our customers.
WE FACE RISKS FROM THE UNCERTAINTY OF PREVAILING ECONOMIC AND POLITICAL
CONDITIONS.
Current global political and economic conditions are uncertain. As a
result, it is difficult to estimate the level of expansion, if any, for the
global or U.S. economies generally or the markets in which we participate.
Because our budgeting and forecasting process relies on estimates of growth in
the markets we serve, the current economic environment renders estimates of
future income and expenses even more difficult than usual to formulate. The
future direction of the domestic and global economies and political environment
could have a material adverse impact on our business, results of operations and
financial condition.
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 or in process research
and development charges related to 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;
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o diversion of management's attention from other business concerns;
and
o potential loss of key employees or customers of any acquired
business.
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 corporate and operating unit 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. 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 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.
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 impact
on our business, results of operations and financial condition.
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.
We believe that we own or have licensed all intellectual property
rights necessary for the operation of our businesses as currently contemplated.
If the technology we use is found to infringe on protected technology, we could
be required to change our business practices, 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 business or if we were
required to change our business practices, we could be prohibited from making
and selling our products or providing certain telecommunications services.
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
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comply with current or future regulations could result in the imposition of
substantial fines, suspension of production, alteration of our manufacturing
processes or cessation of operations that could have a material adverse impact
on our business, results of operations and financial condition.
RECENTLY ENACTED AND PROPOSED CHANGES IN SECURITIES LAWS AND REGULATIONS ARE
LIKELY TO INCREASE OUR COSTS.
The Sarbanes-Oxley Act of 2002 that became law in July 2002 requires
changes in some of our corporate governance, public disclosure and compliance
practices. The Act also requires the Securities and Exchange Commission to
promulgate new rules on a variety of subjects. In addition to final rules and
rule proposals already made, the Nasdaq National Market has proposed revisions
to its requirements for companies, such as us, that are listed on the Nasdaq
National Market. We expect these developments to increase our legal and
financial compliance costs. We expect these developments to make it more
difficult and more expensive for us to obtain director and officer liability
insurance, and we may be required to accept reduced coverage or incur
substantially higher costs to obtain coverage. These developments could make it
more difficult for us to attract and retain qualified members of our board of
directors, particularly to serve on our audit committee, and qualified executive
officers. We are presently evaluating and monitoring regulatory developments and
cannot estimate the timing or magnitude of additional costs we could incur as a
result.
TERRORIST ATTACKS AND THREATS, AND GOVERNMENT RESPONSES THERETO, AND THREATS OF
WAR ELSEWHERE MAY NEGATIVELY IMPACT ALL ASPECTS OF OUR OPERATIONS, REVENUES,
COSTS AND STOCK PRICE.
The terrorist attacks in the United States and against United States'
interests overseas, the U.S. government's response thereto, and threats of war
may negatively affect our business, financial condition and results of
operations. Any escalation in these events or similar or future events may
disrupt our operations or those of our customers and may affect the availability
of materials needed to manufacture our products or the means to transport those
materials to manufacturing facilities and finished products to customers. In
addition, these events have had and could continue to have an adverse impact on
the U.S. and world economy in general.
RISKS RELATED TO THIS OFFERING
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 company. 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 a
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 economic conditions generally, particularly in the
telecommunications sector;
o changes in market conditions generally, particularly in the market
for small cap stocks; and
o limited public float.
Shortfalls in our sales 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 CASH 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.
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PROVISIONS IN OUR CORPORATE DOCUMENTS, STOCKHOLDER RIGHTS PLAN, AND DELAWARE LAW
COULD DELAY OR PREVENT A CHANGE IN CONTROL OF COMTECH.
We have taken a number of actions that could have the effect of
discouraging, delaying or preventing a merger or acquisition involving Comtech
that our stockholders may consider favorable. For example, we have adopted a
stockholder rights plan that could cause substantial dilution to a stockholder,
and substantially increase the cost paid by a stockholder, who attempts to
acquire us on terms not approved by our board of directors. This could prevent
us from being acquired. In addition, our certificate of incorporation grants the
board of directors the authority to fix the rights, preferences and privileges
of and issue up to 2,000,000 shares of preferred stock without stockholder
action. Although we have no present intention to issue shares of preferred
stock, such an issuance of any class or series of our preferred stock could have
rights which would adversely affect the voting power of the common stock or
which could delay, defer, or prevent a change in control of Comtech. In
addition, we are subject to the provisions of Section 203 of the Delaware
General Corporation Law, an anti-takeover law. In general, this statute provides
that except in certain limited circumstances a corporation shall not engage in
any "business combination" with an "interested stockholder" for a period of
three years after the date of the transaction in which the person became an
interested stockholder, unless the business combination is approved in a
prescribed manner. A "business combination" includes mergers, asset sales and
other transactions resulting in a financial benefit to the interested
stockholder. Subject to certain exceptions, for purposes of Section 203 of the
Delaware General Corporation Law, an "interested stockholder" is a person who,
together with affiliates, owns, or within three years did own, 15% or more of
the corporation's voting stock. This provision could have the effect of delaying
or preventing a change in control of Comtech.
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FORWARD-LOOKING STATEMENTS
This prospectus contains "forward-looking statements" including
statements concerning the future of our industry, product development, business
strategy, continued acceptance of our products, market growth, and dependence on
significant customers. These statements can be identified by the use of
forward-looking terminology such as "may," "will," "expect," "anticipate,"
"estimate," "continue," or other similar words. When considering forward-looking
statements, you should keep in mind the risk factors and other cautionary
statements in this prospectus. The risk factors noted above and other factors
noted throughout this prospectus could cause our actual results to differ
significantly from those contained in any forward-looking statement. Except as
required by law, we undertake no obligation to update publicly any
forward-looking statements for any reason after the date of this prospectus to
conform these statements to actual results or to changes in our expectations.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the shares of common
stock by the selling stockholders.
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SELLING STOCKHOLDERS
All of the 123,172 shares offered hereby were acquired from us by the
selling stockholders upon their exercise of warrants for the purchase of our
shares of common stock. The warrants that were exercised were issued in
connection with our acquisition of Mobile Datacom Corporation in September,
1998, and were issued with an exercise price of $4.38 per share. Under the
warrants, we agreed to file a registration statement registering the resale of
shares of our common stock by the selling stockholders and to keep such
registration statement effective for such period of time needed to complete the
offer and sale of the common stock being offered under this prospectus.
The initial holders, or their pledgees, donees, distributes,
transferees or other successors-in-interest (including, for example, partners in
a partnership receiving a distribution of the shares), who are collectively
referred to in this prospectus as the selling stockholders, may from time to
time offer and sell any and all of the shares of common stock offered under this
prospectus. This prospectus also covers any additional shares of common stock
that become issuable in connection with the shares being registered by reason of
any stock dividend, stock split, recapitalization or other similar transaction
effected without receipt of consideration which results in an increase in the
number of our outstanding shares of common stock.
The following table sets forth, for each selling stockholder, the
amount of Comtech common stock owned, the number of shares of common stock
offered hereby and the number of shares of common stock to be held and the
percentage of outstanding common stock to be owned after completion of this
offering (assuming the sale of all shares offered under this prospectus). In
addition, the table indicates any position, office or other relationship
material to Comtech or any of its affiliates which any selling stockholder has
held within the past three years.
POSITION,
PERCENT OF OFFICE OR
NUMBER OF NUMBER OF OWNERSHIP OTHER
NUMBER OF SHARES OFFERED SHARES OWNED AFTER MATERIAL
NAME SHARES OWNED HEREBY AFTER OFFERING OFFERING RELATIONSHIP
---- ------------ -------------- -------------- --------- ------------
Odyssey Financial 10,539 10,539 -- -- --
MCI WORLDCOM Network Services, Inc. 25,411 25,411 -- -- --
(MCI Telecommunications, Inc.)
SG Partners LP 59,975 8,275 51,700 * --
Yale University 30,547 30,547 -- -- --
Susan Goldstein 6,250 6,250 -- -- --
Joel Alper 31,438 31,438 -- -- Subsidiary
Officer
Brent Taylor 66,661 3,861 62,800 * Subsidiary
Officer
Steve Line 784 784 -- -- --
Leslie Snively 53,829 1,829 52,000 * Subsidiary
Officer
Dan Veeneman 37,979 479 37,500 * Subsidiary
Officer
Donna Whitt 3,759 3,759 -- -- --
----------------
* Less than 1%.
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PLAN OF DISTRIBUTION
The selling stockholders may, from time to time, sell any or all of
their shares of common stock on any stock exchange, market or trading facility
on which the shares are traded or in private transactions. These sales may be at
fixed or negotiated prices. The selling stockholders may use any one or more of
the following methods when selling shares:
o ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
o block trades in which the broker-dealer will attempt to sell the
shares as agent but may position and resell a portion of the block
as principal to facilitate the transaction;
o purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
o an exchange distribution in accordance with the rules of the
applicable exchange;
o privately negotiated transactions;
o short sales;
o broker-dealers may agree with the selling stockholders to sell a
specified number of such shares at a stipulated price per share;
o a combination of any such methods of sale; and
o any other method permitted pursuant to applicable law.
The selling stockholders may also sell shares under Rule 144 under the
Securities Act of 1933, as amended (the "Securities Act"), if available, rather
than under this prospectus.
The selling stockholders may also engage in short sales against the
box, puts and calls and other transactions in our shares of common stock and may
sell or deliver shares in connection with these trades.
Broker-dealers engaged by the selling stockholders may arrange for
other brokers-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the selling stockholders (or, if any broker-dealer
acts as agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. Any profits on the resale of shares of common stock by a
broker-dealer acting as principal might be deemed to be underwriting discounts
or commissions under the Securities Act. Discounts, concessions, commissions and
similar selling expenses, if any, attributable to the sale of shares will be
borne by a selling stockholder. The selling stockholders may agree to indemnify
any agent, dealer or broker-dealer that participates in transactions involving
sales of the shares if liabilities are imposed on that person under the
Securities Act.
The selling stockholders may from time to time pledge or grant a
security interest in some or all of the shares of common stock owned by them
and, if they default in the performance of their secured obligations, the
pledgees or secured parties may offer and sell the shares of common stock from
time to time under this prospectus after we have filed an amendment to this
prospectus under Rule 424(b)(3) or other applicable provision of the Securities
Act amending the list of selling stockholders to include the pledgee, transferee
or other successors in interest as selling stockholders under this prospectus.
The selling stockholders also may transfer the shares of common stock
in other circumstances, in which case the transferees, pledgees or other
successors in interest will be the selling beneficial owners for purposes of
this prospectus and may sell the shares of common stock from time to time under
this prospectus after we have filed an amendment to this prospectus under Rule
424(b)(3) or other applicable provision of the Securities Act amending the list
of selling stockholders to include the pledgee, transferee or other successors
in interest as selling stockholders under this prospectus.
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The selling stockholders and any broker-dealers or agents that are
involved in selling the shares of common stock may be deemed to be
"underwriters" within the meaning of the Securities Act in connection with such
sales. In such event, any commissions received by such broker-dealers or agents
and any profit on the resale of the shares of common stock purchased by them may
be deemed to be underwriting commissions or discounts under the Securities Act.
We are required to pay all fees and expenses incident to the
registration of the shares of common stock. We have agreed to indemnify the
selling stockholders against certain losses, claims, damages and liabilities,
including liabilities under the Securities Act.
The selling stockholders have advised us that they have not entered
into any agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their shares of common stock, nor is there
an underwriter or coordinating broker acting in connection with a proposed sale
of shares of common stock by any selling stockholder. If we are notified by any
selling stockholder that any material arrangement has been entered into with a
broker-dealer for the sale of shares of common stock, if required, we will file
a supplement to this prospectus. If the selling stockholders use this prospectus
for any sale of the shares of common stock, they will be subject to the
prospectus delivery requirements of the Securities Act.
LEGAL MATTERS
The validity of the shares of common stock offered hereby will be
passed upon for us by Proskauer Rose LLP, New York, New York. Richard L.
Goldberg, a director of Comtech, is also a partner in Proskauer Rose LLP.
EXPERTS
The consolidated financial statements and schedule of Comtech
Telecommunications Corp. and subsidiaries as of July 31, 2003 and 2002, and for
each of the years in the three-year period ended July 31, 2003, have been
incorporated by reference in Comtech's Annual Report on Form 10-K for the year
ended July 31, 2003 in reliance upon the report of KPMG LLP, independent
accountants, incorporated herein by reference, and upon the authority of said
firm as experts in accounting and auditing.
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission. You can inspect
and copy these reports, proxy statements and other information at the public
reference facilities of the Securities and Exchange Commission, in Room 1024,
450 Fifth Street, N.W., Washington, D.C. 20549 and at the Securities and
Exchange Commission's regional offices at 233 Broadway, New York, New York 10279
and 175 W. Jackson Boulevard, Suite 900, Chicago, Illinois 60604. You can also
obtain copies of these materials from the public reference section of the
Securities and Exchange Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. Please call the Securities and Exchange Commission
at 1-800-SEC-0330 for further information on the public reference rooms. The
Securities and Exchange Commission also maintains a web site that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Securities and Exchange Commission
(http://www.sec.gov).
We have filed a registration statement on Form S-3 and related exhibits
with the Securities and Exchange Commission under the Securities Act. The
registration statement contains additional information about us and our common
stock. You may inspect the registration statement and exhibits without charge at
the office of the Securities and Exchange Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and you may obtain copies from the Securities and
Exchange Commission at prescribed rates.
The Securities and Exchange Commission allows us to "incorporate by
reference" the information we file with it, which means that we can disclose
important information to you by referring to those documents. The information
incorporated by reference is an important part of this prospectus, and
information that we file later with the Securities and Exchange Commission will
automatically update and supersede this information. We incorporate by reference
the following documents we filed with the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange
Act"):
o our Annual Report on Form 10-K for the fiscal year ended July 31,
2003, filed on September 23, 2003;
o our Definitive Proxy Statement dated November 3, 2003;
o our registration of our common stock pursuant to Section 12(g) of
the Exchange Act on Form 8-A filed on November 22, 1974, as
amended by our Current Report on Form 8-K dated December 11, 2000;
and
o all documents filed by us with the Securities and Exchange
Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act before the offering of the common stock offered
hereby is completed.
You may request a copy of these filings at no cost, by writing or
telephoning us at the following address:
Comtech Telecommunications Corp.
105 Baylis Road
Melville, New York 11747
Telephone: (631) 777-8900
Attention: Ms. Gail Segui
14
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COMTECH TELECOMMUNICATIONS CORP. (GRAPHICS)
123,172
COMMON STOCK
-------------
PROSPECTUS
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November 19, 2003
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