KVH Reports Second Quarter Results

KVH Industries, Inc., (Nasdaq: KVHI):

   --  Record Quarterly Revenue of $22.0 Million, Up 17% Year over
        Year

   --  $0.11 EPS and Record Net Income of $1.7 Million

   KVH Industries, Inc., (Nasdaq: KVHI) today reported its results
for the second quarter ended June 30, 2006. Revenue for the quarter
was $22.0 million, up 17% from $18.8 million for the second quarter
ended June 30, 2005. Net income for the quarter was $1.7 million, or
$0.11 per diluted share. Net income for the quarter included a
non-cash charge of approximately $0.2 million, or $0.02 per diluted
share, related to the company's adoption of SFAS No. 123R, "Share
Based Payment," which requires the expensing of stock options and
other equity compensation. During the same period last year the
company reported net income of $1.0 million, or $0.06 per diluted
share.
   For the six months ended June 30, 2006, revenue increased 15% to
$42.3 million from $36.7 million for the six months ended June 30,
2005. KVH reported net income of $2.9 million or $0.20 per diluted
share for the 2006 period, versus net income of $1.3 million or $0.09
per diluted share in the year ago period. Net income for the 2006
period included a stock-based compensation charge of approximately
$0.5 million, or $0.03 per diluted share.
   "Building on our successful start to the year, the second quarter
was highlighted by record revenue, strong earnings growth, and
increasing demand for our new products," said Martin Kits van
Heyningen, KVH's president and chief executive officer. "Our maritime
TracVision(R) M3 satellite TV system is generating new sales within
the smaller boat market segment, complementing the continued demand
for our established, larger products. Our revamped TracVision
R-series, including the new flagship TracVision R6, is gaining
momentum with recreational vehicle manufacturers and consumers. As a
result we achieved year-over-year sales growth in this market a full
quarter earlier than anticipated. Our defense business also grew on a
year-over-year basis, driven by sales of our fiber optic gyro (FOG)
products, which topped $2.0 million in quarterly product sales for the
first time."
   In the second quarter of 2006, mobile communication revenue was
$16.8 million, up 22% on a year-over-year basis. Defense-related
sales, including those for KVH's TACNAV(R) military navigation systems
and FOG solutions, were approximately $5.2 million, up 3% on a
year-over-year basis.
   Commenting on the company's financial results, Pat Spratt, KVH's
chief financial officer, remarked, "Our second quarter results
exceeded both our top and bottom line expectations, in part due to the
resurgence in our sales to the RV marketplace and the level of demand
in the worldwide marine market for our mobile communication products
and services. Income from operations increased 46% compared to last
year, and our operating margin improved to 6.4%. We are encouraged by
the recent performance in the majority of our businesses. Based on the
general business strength that we have seen to date, we are raising
our guidance for revenue and earnings. We anticipate that
year-over-year revenue growth will be in the range of 12% - 15% for
the third quarter and for the full year. We expect that EPS will be
approximately $0.05 in the third quarter. This projection includes
approximately $0.02 per share of stock option expenses. We expect that
EPS for the year will be in the range of $0.30 - $0.33, considerably
above our prior guidance of $0.24. This projection includes
approximately $0.06 - $0.07 per share of stock option expenses. This
2006 guidance assumes a sequential decline in marine sales for the
second half of the year compared to the first half, in line with
historical seasonal patterns, and a continuation of the current
quarterly level of tactical navigation sales for the remainder of the
year."

   Recent Operational Highlights:

   --  July 19, 2006 - KVH announced that Sea Ray, a major
        manufacturer of inboard recreational powerboats, is adding the
        TracVision M3 as an option on new vessels 29-44 feet in
        length. Sea Ray will continue to offer the TracVision 4-HP on
        vessels 45 feet and longer.

   --  June 26, 2006 - Teton Homes announced that it selected the
        TracVision R4 stationary automatic satellite TV system for use
        on its 2007 model year 5th wheel campers.

   --  May 18, 2006 - KVH expanded the distribution of its consumer
        products into Asia with the selection of Eletek Technology of
        China and Hong Kong and Can Traders of Singapore as new
        regional distributors. This expansion builds on the success of
        KVH's existing marine satellite TV and communication sales and
        regional distribution networks in North America, Europe, the
        Middle East, Australia, and New Zealand.

   KVH is webcasting its second quarter conference call live at 10:30
a.m. Eastern time today through the company's website. The conference
call can be accessed via the company's website at
http://investors.kvh.com. The audio archive and an MP3 podcast will
also be available on the company website within three hours of the
completion of the call.

   About KVH Industries, Inc.

   KVH Industries, Inc., is a premier manufacturer of systems to
provide access to live mobile media ranging from satellite TV to
telephone and high-speed Internet for vehicles and vessels as well as
a leading source of navigation, pointing, and guidance solutions for
maritime, defense, and commercial applications. The company's products
are based on its proprietary mobile satellite antenna and fiber optic
technologies. An ISO 9001-certified company, KVH is based in
Middletown, Rhode Island. For more information, visit
http://www.kvh.com.

   This press release contains forward-looking statements that
involve risks and uncertainties. For example, forward-looking
statements include statements regarding our financial goals for 2006,
anticipated revenue growth, anticipated profitability, anticipated
orders for our mobile communication and military products, and
anticipated improvements in our competitive position. The actual
results we achieve could differ materially from the statements made in
this press release. Factors that might cause these differences
include, but are not limited to: seasonal declines in demand for our
mobile communication and television products; changes in customer
response to new product introductions; the unpredictability of
purchasing schedules and priorities of the relatively small number of
customers for our defense products; the risk of order cancellations or
unexercised options, particularly for longer-term defense orders;
potential reductions in our overall gross margins in the event of a
general shift in product mix toward our mobile communication products;
the impact of increases in fuel prices on the sale and use of motor
vehicles and marine vessels; our dependence on sole, limited source,
or foreign suppliers; our dependence on third-party satellite networks
for programming and satellite services; the unpredictability of the
emerging market, as well as consumer and automotive manufacturer
demand, for mobile communication products in automobiles; the
emergence of alternative technology that may compete with or displace
wireless mobile Internet services with regard to range and cost; poor
or delayed research and development results; currency fluctuations,
export restrictions, delays in procuring export licenses, and other
international risks; potential product liability claims; the
difficulty in protecting our proprietary technology; potential claims
of intellectual property infringement; expenses associated with
corporate governance requirements; and changes in our equity
compensation practices, including the impact of fluctuations in our
stock price. These and other factors are discussed in more detail in
our Quarterly Report on Form 10-Q filed with the Securities and
Exchange Commission on May 9, 2006. Copies are available through our
Investor Relations department and website, http://investors.kvh.com.
We assume no obligation to update our forward-looking statements to
reflect new information and developments.

   KVH, TracVision, and TACNAV are registered trademarks of KVH
Industries, Inc. All other trademarks are the property of their
respective companies.
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                  KVH INDUSTRIES, INC. AND SUBSIDIARY

            CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
          (in thousands, except per share amounts, unaudited)

                                     Three Months       Six Months
                                         Ended             Ended
                                       June 30,          June 30,
                                   ----------------- -----------------
                                     2006     2005     2006     2005
                                   -------- -------- -------- --------

Net sales                          $21,968  $18,807  $42,257  $36,700
Cost of goods sold                  13,373   11,029   24,842   21,812
                                   -------- -------- -------- --------
   Gross profit                      8,595    7,778   17,415   14,888

Operating expenses:
   Research and development          1,973    1,978    4,142    3,876
   Sales and marketing               3,428    3,347    7,273    6,970
   General and administrative        1,790    1,493    3,685    2,766
                                   -------- -------- -------- --------

Income from operations               1,404      960    2,315    1,276
   Other income, net                   511       68      943      210
   Income tax expense                 (229)     (76)    (318)    (233)
                                   -------- -------- -------- --------
Net income                         $ 1,686  $   952  $ 2,940  $ 1,253
                                   ======== ======== ======== ========

Net income per common share
   Basic                           $  0.11  $  0.07  $  0.20  $  0.09
                                   ======== ======== ======== ========
   Diluted                         $  0.11  $  0.06  $  0.20  $  0.09
                                   ======== ======== ======== ========

Weighted average common shares
 outstanding
   Basic                            14,773   14,549   14,729   14,535
                                   ======== ======== ======== ========
   Diluted                          14,893   14,658   14,860   14,662
                                   ======== ======== ======== ========



                  KVH INDUSTRIES, INC. AND SUBSIDIARY

                 CONDENSED CONSOLIDATED BALANCE SHEETS
                       (in thousands, unaudited)

                                                       June   December
                                                        30,      31,
                                                       2006     2005
                                                     -------- --------
ASSETS

   Cash, cash equivalents and marketable securities  $53,956  $50,090
   Accounts receivable, net                           11,395   12,283
   Inventories                                         7,435    6,564
   Other assets                                          972    1,233
                                                     -------- --------
      Total current assets                            73,758   70,170

   Property and equipment, net                         9,627    8,663
   Deferred income taxes                               3,334    3,334
   Other non-current assets                               91      163
                                                     -------- --------

      Total assets                                   $86,810  $82,330
                                                     ======== ========

LIABILITIES AND STOCKHOLDERS' EQUITY

   Accounts payable and accrued expenses             $ 8,321  $ 8,442
   Current portion of long-term debt                     119      115
                                                     -------- --------
      Total current liabilities                        8,440    8,557

   Deferred revenue                                      252      128
   Long-term debt, excluding current portion           2,221    2,282
   Stockholders' equity                               75,897   71,363
                                                     -------- --------

      Total liabilities and stockholders' equity     $86,810  $82,330
                                                     ======== ========
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