COMTECH TELECOMMUNICATIONS CORP. Annual Report 2016 Presence in Large, Growing End Markets Comtech is focused on markets CORPORATE INFORMATION that are highly dependent on secure, advanced communications technologies. Satellite-based Communications Public Safety & Next Generation 911 Enterprise & Trusted Location Platforms Command & Control (C4ISR) Solutions Cybersecurity Training Emerging Markets POSITIONED FOR GROWTH Commercial Solutions Segment Government Solutions Segment Our Commercial Solutions segment serves commercial customers Our Government Solutions segment serves large government and smaller government customers, such as state and local end-users (including those of foreign countries) that require governments, that require advanced communication technologies mission-critical technologies and systems. We are a leading to meet their needs and also serves certain large government provider of command and control technologies and applications customers (including the U.S. Government) that have requirements (such as the design, installation and operation of data networks for off-the-shelf commercial equipment. Our satellite-based that integrate computing and communications, including both communication technologies products and services are used satellite and terrestrial links), ongoing network operation and in a wide variety of commercial and government applications management support services (including telecom expense including the backhaul of satellite-based cellular traffic, management, project management and fielding and maintenance broadcasting (including HDTV), IP trunking solutions and premium solutions related to satellite ground terminals), troposcatter enterprise services. In fiscal 2016, as a result of the acquisition communications (such as digital troposcatter multiplexers, digital of TeleCommunication Systems, Inc. (“TCS”), we expanded our over-the-horizon modems, troposcatter systems, and frequency offerings to include safety and security technologies, such as converter systems) and RF power and switching technologies Next Generation 911, wireless/VoIP 911 and ESInet services and (such as solid-state high-power broadband amplifiers, enhanced Enterprise and Trusted LocationTM technologies including application position location reporting system (commonly known as “EPLRS”) solutions such as managed “cloud” services, trusted location amplifier assemblies, identification friend or foe (“IFF”) amplifiers, and precise indoor location and software and equipment for and amplifiers used in the counteraction of improvised explosive location-based and messaging infrastructures. We believe that devices). In fiscal 2016, as a result of the acquisition of TCS, our Comtech is well positioned to capitalize on this industry growth. command and control technologies applications were increased and now include C4ISR and cyber intelligence solutions. FISCAL 2016 REVENUE BY SEGMENT FISCAL 2016 REVENUE BY CUSTOMER 39.4% 40.8% 60.6% 29.2% 30.0% Commercial Solutions Domestic Government Solutions International U.S. Government 1 TO OUR FELLOW SHAREHOLDERS: Fiscal year 2016 has been a year our business through two should provide Comtech with of significant change for Comtech reportable operating segments significant revenue growth in Telecommunications Corp. that we refer to as Commercial the future. Solutions and Government In February 2016, we Solutions. We achieved significant We continue to be the undisputed completed the acquisition of cost synergies in the first year leader in over-the-horizon TeleCommunication Systems, of operations and are working troposcatter technology, providing Inc. (“TCS”) to position us to aggressively to achieve more. products and systems to customers achieve meaningful sustainable worldwide including to the growth. In simple terms, we The TCS acquisition provides U.S. Government. Today, we are doubled our annual revenue us with key strategic and the only company able to provide base, doubled our employee base financial benefits, including an adaptive modem operating and positioned the Company for creation of scale and more at 50 Mbps over difficult significant growth for many years. diversified earnings streams, communication paths. reducing volatility associated The TCS acquisition was a with challenging international We also remain the undisputed challenge and took tremendous business conditions. Comtech leader in the satellite effort – which continues to this has now entered the public earth station single-channel-per day. In the midst of challenging safety market which has a -carrier (“SCPC”) modem area, financing conditions, we took growing need for next generation driven primarily by our proven on approximately $360.0 million emergency 911 systems that ability to deliver the most of debt and also raised utilize messaging and trusted bandwidth-efficient modems approximately $95.0 million of equity location technology. This is and highest efficiency to strengthen our balance sheet. a new and growing market for amplifiers to our end-customers. We also began managing Comtech which we believe We continue to invest in our 2 new HEIGHTSTM solutions, I became increasingly more I am a large shareholder myself, a scalable networking platform excited about our future growth with a significant portion of my which leverages a single potential and I ultimately net worth invested in Comtech user interface with a powerful agreed to resume the role and I am confident we will be traffic analytical engine that of CEO and President. We successful in achieving our goals. allows simplified design, created a new COO role implementation, monitoring, bringing in an outsider, Michael Respectfully yours, control and optimization of networks Galletti, a skilled executive with using our hubs and gateways. impeccable operational skills. I believe our management bench Fred Kornberg During the past year or so, we strength is deep and we are all Chairman CEO and President have also made significant inroads focused on achieving long-term into the high growth in-flight growth for our shareholders. satellite-based connectivity market. Our solid-state power amplifiers help I want to express my sincere enable commercial airlines to thanks to the many Comtech provide in-flight connectivity and TCS employees. They are services to their passengers. This the reason why we are able is a new and growing market for us to navigate through current and we believe this area should be challenges and who made the a significant revenue contributor for acquisition possible. Finally, Comtech over the next several years. thanks to our stockholders Towards the end of fiscal 2016, for their continued support. 3 Our “Super Power” traveling wave tube amplifiers have been well received, allowing our customers, COMMERCIAL such as broadcasters, to build new infrastructure and enable the replacement of aged klystron or TWT equipment. These high power, high SOLUTIONS efficiency broadband amplifiers are necessary for High Definition and Ultra-High Definition or “4K” broadcasting. Communication Technologies The “in-flight connectivity” market has become a We believe we are the leading provider of satellite growing market for Comtech. Our solid state power communications technologies. Our product offerings amplifiers help enable commercial airlines to provide include ground-based equipment such as satellite in-flight connectivity service to their passengers. earth station modems, traveling wave tube amplifiers, We believe we are a key supplier in providing block up converters, power amplifiers, frequency amplifier components used in in-flight Ku-band converters, transceivers, access devices, voice-gateways, connectivity systems. internet protocol encapsulators, and media routers. We manufacture most of the satellite-based communication equipment we sell to our customers. Our satellite-based communication products participate Safety and Security Technologies in the satellite backhaul and services market. In the satellite earth station sector, Comtech remains We believe we are a leader in public safety the undisputed leader of SCPC (single-channel-per- communication technologies used for delivery of carrier), driven by our proven ability to deliver the 911 calls. most bandwidth efficient modems and highest efficiency amplifiers to end-users. Our HeightsTM We offer safety and security technology solutions Networking Platform, successor to our advanced VSAT that enable 911 call routing via cellular, voice products, combines our most efficient waveforms, over Internet Protocol (VoIP), and text to 911. We compression engines and the ability to provide believe we are a leader in providing text to 911 dynamic bandwidth to meet the demands of technology for network operators who must comply premium enterprise customers, on traditional with FCC regulations, having completed public satellites as well as the new High Throughput Satellites safety answering points (“PSAP”) deployments in (“HTS”). With more than 100 new HTS expected over 800 of our nation’s PSAPs with a presence in to launch in the next decade, we believe service 37 states, Puerto Rico and the District of Columbia. providers will require new installations and upgrades to expand their networks. 4 3 We intend to continue to invest in and upgrade our Our Look4TM application allows customers to build 911 capabilities as we believe this market will grow their own applications that include our location-based from current levels. We believe our existing customer technology. Look4TM allows enterprise customers