Globecomm Reports Q2

HAUPPAUGE, N.Y. -- Globecomm Systems Inc. (NASDAQ: GCOM), a global provider of end-to-end satellite-based communications solutions, today announced financial results for the fiscal 2006 second quarter and six-months ended December 31, 2005.

Fiscal 2006 Second Quarter Results

Revenues for the Company's fiscal 2006 second quarter increased 2.3% to a record $29.9 million, compared to $29.2 million in the same period last year. Revenues by the Company's network services division increased 61.1% to $7.3 million, driven primarily by continued growth in voice over Internet protocol minutes, coupled with the addition of certain large customers over the same period last year. Revenues for ground segment systems, network and enterprise solutions decreased by 8.5% to $22.6 million, primarily due to the timing of shipments and milestones relating to large projects.

Net income for the Company's fiscal 2006 second quarter was $0.9 million, or $0.06 per diluted share, compared to net income of $1.0 million, or $0.07 per diluted share, in the second quarter of fiscal 2005 on the basis of generally accepted accounting principles. However, the Company's net income for the second quarter of fiscal 2005 included a $0.5 million non-recurring gain, or $0.04 per diluted share, which is reflected as a reduction in costs from ground segment systems, networks and enterprise solutions. Excluding this non-recurring gain, net income in the second quarter of fiscal 2005 was $0.5 million, or $0.03 per diluted share.

Fiscal 2006 Six-Month Results

Revenues for the Company's fiscal 2006 six-months ended December 31, 2005 increased 8.8% to a record $59.5 million, compared to $54.7 million in the same period last year. The increase in revenues was primarily driven by a 64.9% increase in revenues by the network service division due to a significant increase in voice over Internet Protocol minutes, coupled with the addition of certain large customers over the same period last year. Revenue for ground segment systems, network and enterprise solutions remained relatively consistent at $45.6 million as compared to $46.3 million in the same period last year.

Net income for the Company's first six-months of fiscal 2006 was $1.8 million, or $0.11 per diluted share, compared to net income of $3.2 million, or $0.21 per diluted share, in the same period last year on the basis of generally accepted accounting principles. However, the Company's net income for the first six-months of fiscal 2005 included a non-recurring gain of $2.4 million relating to a recovery from a client, which was reflected as a $1.5 million reduction in general and administrative expense and a $0.9 million reduction in costs from ground segment systems, networks and enterprise solutions. Excluding this non-recurring gain, net income for the first six-months of fiscal 2005 was $0.8 million, or $0.05 per diluted share.

Management's Review of Results

David Hershberg, Chairman and Chief Executive Officer of Globecomm said: "Growth in the network services division has been the highlight of the first six-months of fiscal 2006, helping fuel the Company to its seventh consecutive profitable quarter. Globecomm's business model is predicated around building a total communication solution for our customers. This provides the Company with a recurring revenue stream once we complete the required network infrastructure. The Company is gaining traction in providing voice over Internet Protocol minutes on multiple networks Globecomm has designed and installed. Globecomm recently announced another large contract with a major government prime, which will also have a service component once the final contract negotiations are complete. This trend is favorable to Globecomm's success over the long-term as service contracts tend to be multi-year in nature. In addition, during the second quarter, Globecomm received an order for eight lightweight, rapid deploy flyaway terminals for secure broadband communications from a major United States Government customer. This is a very exciting contract as the Company has invested significant time and resources into developing and marketing this product and we believe it is gaining market acceptance as demonstrated by this order. We have identified multiple opportunities for this product and intend to vigorously pursue them."

Mr. Hershberg continued, "Globecomm's ability to generate record revenues, while maintaining a strong balance sheet is a testimony to the Company's focus, ability to grow the business, develop new products and penetrate new markets. We are proud of this and look forward to continued profitability for the foreseeable future."

Management's Current Expectations for the Fiscal Year Ending June 30, 2006

Globecomm continues to expect consolidated revenues for fiscal year 2006 to be in excess of $125 million, or a 14% increase over fiscal 2005, and diluted earnings per share to be in excess of $0.25 per share, representing a 79% increase over fiscal 2005 diluted earnings per share, excluding net non-recurring gains.

Globecomm Systems Inc.