Radyne Reports Third Quarter Earnings of $0.36 Per Share

Radyne Reports Third Quarter Earnings of $0.36 Per Share 


PHOENIX, Oct. 27  /PRNewswire-FirstCall/ -- Radyne ComStream Inc. (Nasdaq:
RADN; Warrants: RADNW), today reported net earnings of $6.1 million, or $0.36
per fully diluted share, for its third quarter ended September 30, 2004
compared to earnings of $1.6 million, or $0.10 per fully diluted share for the
same quarter of 2003.  Earnings include a tax benefit of $4.3 million or $ 0.25
per fully diluted share due primarily to the reduction of a valuation allowance
against deferred tax assets arising from the Company's net operating loss
carryforwards and unused tax credits of $4.1 million.  Net sales for third
quarter 2004 were $12.7 million compared to third quarter 2003 net sales of
$15.8 million.

For the first nine months of 2004, sales were $39.8 million compared to $41.5
million for the first nine months of 2003.  During the same period, gross
profit increased 18%. Gross margins for the first nine months of 2004 were 52%
compared to gross margins of 42% for the same period in 2003.  The improvement
reflects the Company's continuing development of new products with lower
manufacturing costs and the success of its new products in the broadcast
market.

Also, at the end of the quarter, sales backlog was $5.7 million compared to
$5.8 million at the end of the second quarter.  Overall, the Company booked
$12.5 million in orders during the third quarter compared to $13.8 million
during the third quarter of 2003.  For the first nine months of 2004, bookings
rose to $37.1 million from $36.3 million during the same period of 2003.

The bookings for the quarter were influenced by a number of key orders that
slipped into the fourth quarter.  Since the end of the quarter, the company has
booked an additional $5.1 million in new orders.  Sales and bookings were
further impacted by the Company's decision to withdraw from bidding for
large-scale and low-margin system integration jobs.  This decision resulted in
a reduction in sales of $1.9 million over the first nine months of 2004.

The Company's balance sheet remains strong with a cash balance of $35.4 million
compared to $30.1 million at the beginning of this year. Accounts receivable
declined to $8.5 million or 60.9 days of sales outstanding compared to $9.8
million and 62 days at the end of 2003.  Inventory increased to $8.9 million
from $7.8 million at the beginning of 2004 as the Company made planned
components purchases to assure customer delivery times.  During the quarter,
Radyne repurchased $2.4 million of its shares at an average purchase price of
$6.89.

"Our new products, particularly for the broadcast market, continue to generate
strong positive market reactions," commented Bob Fitting, CEO.  "The resultant
higher margins coupled with continued demand in digital television bode well
for continued high profitability."

Radyne will be holding a conference call on Wednesday, October 27, 2004 at 4:30
p.m. EDT to discuss its third quarter 2004 financial results and operational
highlights.  The call is open to the public.  The domestic dial in number is
1-800-901-5241 and the international dial in number is [phone].  The
conference will also be accessible via the Internet at http://www.radn.com/ and
http://www.fulldisclosure.com/.

About Radyne ComStream

Radyne ComStream designs, manufactures, sells, integrates and installs
products, systems and software used for the transmission and reception of data
and video over satellite, microwave and cable communication networks. The
Company, through the Tiernan subsidiary, is a supplier of HDTV and SDTV
encoding and transmission equipment. The Armer subsidiary provides innovative
solutions for the integration and installation of turnkey communications
systems.  Radyne ComStream is headquartered in Phoenix, Arizona, has
manufacturing facilities in Phoenix and San Diego, and sales offices in
Singapore, Beijing, Jakarta and London. The Company also has sales and/or
service centers in Sao Paulo, Bangalore, Shanghai and Moscow.  For more
information visit our web site at http://www.radn.com/.

  Contact: Malcolm Persen, Chief Financial Officer, 602.437.9620

  Safe Harbor Paragraph for Forward-Looking Statements


This press release includes statements that constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995 (the "Reform Act") and Radyne ComStream claims the protection of the
safe-harbor for forward-looking statements contained in the Reform Act.
Forward-looking statements involve risks, uncertainties and other factors that
may cause actual results, performance or achievements of Radyne ComStream and
its subsidiaries to be materially different from those expressed or implied by
such forward-looking statements.  These forward-looking statements are often
characterized by the terms "may," "believes," "projects," "expects," or
"anticipates," and do not reflect historical facts. Specific forward-looking
statements contained in this press release include, but are not limited to: (i)
expected future high margins on new products, since there is no guarantee that
current sales levels of those products will continue or, that if they do, that
the margins will remain high; (ii) continued development of new products and,
once developed, if they will be accepted into the marketplace so as to effect
profits; (iii) expected new orders, the demand for digital television, and
improved market conditions may not materialize, and even if they do, may not
result in higher sales/profits; (iv) our inability to generate profits
sufficient to offset the deferred tax assets recently capitalized on the
balance sheet could result in an asset impairment charge; (v) planned component
purchases, and the resultant increase in inventory levels, may not enhance our
ability to deliver products on a timely basis and, (vi) the stock repurchase
plan may not continue, and even if it does, the desired effect of enhancing
earnings per share may not materialize.

Other factors that may affect forward-looking statements and the Company's
business generally include but are not limited to:

   *  Prospects of the international markets and global economy given that
      Radyne ComStream depends heavily on international sales.

   *  A downturn in the evolving telecommunications and Internet industries.

   *  Risk factors and cautionary statements made in Radyne ComStream's
      Annual Report on Form 10-K for the period ended December 31, 2003.

   *  The effect that acts of international terrorism may have on Radyne
      ComStream's ability to ship products abroad.

   *  Other factors that Radyne ComStream is currently unable to identify
      or quantify, but may exist in the future.



Forward-looking statements speak only as of the date the statement was made. 
Radyne ComStream does not undertake and specifically declines any obligation to
update any forward-looking statements.

                          Radyne ComStream Inc.
                       Consolidated Balance Sheets
                              (in thousands)

                      Assets                Sept. 30, 2004  Dec. 31, 2003
                                               Unaudited

  Current assets:
    Cash and cash equivalents                   $35,366        $30,130

    Accounts receivable - trade,
     net of allowance for
     doubtful accounts of $232 and $489,
     respectively                                 8,481          9,780
    Inventories, net                              8,947          7,766
    Deferred tax assets                           2,795             --
    Prepaid expenses and other assets               683            482
      Total current assets                       56,272         48,158

  Deferred tax assets                             2,945             --
  Property and equipment, net                     1,696          2,269
  Deposits                                          182            182
                                                $61,095        $50,609

      Liabilities and Stockholders' Equity
  Current liabilities:
    Accounts payable                             $1,097         $2,181

    Accrued expenses                              3,981          3,527
    Income taxes payable                            160            185
    Customer advance payments                       466            877
      Total current liabilities                   5,704          6,770

  Long-term obligations                              --             16
  Accrued stock option compensation                 146            205
      Total liabilities                           5,850          6,991

  Stockholders' equity:
    Common stock                                     16             16
    Additional paid-in capital                   54,205         53,102
    Retained earnings (deficit)                   1,024         (9,500)
      Total stockholders' equity                 55,245         43,618
                                                $61,095        $50,609


                          Radyne ComStream Inc.
                  Consolidated Statements of Operations
             (Unaudited, in thousands except per share data)

                            Three Months Ended        Nine Months Ended
                               September 30,            September 30,
                            2004          2003        2004         2003

  Net sales               $12,707       $15,791     $39,800      $41,463
  Cost of sales             6,133         8,655      19,197       24,029
      Gross profit          6,574         7,136      20,603       17,434

  Operating expenses:
    Selling, general
     and administrative     3,523         2,977      10,395       10,130
    Research and
     development            1,411         1,554       3,964        4,883
      Total operating
       expenses             4,934         4,531      14,359       15,013

  Earnings from operations  1,640         2,605       6,244        2,421

  Other (income) expense:
    Interest expense           10             4          15           22
    Interest and
     other income            (133)          (55)       (305)        (182)

  Earnings before
   income taxes             1,763         2,656       6,534        2,581
    Income tax
     (benefit) expense     (4,302)        1,032      (3,990)       1,032
  Net earnings             $6,065        $1,624     $10,524       $1,549

  Earnings per share:
      Basic                 $0.37         $0.11       $0.64        $0.10
      Diluted               $0.36         $0.10       $0.61        $0.10

  Weighted average number
   of common shares
   outstanding:
      Basic                16,390        15,452      16,404       15,358
      Diluted              16,911        15,721      17,159       15,419


DATASOURCE: Radyne ComStream Inc.



CONTACT:  Malcolm Persen, Chief Financial Officer of Radyne ComStream

Inc., [phone]



Web site:  http://www.radn.com/ 

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