23197--9/20/2006--COMTECH_TELECOMMUNICATIONS_CORP

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{tax, income, asset}

{customer, product, revenue}

{product, market, service}

{regulation, change, law}

{acquisition, growth, future}

{stock, price, share}

{condition, economic, financial}

{cost, contract, operation}

{operation, international, foreign}

{debt, indebtedness, cash}

{cost, regulation, environmental}

{personnel, key, retain}

{operation, natural, condition}

{control, financial, internal}

{property, intellectual, protect}

{provision, law, control}

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Due to many factors, including the amount of business represented by large contracts, new orders, net sales and our operating results are difficult to forecast and may be volatile. Our business, results of operations, liquidity and financial position depend on our ability to maintain our level of U.S. government business. Our dependence on international sales and international sales agents may adversely affect us. All of our businesses are subject to rapid technological change; we must keep pace with changes to compete successfully. Reductions in telecommunications equipment and systems spending may negatively affect our revenues, profitability and the recoverability of our assets, including intangible assets. Our mobile data communications business is subject to unique risks. Our backlog is subject to customer cancellation or modification and such cancellation could result in decreased sales and increased provisions for excess and obsolete inventory. Our dependence on component availability, subcontractor availability and performance and key suppliers, including the core manufacturing expertise of our high-volume technology manufacturing center located in Tempe, Arizona, may adversely affect us. Contract cost growth on our fixed price contracts and other contracts that cannot be justified as an increase in contract value due from customers exposes us to reduced profitability and the potential loss of future business and other risks. Adverse regulatory changes could impair our ability to sell products. Acquisitions and strategic investments may divert our resources and management attention; results may fall short of expectations. We have investments in recorded goodwill as a result of prior acquisitions, and changes in future business conditions could cause these investments to become impaired, requiring substantial write-downs that would reduce our operating income. The loss of key technical or management personnel could adversely affect our business. Our business and operating results may be negatively impacted if we are unable to continue to manage growth of our businesses. Our markets are highly competitive. Protection of our intellectual property is limited; we are subject to the risk of third party claims of infringement. Our operations are subject to environmental laws and regulations and we may be subject to environmental liabilities. Our fiscal 2004 Federal income tax return is being audited by the Internal Revenue Service, other returns may be selected for audit and a resulting tax assessment or settlement could have a material adverse impact on our results of operations and financial position. Recently enacted securities laws and regulations are increasing our costs. We are subject to the ongoing internal control provisions of Section 404 of the Sarbanes-Oxley Act of 2002. Identification of material weaknesses in internal controls, if identified, could indicate a lack of proper controls to generate accurate financial statements. Changes in financial accounting standards related to stock option expenses are expected to continue to have a significant effect on our reported results. We face risks from the uncertainty of prevailing economic and political conditions. 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. Provisions in our corporate documents, stockholder rights plan, and Delaware law could delay or prevent a change in control of Comtech. Our debt service obligations may adversely affect our cash flow. Our stock price is volatile. We have never declared or paid cash dividends.

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23197--9/20/2006--COMTECH_TELECOMMUNICATIONS_CORP_/DE/