UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended June 30, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission File Number 000-22839
 GLOBECOMM SYSTEMS INC.
 (exact name of registrant as specified in its charter)
 Delaware
    
    11-3225567(State or other jurisdiction of
    
    (I.R.S. EMPLOYERincorporation or organization)
    
    Identification No.)
 45 Oser Avenue,Hauppauge, NY
    
    11788(Address of principal executive offices)
    
    (Zip Code)
 Registrants telephone number, including area code: (631) 231-9800
 Securities registered pursuant to Section 12(b) of the Act:
 Name of each exchangeTitle of each class
    
    on which registeredCommon Stock, $0.001 par value
    
    Nasdaq Global Market
 Securities registered pursuant to Section 12(g) of the Act: None
 o þ
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 þ o
 þ
  Large accelerated filer oAccelerated filer þNon-accelerated filer o(Do not check if a smaller reporting company)Smaller reporting company o
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   DOCUMENTS INCORPORATED BY REFERENCE




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PART I
 Item 1. Business
 Overview
    Infrastructure Solutions
  ®
 Services
    2




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Communications Infrastructure
     Comprehensive Solutions
  Our Pre-Engineered Systems
 Ô Ô
 Summit Ô Modular Building Block Earth Station MBB 2001. â
 Summit Ô Commercial Terminal CTF 2001. â
 Summit Ô Compact Earth Station CES 2001. â
 Auto-Explorer Fly-Away Satellite Terminals.
 3




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Explorer MIL-COTS HMMWV Transportable Satellite Terminals
 AxxSys â Network Management Systems
 SpyGlass Carrier Monitoring Systems. â â
 Our Systems Design and Integration Services
  Our Managed Network Services
     4




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Internet and Data Solutions. SM
 Access-Plus SM Connectivity
 Access-Plus SM Restoral
 Access-Plus SM Surveillance
 Access-Plus SM VSAT
 SM
 Content Distribution Solutions. SM
 Skyborne SM Enterprise
 Skyborne SM Direct to Home Platform
 5




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Skyborne SM Broadcast
 Telephony Solutions. SM
 SatCell SM Packet Voice (Clear Packet)
 SatCell SM Cellular Hosted Soft Switch
 Our Life Cycle Support Services
  Network
Monitoring and Help Desk
 Installation
and Maintenance
 Professional
Engineering
 Sales and Marketing
  6




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Acquisition
  Customers
  7




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Backlog
  Product Design, Assembly and Testing
   Research and Development
  Competition
    8




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Intellectual Property
   Government Regulations
 Operations and Use of Satellites
    9




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Common Carrier Regulation
   Foreign Ownership
   Foreign Regulations
  Regulation of the Internet
   10




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Telecommunications Taxation, Support Requirements and Access Charges
   Export of Telecommunications Equipment
  Employees
  Financial Information About Geographic Areas
  Financial Information About Business Segments
  Available information
 www.globecommsystems.com
 11




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Item 1A. Risk Factors
 Risks Related to Our Business
 A limited number of customer contracts account for a significant portion of our revenues, and the
inability to replace a key customer contract or the failure of the customer to implement its plans
would adversely affect our results of operations, business and financial condition.
  We derive a substantial portion of our revenues from the government marketplace.
   Risks associated with operating in international markets could restrict our ability to expand
globally and harm our business and prospects.
  
    
    general political and economic instability in international markets, including the
hostilities in Iraq and Afghanistan, could impede our ability to deliver our products
and services to customers and harm our results of operations;
    
    difficulties in collecting accounts receivable could adversely affect our results
of operations;
    
    changes in regulatory requirements could restrict our ability to deliver services to
our international customers; including the addition of a country to the list of
sanctioned countries under the International Emergency Economic Powers Act or similar
legislation;
    
    export restrictions, tariffs, licenses and other trade barriers could prevent us
from adequately equipping our network facilities;
    
    differing technology standards across countries may impede our ability to integrate
our products and services across international borders;
    
    protectionist laws and business practices favoring local competition may give unequal
bargaining leverage to key vendors in countries where competition is scarce,
significantly increasing our operating costs;
    
    increased expenses associated with marketing services in foreign countries could
affect our ability to compete;
    
    relying on local subcontractors for installation of our products and services could
adversely impact the quality of our products and services;
 12




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
    
    difficulties in staffing and managing foreign operations could affect our ability
to compete;
    
    complex foreign laws and treaties could affect our ability to compete; and
    
    potentially adverse taxes could affect our results of operations.
  We derive a substantial portion of our revenues from fixed-price projects, under which we assume
greater financial risk if we fail to accurately estimate the costs of the projects.
  Our service revenue has increased as a percentage of total revenue and if our service revenue
decreases or margins decrease, our results of operations will be harmed
  In the event of a catastrophic loss affecting our operations in Hauppauge, New York or Laurel,
Maryland, our results of operations would be harmed.
  Our markets are highly competitive and we have many established competitors, and we may lose market
share as a result.
    13




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We may not realize all of the anticipated benefits of our acquisition of the GlobalSat business.
  If our products and services are not accepted in developing countries with emerging markets, our
revenues will be impaired.
  
    
    the speed at which communications infrastructure, including terrestrial microwave,
coaxial cable and fiber optic communications systems, which compete with satellite-based
services, is built;
    
    the effectiveness of our local resellers and sales representatives in marketing and
selling our products and services; and
    
    the acceptance of our products and services by customers.
  Since sales of satellite communications equipment are dependent on the growth of communications
networks, if market demand for these networks declines, our revenue and profitability are likely to
decline.
  We depend upon certain key personnel and may not be able to retain these employees. If we lose the
services of these individuals or cannot hire additional qualified personnel, our business will be
harmed.
   Satellites upon which we rely may malfunction or be damaged or lost.
  14




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We depend on our suppliers, some of which are our sole or a limited source of supply, and the loss
of these suppliers could materially adversely affect our business, results of operations and
financial condition.
  Our network may experience security breaches, which could disrupt our services.
  If the satellite communications industry fails to continue to develop or new technology makes it
obsolete, our business and financial condition will be harmed.
  We may not be able to keep pace with technological changes, which would make our products and
services become non-competitive and obsolete.
  Unauthorized use of our intellectual property by third parties may damage our business.
   15




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Defending against intellectual property infringement claims could be time consuming and expensive,
and if we are not successful, could cause substantial expenses and disrupt our business.
  Risks Related to the Securities Markets and Ownership of Our Common Stock
 Our stock price is volatile.
  
    
    quarterly variations in operating results;
    
    announcements of new technology, products or services by us or any of our
competitors;
    
    changes in financial estimates or recommendations by securities analysts;
    
    general market conditions; or
    
    domestic and international economic factors unrelated to our performance.
   Because our common stock is thinly traded, it may be difficult to sell shares of our common stock
into the markets without experiencing significant price volatility.
  A third party could be prevented from acquiring shares of our stock at a premium to the market
price because of our anti-takeover provisions.
  16




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We have not paid dividends in the past and do not expect to pay dividends in the future, and any
return on investment may be limited to the value of our stock.
  Risks Related to Government Approvals
 We are subject to many government regulations, and failure to comply with them will harm our
business.
 Operations and Use of Satellites
  Foreign Regulations
  Regulation of the Internet
  17




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Telecommunications Taxation, Support Requirements, and Access Charges
   Export of Telecommunications Equipment
  Foreign Ownership
  Item 1B. Unresolved Staff Comments.
  Item 2. Properties
  Item 3. Legal Proceedings
  Item 4. Submission of Matters to a Vote of Security Holders
  18




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PART II
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
  High
    
    Low2008Quarter ended September 30, 2007
    
    $
    14.96
    
    
    $
    11.37Quarter ended December 31, 2007
    
    
    16.49
    
    
    
    9.28Quarter ended March 31, 2008
    
    
    12.00
    
    
    
    7.77Quarter ended June 30, 2008
    
    
    10.53
    
    
    
    8.202007Quarter ended September 30, 2006
    
    
    8.91
    
    
    
    6.30Quarter ended December 31, 2006
    
    
    9.70
    
    
    
    8.02Quarter ended March 31, 2007
    
    
    11.63
    
    
    
    8.85Quarter ended June 30, 2007
    
    
    15.05
    
    
    
    10.17
     Equity Compensation Plan Information as of June 30, 2008
 Number of securitiesremaining availableNumber of
    
    
    
    
    
    
    for futuresecurities to be
    
    
    Weighted-average
    
    
    issuance underissued upon exercise
    
    
    exercise price
    
    
    equity compensationof outstanding
    
    
    of outstanding
    
    
    plans (excludingoptions, warrants
    
    
    options, warrants
    
    
    securities reflectedPLAN CATEGORY
    
    and rights
    
    
    and rights
    
    
    in column (a))(a)
    
    
    (b)
    
    
    (c)Equity compensation plan approved
by security holders
    
    
    1,655,373
    
    
    $
    8.38
    
    
    
    609,400Equity compensation plans not
approved by security holders
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    1,655,373
    
    
    $
    8.38
    
    
    
    609,400
 19




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Performance Graph
  COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
 
 
 *
    
    $100 invested on 6/30/03 in stock and index-including reinvestment of dividends.Fiscal year ending June 30. Item 6. Selected Financial Data
  20




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Selected Financial Data
(In thousands, except per share data)
 Years Ended June 30,2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004Statements of Operations Data:Revenues from infrastructure solutions
    
    $
    133,634
    
    
    $
    114,612
    
    
    $
    97,967
    
    
    $
    90,656
    
    
    $
    73,305Revenues from services
    
    
    62,891
    
    
    
    36,133
    
    
    
    28,069
    
    
    
    18,928
    
    
    
    13,931Total revenues
    
    
    196,525
    
    
    
    150,745
    
    
    
    126,036
    
    
    
    109,584
    
    
    
    87,236Costs and operating expenses:Costs from infrastructure solutions
    
    
    106,699
    
    
    
    92,197
    
    
    
    81,410
    
    
    
    75,357
    
    
    
    63,282Costs from services
    
    
    47,739
    
    
    
    29,052
    
    
    
    23,605
    
    
    
    15,527
    
    
    
    12,992Selling and marketing
    
    
    10,873
    
    
    
    8,376
    
    
    
    7,029
    
    
    
    5,821
    
    
    
    4,808Research and development
    
    
    1,913
    
    
    
    1,451
    
    
    
    1,052
    
    
    
    1,021
    
    
    
    1,328General and administrative
    
    
    15,888
    
    
    
    12,297
    
    
    
    9,589
    
    
    
    7,596
    
    
    
    6,529Total costs and operating expenses
    
    
    183,112
    
    
    
    143,373
    
    
    
    122,685
    
    
    
    105,322
    
    
    
    88,939Income (loss) from operations
    
    
    13,413
    
    
    
    7,372
    
    
    
    3,351
    
    
    
    4,262
    
    
    
    (1,703
    )Other income (expense):Interest income
    
    
    1,733
    
    
    
    1,370
    
    
    
    965
    
    
    
    444
    
    
    
    271Interest expense
    
    
    (285
    )
    
    
    (205
    )
    
    
    
    
    
    
    
    
    
    
    Gain on liquidation of foreign subsidiary
    
    
    
    
    
    
    
    
    
    
    264
    
    
    
    
    
    
    
    Gain on sale of available-for-sale securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    132
    
    
    
    91Gain on sale of investment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40
    
    
    
    Income (loss) before income taxes
    
    
    14,861
    
    
    
    8,537
    
    
    
    4,580
    
    
    
    4,878
    
    
    
    (1,341
    )(Benefit) provision for income taxes
    
    
    (12,158
    )
    
    
    211
    
    
    
    88
    
    
    
    64
    
    
    
    Net income (loss) from continuing operations
    
    $
    27,019
    
    
    $
    8,326
    
    
    $
    4,492
    
    
    $
    4,814
    
    
    $
    (1,341
    )Basic net income (loss) from continuing
operations per common share
    
    $
    1.39
    
    
    $
    0.53
    
    
    $
    0.30
    
    
    $
    0.33
    
    
    $
    (0.10
    )Diluted net income (loss) from continuing
operations per common share
    
    $
    1.34
    
    
    $
    0.50
    
    
    $
    0.29
    
    
    $
    0.32
    
    
    $
    (0.10
    )Weighted-average shares used in the
calculation of basic net income (loss)
from continuing operations per common share
    
    
    19,476
    
    
    
    15,795
    
    
    
    15,001
    
    
    
    14,422
    
    
    
    13,346Weighted-average shares used in the
calculation of diluted net income (loss)
from continuing operations per common share
    
    
    20,140
    
    
    
    16,672
    
    
    
    15,608
    
    
    
    14,966
    
    
    
    13,346
 21




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Years Ended June 30,2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004Other Operating Data:Net income (loss)
    
    $
    27,019
    
    
    $
    8,326
    
    
    $
    4,492
    
    
    $
    4,814
    
    
    $
    (1,341
    )Other (income) expense, net
    
    
    (1,448
    )
    
    
    (1,165
    )
    
    
    (1,229
    )
    
    
    (616
    )
    
    
    (362
    )(Benefit) provision for income taxes
    
    
    (12,158
    )(a)
    
    
    211
    
    
    
    88
    
    
    
    64
    
    
    
    Depreciation and amortization
    
    
    5,742
    
    
    
    3,333
    
    
    
    3,023
    
    
    
    2,695
    
    
    
    3,097EBITDA
    
    $
    19,155
    
    
    $
    10,705
    
    
    $
    6,374
    
    
    $
    6,957
    
    
    $
    1,394Cash flows provided by (used in) operating
activities
    
    $
    9,207
    
    
    $
    14,357
    
    
    $
    (1,129
    )
    
    $
    (3,926
    )
    
    $
    1,613Cash flows used in investing activities
    
    
    (5,008
    )
    
    
    (36,877
    )
    
    
    (2,484
    )
    
    
    (1,070
    )
    
    
    (1,871
    )Cash flows provided by financing activities
    
    
    21,642
    
    
    
    23,566
    
    
    
    2,531
    
    
    
    2,347
    
    
    
    6,421Capital expenditures
    
    
    5,008
    
    
    
    17,808
    (c)
    
    
    2,484
    
    
    
    3,303
    
    
    
    1,267Backlog at end of year
    
    
    146,787
    
    
    
    141,198
    
    
    
    90,930
    
    
    
    76,268
    
    
    
    75,444
 June 30,2008
    
    
    2007
    
    
    2006
    
    
    2005
    
    
    2004Balance Sheet Data:Cash and cash equivalents
    
    $
    51,399
    (b)
    
    $
    25,558
    
    
    $
    24,512
    
    
    $
    25,609
    
    
    $
    28,252Working capital
    
    
    79,009
    
    
    
    37,251
    
    
    
    43,695
    
    
    
    36,520
    
    
    
    30,052Total assets
    
    
    193,092
    
    
    
    142,883
    
    
    
    93,234
    
    
    
    86,378
    
    
    
    73,475Long-term liabilities
    
    
    957
    
    
    
    13,568
    (d)
    
    
    353
    
    
    
    670
    
    
    
    987Total stockholders equity
    
    
    148,776
    
    
    
    83,513
    
    
    
    67,016
    
    
    
    60,137
    
    
    
    52,806
 
 (a)
    
    During fiscal 2008 we recorded a non-recurring tax benefit of $12.5 million
primarily due to our recognition of a significant portion of our deferred tax assets
through a reduction in our deferred tax asset valuation allowance. See Note 13 of the
Notes to Consolidated Financial Statements.(b)
    
    The increase in cash at June 30, 2008 is due to approximately $36.4 million in
net proceeds from an offering of equity securities completed in August and September
2007.(c)
    
    Capital expenditures of $17.8 million primarily related to the purchase of
network operations center and teleport assets primarily for a large program with
Showtime Network Inc. which service began on July 1, 2007. In addition, we upgraded our
facility to meet the requirements of our increase in business levels.(d)
    
    The increase in long term liabilities at June 30, 2007 is primarily due to
Acquisition Loan used to partially fund the acquisition of GlobalSat. The balance of
the Acquisition Loan was repaid on September 26, 2007. Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Overview
  22




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Critical Accounting Policies
  Revenue Recognition
  23




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Costs from Infrastructure Solutions
  Goodwill Impairment
  Deferred tax assets
   24




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Stock-Based Compensation
  Allowances for Doubtful Accounts
  Inventories
  Recent Accounting Pronouncements
   25




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Results of Operations
 Fiscal Years Ended June 30, 2008 and 2007
  Revenues from Infrastructure Solutions
 Revenues from Services.
 Costs from Infrastructure Solutions
 Costs from Services
 Selling and Marketing.
 Research and Development
 General and Administrative
 26




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Interest Income
 Interest Expense
 Benefit for income taxes
 Fiscal Years Ended June 30, 2007 and 2006
  Revenues from Infrastructure Solutions
 Revenues from Services.
 Costs from Infrastructure Solutions
 Costs from Services
 Selling and Marketing.
 Research and Development ® ®
 General and Administrative
 27




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Interest Income
 Interest Expense
 Gain on liquidation of foreign subsidiary
 28




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Quarterly Results
  Three Months Ended,June 30,
    
    
    Mar. 31,
    
    
    Dec. 31,
    
    
    Sept. 30,
    
    
    June 30,
    
    
    Mar. 31,
    
    
    Dec. 31,
    
    
    Sept. 30,2008
    
    
    2008
    
    
    2007
    
    
    2007
    
    
    2007
    
    
    2007
    
    
    2006
    
    
    2006(In thousands, except per share data)Statement of Operations Data:Revenues from
infrastructure solutions
    
    $
    40,428
    
    
    $
    27,483
    
    
    $
    38,925
    
    
    $
    26,798
    
    
    $
    36,982
    
    
    $
    31,818
    
    
    $
    28,351
    
    
    $
    17,461Revenues from services
    
    
    16,016
    
    
    
    15,809
    
    
    
    15,522
    
    
    
    15,544
    
    
    
    12,206
    
    
    
    7,299
    
    
    
    8,370
    
    
    
    8,258Total revenues
    
    
    56,444
    
    
    
    43,292
    
    
    
    54,447
    
    
    
    42,342
    
    
    
    49,188
    
    
    
    39,117
    
    
    
    36,721
    
    
    
    25,719Costs and operating expenses:Costs from infrastructure
solutions
    
    
    32,692
    
    
    
    21,388
    
    
    
    31,435
    
    
    
    21,184
    
    
    
    29,695
    
    
    
    25,225
    
    
    
    23,202
    
    
    
    14,075Costs from services
    
    
    12,428
    
    
    
    12,178
    
    
    
    12,027
    
    
    
    11,106
    
    
    
    9,358
    
    
    
    6,131
    
    
    
    6,976
    
    
    
    6,587Selling and marketing
    
    
    3,163
    
    
    
    2,457
    
    
    
    2,728
    
    
    
    2,525
    
    
    
    2,545
    
    
    
    2,290
    
    
    
    1,766
    
    
    
    1,775Research and development
    
    
    253
    
    
    
    507
    
    
    
    656
    
    
    
    497
    
    
    
    488
    
    
    
    440
    
    
    
    323
    
    
    
    200General and administrative
    
    
    4,051
    
    
    
    3,533
    
    
    
    4,229
    
    
    
    4,075
    
    
    
    3,899
    
    
    
    3,033
    
    
    
    2,951
    
    
    
    2,414Total costs and operating
expenses
    
    
    52,587
    
    
    
    40,063
    
    
    
    51,075
    
    
    
    39,387
    
    
    
    45,985
    
    
    
    37,119
    
    
    
    35,218
    
    
    
    25,051Income from operations
    
    
    3,857
    
    
    
    3,229
    
    
    
    3,372
    
    
    
    2,955
    
    
    
    3,203
    
    
    
    1,998
    
    
    
    1,503
    
    
    
    668Other income (expense):Interest income
    
    
    270
    
    
    
    387
    
    
    
    556
    
    
    
    520
    
    
    
    363
    
    
    
    391
    
    
    
    348
    
    
    
    268Interest expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (285
    )
    
    
    (205
    )
    
    
    
    
    
    
    
    
    
    
    Income before income taxes
    
    
    4,127
    
    
    
    3,616
    
    
    
    3,928
    
    
    
    3,190
    
    
    
    3,361
    
    
    
    2,389
    
    
    
    1,851
    
    
    
    936(Benefit) provision for
income taxes
    
    
    (12,726
    )
    
    
    193
    
    
    
    208
    
    
    
    167
    
    
    
    89
    
    
    
    57
    
    
    
    45
    
    
    
    20Net income
    
    $
    16,853
    
    
    $
    3,423
    
    
    $
    3,720
    
    
    $
    3,023
    
    
    $
    3,272
    
    
    $
    2,332
    
    
    $
    1,806
    
    
    $
    916Basic net income
per common share
    
    $
    0.84
    
    
    $
    0.17
    
    
    $
    0.19
    
    
    $
    0.17
    
    
    $
    0.20
    
    
    $
    0.15
    
    
    $
    0.12
    
    
    $
    0.06Diluted net income
per common share
    
    $
    0.82
    
    
    $
    0.17
    
    
    $
    0.18
    
    
    $
    0.16
    
    
    $
    0.19
    
    
    $
    0.14
    
    
    $
    0.11
    
    
    $
    0.06Weighted-average shares used
in the calculation of basic
net income per common share
    
    
    20,063
    
    
    
    20,036
    
    
    
    19,992
    
    
    
    17,829
    
    
    
    16,324
    
    
    
    16,045
    
    
    
    15,601
    
    
    
    15,219Weighted-average shares used
in the calculation of diluted
net income per common share
    
    
    20,578
    
    
    
    20,610
    
    
    
    20,868
    
    
    
    18,815
    
    
    
    17,332
    
    
    
    16,954
    
    
    
    16,489
    
    
    
    15,834
  Liquidity and Capital Resources
  29




---



##### 



30




---



##### 



Off-Balance Sheet Arrangements
  Contractual Obligations and Commercial Commitments
  Payments Due by PeriodLess than 1
    
    
    
    
    
    
    
    
    
    
    More thanContractual Obligations
    
    Total
    
    
    year
    
    
    1-3 years
    
    
    4-5 years
    
    
    5 yearsOperating leases
    
    $
    20,209
    
    
    $
    14,884
    
    
    $
    3,996
    
    
    $
    1,045
    
    
    $
    284Total contractual cash obligations
    
    $
    20,209
    
    
    $
    14,884
    
    
    $
    3,996
    
    
    $
    1,045
    
    
    $
    284Amount of Commitment Expiration Per PeriodTotal Amounts
    
    
    Less than 1
    
    
    
    
    
    
    
    
    
    
    More thanOther Commercial Commitments
    
    Committed
    
    
    year
    
    
    1-3 years
    
    
    4-5 years
    
    
    5 yearsStandby letters of credit
    
    $
    7,613
    
    
    $
    6,051
    
    
    $
    162
    
    
    $
    1,400
    
    
    $
    Total commercial commitments
    
    $
    7,613
    
    
    $
    6,051
    
    
    $
    162
    
    
    $
    1,400
    
    
    $
    
 Related Party Transactions
   Item 7A. Quantitative and Qualitative Disclosures About Market Risk
   31




---



##### 



Item 8. Financial Statements and Supplementary Data
  Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  Item 9A. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures.
 Managements Report on Internal Control Over Financial Reporting.
      Changes in Internal Control Over Financial Reporting.
 Item 9B. Other Information
  32




---



##### 



PART III
 Item 10. Directors, Executive Officers and Corporate Governance
  Item 11. Executive Compensation
  Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
  Item 13. Certain Relationships and Related Transactions, and Director Independence
  Item 14. Principal Accounting Fees and Services
  33




---



##### 



PART IV
 Item 15. Exhibits, Financial Statement Schedules
 (A) (1) Index to Consolidated Financial Statements
 Reports of Independent Registered Public Accounting Firm
    
    
    F-1Consolidated Balance Sheets as of June 30, 2008 and 2007
    
    
    F-3Consolidated Statements of Operations for the years ended
June 30, 2008, 2007 and 2006
    
    
    F-4Consolidated Statements of Changes in Stockholders Equity for the years ended
June 30, 2008, 2007 and 2006
    
    
    F-5Consolidated Statements of Cash Flows for the years ended
June 30, 2008, 2007 and 2006
    
    
    F-6Notes to Consolidated Financial Statements
    
    
    F-7
 (2) Index to Consolidated Financial Statement Schedule
 Schedule II  Valuation and Qualifying Accounts
    
    
    S-1
   34




---



##### 



(3) Index of Exhibits
 ExhibitNo.3.1
    
    Amended and Restated Certificate of Incorporation
(incorporated by reference to Exhibit 3.1 of the Registrants
Annual Report on Form 10-K for the fiscal year ended June 30,
1998).3.2
    
    Amended and Restated By-laws of the Registrant (incorporated
by reference to Exhibit 3.2 of the Registrants Annual Report
on Form 10-K for the fiscal year ended June 30, 1998).4.2
    
    See Exhibits 3.1 and 3.2 for provisions of the Amended and
Restated Certificate of Incorporation and Amended and Restated
By-laws of the Registrant defining rights of holders of Common
Stock of the Registrant (incorporated by reference to Exhibit
4.2 of the Registrants Registration Statement on Form S-1,
File No. 333-22425 (the Registration Statement)).10.1
    
    Employment Agreement dated as of October 9, 2001 by and
between the Registrant and David E. Hershberg (incorporated by
reference to Exhibit 10.9 of the Registrants Quarterly Report
on Form 10-Q, for the quarter ended September 30, 2001).10.2
    
    Employment Agreement dated as of October 9, 2001 by and
between the Registrant and Kenneth A. Miller (incorporated by
reference to Exhibit 10.10 of the Registrants Quarterly
Report on Form 10-Q, for the quarter ended September 30,
2001).10.3
    
    The Amended and Restated 1997 Stock Incentive Plan
(incorporated by reference to Exhibit 99 of the Registrants
Registration Statement on Form S-8 Registration, File No.
333-112351).10.4
    
    1999 Employee Stock Purchase Plan (incorporated by reference
to Exhibit 99.8 of the Registrants Registration Statement on
Form S-8, File No. 333-70527).10.5
    
    Rights Agreement, dated as of December 3, 1998, between the
Registrant and American Stock Transfer and Trust Company,
which includes the form of Certificate of Designation for the
Series A Junior Participating Preferred Stock as Exhibit A,
the form of Rights Certificate as Exhibit B and the Summary of
Rights to Purchase Series A Preferred Shares as Exhibit C
(incorporated by reference to Exhibit 4 of Registrants
Current Report on Form 8-K, dated December 3, 1998).10.6
    
    Negotiable Promissory Note, dated April 1, 2001, between the
Registrant and Donald G. Woodring (incorporated by reference to
Exhibit 10.19 of the Registrants Annual Report on Form 10-K
for the year ended June 30, 2001).10.7
    
    Employment Agreement, dated as of October 9, 2001, by and
between Stephen C. Yablonski and the Registrant (incorporated
by reference to Exhibit 10.20 of the Registrants Quarterly
Report on Form 10-Q, for the quarter ended September 30,
2001).10.8
    
    Employment Agreement, dated as of October 9, 2001, by and
between Andrew C. Melfi and the Registrant (incorporated by
reference to Exhibit 10.21 of the Registrants Quarterly
Report on Form 10-Q, for the quarter ended September 30,
2001).10.9
    
    Employment Agreement, dated as of October 9, 2001, by and
between Donald G. Woodring and the Registrant (incorporated by
reference to Exhibit 10.22 of the Registrants Quarterly
Report on Form 10-Q, for the quarter ended September 30,
2001).10.10
    
    Employment Agreement, dated as of October 9, 2001, by and
between Paul J. Johnson and the Registrant (incorporated by
reference to Exhibit 10.23 of the Registrants Quarterly
Report on Form 10-Q, for the quarter ended September 30,
2001).10.11
    
    Employment Agreement, dated as of October 9, 2001, by and
between Paul Eterno and the Registrant (incorporated by
reference to Exhibit 10.24 of the Registrants Quarterly
Report on Form 10-Q, for the quarter ended September 30,
2001).10.12*
    
    Settlement Agreement, dated as of October 1, 2002, by and
between Loral SkynetÒ, a division of Loral SpaceCom
Corporation and the Registrant (incorporated by reference to
Exhibit 10.28 of the Registrants Quarterly Report on Form
10-Q, for the quarter ended September 30, 2002).10.13
    
    Letter Agreement, dated as of January 31, 2003, by and between
Donald G. Woodring and the Registrant (incorporated by
reference to Exhibit 10.30 of the Registrants Quarterly
Report on Form 10-Q, for the quarter ended December 31, 2002).
 35




---



##### 



ExhibitNo.10.14
    
    Term Loan Agreement dated May 2, 2007, by and between the Registrant and Citibank, N.A. (incorporated by
reference to Exhibit 10.23 of the Registrants Annual Report on Form 10-K for the year ended June 30, 2007).10.15
    
    2006 Incentive Stock Plan. (incorporated by reference to Appendix A of the Registrants Definitive proxy on
schedule 14A, filed with the Commission on October 13, 2006).10.16
    
    Asset Purchase Agreement, dated May 2, 2007, by and between the Registrant and Lyman Bros., Inc. (incorporated
by reference to Exhibit 2.1 of the Registrants Registration Statement on Form 8-K, file No. 000-22839).10.17
    
    Form of Securities Purchase Agreement, dated as of December 31, 2003, by and between the Registrant and each
of the purchasers listed on Exhibit A thereto (incorporated herein by reference to Exhibit 4.5 of the
Registrants Registration Statement on Form S-3, File No. 333-112024).10.18
    
    Form of Warrant, dated as of December 31, 2003, by and between the Registrant and each of the purchasers
listed on Exhibit A thereto (incorporated herein by reference to Exhibit 4.5 of the Registrants Registration
Statement on Form S-3, File No. 333-112024).10.19
    
    Credit Facility dated December 31, 2007, by and between the Registrant and Citibank, N.A. (incorporated by
reference to Exhibit 10.1 of the Registrants Registration Statement on Form 8-K, file No. 000-22839).10.20
    
    Amendment to Employment Agreement, dated as of May 15, 2008, by and between Andrew C. Melfi and the Registrant
(filed herewith).10.21**
    
    Employment Agreement, dated as of
April 23, 2007, by and between William Raney and the Registrant (filed
herewith).10.22**
    
    Amendment to Employment Agreement,
dated as of April 1, 2008, by and between William Raney and the
Registrant (filed herewith).10.23
    
    Employment Agreement, dated as of June 30, 2008, by and between Keith Hall and the Registrant (filed herewith).10.24
    
    Employment Agreement, dated as of June 30, 2008, by and between Tom Coyle and the Registrant (filed herewith).14
    
    Registrants Code of Ethics and Business Conduct (incorporated by reference to Exhibit 14 of the Registrants
Annual Report on Form 10-K for the year ended June 30, 2004).21
    
    Subsidiaries of the Registrant (filed herewith).23
    
    Consent of Independent Registered Public Accounting Firm (filed herewith).31.1
    
    Chief Executive Officer Certification required by Rules 13a-14 and 15d-14 under the Securities Exchange Act of
1934, as amended (filed herewith).31.2
    
    Chief Financial Officer Certification required by Rules 13a-14 and 15d-14 under the Securities Exchange Act
of 1934, as amended (filed herewith).32
    
    Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes Oxley Act of
2002 (filed herewith).
 
 *
    
    Confidential treatment granted for portions of this agreement.**
    
    Portions of this agreement have been omitted and filed
seperately with the secretary of the Securities and Exchange
Commission pursuant to a confidential treatment request. (B) Exhibits
  (C) Financial Statement Schedules
  36




---



##### 



SIGNATURES
  GLOBECOMM SYSTEMS INC.Date: September 15, 2008
    By:
    /s/ DAVID E. HERSHBERGDavid E. Hershberg,Chairman of the Board and

Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the capacities and on the
dates indicated.
 SIGNATURE
    
    TITLE
    
    DATE/s/ DAVID E. HERSHBERG
 David
E. Hershberg
    
    Chairman of the Board and
Chief Executive Officer

(Principal Executive Officer)
    
    9/15/08/s/ ANDREW C. MELFI
 Andrew
C. Melfi
    
    Vice President, Chief Financial
Officer and Treasurer (Principal Financial
and Accounting Officer)
    
    9/15/08/s/ RICHARD E. CARUSO
 Richard
E. Caruso
    
    Director
    
    9/15/08/s/ HARRY L. HUTCHERSON Jr.
 Harry
L. Hutcherson Jr.
    
    Director
    
    9/15/08/s/ BRIAN T. MALONEY
 Brian
T. Maloney
    
    Director
    
    9/15/08/s/ JACK A. SHAW
 Jack
A. Shaw
    
    Director
    
    9/15/08/s/ A. ROBERT TOWBIN
 A.
Robert Towbin
    
    Director
    
    9/15/08/s/ C.J. WAYLAN
 C.J.
Waylan
    
    Director
    
    9/15/08
 37




---



##### 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
      /s/ ERNST & YOUNG LLP 
 F-1




---



##### 



Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting
 
       /s/ ERNST & YOUNG LLP 
 F-2




---



##### 



GLOBECOMM SYSTEMS INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
 June 30,
    
    
    June 30,2008
    
    
    2007AssetsCurrent assets:Cash and cash equivalents
    
    $
    51,399
    
    
    $
    25,558Accounts receivable, net
    
    
    52,106
    
    
    
    38,378Inventories
    
    
    16,444
    
    
    
    16,294Prepaid expenses and other current assets
    
    
    1,402
    
    
    
    2,823Deferred income taxes
    
    
    1,017
    
    
    
    Total current assets
    
    
    122,368
    
    
    
    83,053Fixed assets, net
    
    
    33,379
    
    
    
    33,238Goodwill
    
    
    22,197
    
    
    
    22,197Intangibles, net
    
    
    2,599
    
    
    
    3,474Deferred income taxes
    
    
    11,496
    
    
    
    Other assets
    
    
    1,053
    
    
    
    921Total assets
    
    $
    193,092
    
    
    $
    142,883Liabilities and Stockholders EquityCurrent liabilities:Accounts payable
    
    $
    25,650
    
    
    $
    24,170Deferred revenues
    
    
    10,004
    
    
    
    9,792Accrued payroll and related fringe benefits
    
    
    5,848
    
    
    
    6,037Other accrued expenses
    
    
    1,759
    
    
    
    2,235Deferred liabilities
    
    
    98
    
    
    
    256Long term debt-current
    
    
    
    
    
    
    3,312Total current liabilities
    
    
    43,359
    
    
    
    45,802Other liabilities
    
    
    957
    
    
    
    1,035Long term debt
    
    
    
    
    
    
    12,533Commitments and contingenciesStockholders equity:Series A Junior Participating, shares authorized, shares
issued and outstanding: none in 2008 and 2007
    
    
    
    
    
    
    Common stock, $.001 par value, shares authorized: 50,000,000
at June 30, 2008 and 2007; shares issued: 20,695,466 at
June 30, 2008 and 16,942,449 at June 30, 2007
    
    
    21
    
    
    
    17Additional paid-in capital
    
    
    182,083
    
    
    
    143,843Accumulated deficit
    
    
    (30,547
    )
    
    
    (57,566
    )Treasury stock, at cost, 465,351 shares in 2008 and 2007
    
    
    (2,781
    )
    
    
    (2,781
    )Total stockholders equity
    
    
    148,776
    
    
    
    83,513Total liabilities and stockholders equity
    
    $
    193,092
    
    
    $
    142,883
  F-3




---



##### 



GLOBECOMM SYSTEMS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
 Years Ended June 30,2008
    
    
    2007
    
    
    2006Revenues from infrastructure solutions
    
    $
    133,634
    
    
    $
    114,612
    
    
    $
    97,967Revenues from services
    
    
    62,891
    
    
    
    36,133
    
    
    
    28,069Total revenues
    
    
    196,525
    
    
    
    150,745
    
    
    
    126,036Costs and operating expenses:Costs from infrastructure solutions
    
    
    106,699
    
    
    
    92,197
    
    
    
    81,410Costs from services
    
    
    47,739
    
    
    
    29,052
    
    
    
    23,605Selling and marketing
    
    
    10,873
    
    
    
    8,376
    
    
    
    7,029Research and development
    
    
    1,913
    
    
    
    1,451
    
    
    
    1,052General and administrative
    
    
    15,888
    
    
    
    12,297
    
    
    
    9,589Total costs and operating expenses
    
    
    183,112
    
    
    
    143,373
    
    
    
    122,685Income from operations
    
    
    13,413
    
    
    
    7,372
    
    
    
    3,351Other income (expense):Interest income
    
    
    1,733
    
    
    
    1,370
    
    
    
    965Interest expense
    
    
    (285
    )
    
    
    (205
    )
    
    
    Gain on liquidation of foreign subsidiary
    
    
    
    
    
    
    
    
    
    
    264Income before income taxes
    
    
    14,861
    
    
    
    8,537
    
    
    
    4,580(Benefit) provision for income taxes
    
    
    (12,158
    )
    
    
    211
    
    
    
    88Net income
    
    $
    27,019
    
    
    $
    8,326
    
    
    $
    4,492Basic net income per common share
    
    $
    1.39
    
    
    $
    0.53
    
    
    $
    0.30Diluted net income per common share
    
    $
    1.34
    
    
    $
    0.50
    
    
    $
    0.29Weighted-average shares used in the
calculation of
basic net income per common share
    
    
    19,476
    
    
    
    15,795
    
    
    
    15,001Weighted-average shares used in the
calculation of
diluted net income per common share
    
    
    20,140
    
    
    
    16,672
    
    
    
    15,608
  F-4




---



##### 



GLOBECOMM SYSTEMS INC.  CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY  YEARS ENDED JUNE 30, 2008, 2007 AND 2006
(In thousands)
 AccumulatedAdditional
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    
    
    
    
    TotalCommon Stock
    
    
    Paid-in
    
    
    Accumulated
    
    
    Comprehensive
    
    
    Treasury Stock
    
    
    StockholdersShares
    
    
    Amount
    
    
    Capital
    
    
    Deficit
    
    
    Income (Loss)
    
    
    Shares
    
    
    Amount
    
    
    EquityBalance at June 30, 2005
    
    
    15,104
    
    
    $
    15
    
    
    $
    133,003
    
    
    $
    (70,384
    )
    
    $
    284
    
    
    
    465
    
    
    $
    (2,781
    )
    
    $
    60,137Proceeds from exercise of stock options
    
    
    477
    
    
    
    1
    
    
    
    2,090
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,091Stock compensation expense
    
    
    
    
    
    
    
    
    
    
    115
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    115Proceeds from exercise of warrants
    
    
    80
    
    
    
    
    
    
    
    440
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    440Tax benefit from stock compensation plan
    
    
    
    
    
    
    
    
    
    
    25
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25Comprehensive income:
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,492
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,492Loss from foreign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (20
    )
    
    
    
    
    
    
    
    
    
    
    (20
    )Realized gain on liquidation of foreign subsidiary
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (264
    )
    
    
    
    
    
    
    
    
    
    
    (264
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,208Balance at June 30, 2006
    
    
    15,661
    
    
    
    16
    
    
    
    135,673
    
    
    
    (65,892
    )
    
    
    
    
    
    
    465
    
    
    
    (2,781
    )
    
    
    67,016Proceeds from exercise of stock options
    
    
    1,002
    
    
    
    1
    
    
    
    6,436
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,437Stock compensation expense
    
    
    
    
    
    
    
    
    
    
    214
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    214Grant of restricted shares
    
    
    37
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Proceeds from exercise of warrants
    
    
    242
    
    
    
    
    
    
    
    1,444
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,444Tax benefit from stock compensation plan
    
    
    
    
    
    
    
    
    
    
    76
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    76Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,326
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,326Balance at June 30, 2007
    
    
    16,942
    
    
    
    17
    
    
    
    143,843
    
    
    
    (57,566
    )
    
    
    
    
    
    
    465
    
    
    
    (2,781
    )
    
    
    83,513Proceeds from exercise of stock options
    
    
    168
    
    
    
    
    
    
    
    976
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    976Stock compensation expense
    
    
    
    
    
    
    
    
    
    
    736
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    736Grant of restricted shares
    
    
    115
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Proceeds from offering, net of issuance costs of $2,412
    
    
    3,450
    
    
    
    4
    
    
    
    36,397
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36,401Proceeds from exercise of warrants
    
    
    20
    
    
    
    
    
    
    
    110
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    110Tax benefit from stock compensation plan
    
    
    
    
    
    
    
    
    
    
    21
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,019
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,019Balance at June 30, 2008
    
    
    20,695
    
    
    $
    21
    
    
    $
    182,083
    
    
    $
    (30,547
    )
    
    $
    
    
    
    
    465
    
    
    $
    (2,781
    )
    
    $
    148,776
 F-5




---



##### 



GLOBECOMM SYSTEMS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 Years
Ended June 30,2008
    
    

2007
    
    

2006Operating Activities:Net income
    
    $
    27,019
    
    
    $
    8,326
    
    
    $
    4,492Adjustments to reconcile net income to net cash provided by (used in)operating activities:Depreciation and amortization
    
    
    5,742
    
    
    
    3,333
    
    
    
    3,023Provision for doubtful accounts
    
    
    560
    
    
    
    546
    
    
    
    426Deferred income taxes
    
    
    (12,513
    )
    
    
    22
    
    
    
    16Stock compensation expense
    
    
    736
    
    
    
    214
    
    
    
    115Tax benefit from stock compensation plan
    
    
    21
    
    
    
    76
    
    
    
    25Gain on liquidation of foreign subsidiary
    
    
    
    
    
    
    
    
    
    
    (264
    )Changes in operating assets and liabilities:Accounts receivable
    
    
    (14,288
    )
    
    
    (4,632
    )
    
    
    (8,569
    )Inventories
    
    
    (150
    )
    
    
    (2,795
    )
    
    
    (174
    )Prepaid expenses and other current assets
    
    
    1,421
    
    
    
    103
    
    
    
    (273
    )Other assets
    
    
    (132
    )
    
    
    58
    
    
    
    73Accounts payable
    
    
    1,480
    
    
    
    4,258
    
    
    
    3,471Deferred revenues
    
    
    212
    
    
    
    1,235
    
    
    
    (3,870
    )Accrued payroll and related fringe benefits
    
    
    (189
    )
    
    
    2,961
    
    
    
    699Other accrued expenses
    
    
    (476
    )
    
    
    30
    
    
    
    (2
    )Other liabilities
    
    
    (236
    )
    
    
    622
    
    
    
    (317
    )Net cash provided by (used in) operating activities
    
    
    9,207
    
    
    
    14,357
    
    
    
    (1,129
    )Investing Activities:Purchases of fixed assets
    
    
    (5,008
    )
    
    
    (17,808
    )
    
    
    (2,484
    )Acquisition of business net of cash received
    
    
    
    
    
    
    (19,069
    )
    
    
    Net cash used in investing activities
    
    
    (5,008
    )
    
    
    (36,877
    )
    
    
    (2,484
    )Financing Activities:Proceeds from exercise of stock options
    
    
    976
    
    
    
    6,437
    
    
    
    2,091Proceeds from exercise of warrants
    
    
    110
    
    
    
    1,444
    
    
    
    440Proceeds from offering
    
    
    36,401
    
    
    
    
    
    
    
    Borrowings under acquisition loan
    
    
    
    
    
    
    16,000
    
    
    
    Repayments of debt
    
    
    (15,845
    )
    
    
    (315
    )
    
    
    Net cash provided by financing activities
    
    
    21,642
    
    
    
    23,566
    
    
    
    2,531Effect of foreign currency translation on cash
    
    
    
    
    
    
    
    
    
    
    (15
    )Net increase (decrease) in cash and cash equivalents
    
    
    25,841
    
    
    
    1,046
    
    
    
    (1,097
    )Cash and cash equivalents at beginning of year
    
    
    25,558
    
    
    
    24,512
    
    
    
    25,609Cash and cash equivalents at end of year
    
    $
    51,399
    
    
    $
    25,558
    
    
    $
    24,512Supplemental Disclosure of Cash Flow Information:Cash paid for interest
    
    $
    404
    
    
    $
    86
    
    
    $
    Cash paid for income taxes
    
    
    353
    
    
    
    109
    
    
    
    198
  F-6




---



##### 



GLOBECOMM SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2008
 1. Organization and Description of Business
  2. Significant Accounting Policies
 Principles of Consolidation
  Accounting Estimates
  Revenue Recognition
   F-7




---



##### 



GLOBECOMM SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
 2. Significant Accounting Policies (continued)
   Costs from Infrastructure Solutions
  Costs from Services
  Research and Development
  Inventories
  Cash Equivalents
  Fixed Assets
  Fair Value of Financial Instruments
  F-8




---



##### 



GLOBECOMM SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
 2. Significant Accounting Policies (continued)
 Stock-Based Compensation
    Goodwill and Other Intangible Assets
    June 30,
    
    
    June 30,2008
    
    
    2007(in thousands)Customer relationships
    
    $
    3,000
    
    
    $
    3,000Contracts backlog
    
    
    640
    
    
    
    640Covenant not to compete
    
    
    60
    
    
    
    603,700
    
    
    
    3,700Less accumulated amortization
    
    
    1,101
    
    
    
    226Intangibles, net
    
    $
    2,599
    
    
    $
    3,474
  F-9




---



##### 



GLOBECOMM SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
 2. Significant Accounting Policies (continued)
  2009
    
    $
    3952010
    
    
    3922011
    
    
    3752012
    
    
    3752013
    
    
    375
 Long-Lived Assets
   Income Taxes
 Deferred Tax Assets
  Uncertainty in Tax Positions
   F-10




---



##### 



GLOBECOMM SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
 2. Significant Accounting Policies (continued)
  Product Warranties
  Recent Accounting Pronouncements
    3. Acquisition
    F-11




---



##### 



GLOBECOMM SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
 3. Acquisition (continued)
   Total current assets
    
    $
    5,848Fixed assets
    
    
    3,027Other assets
    
    
    19Goodwill
    
    
    14,993Customer relationships
    
    
    3,000Contracts backlog
    
    
    640Covenant not to compete
    
    
    60Liabilities
    
    
    (8,362
    )Total Purchase Price
    
    $
    19,225
  Years Ended June 30,2007
    
    
    2006(in thousands)(unaudited)Revenues
    
    $
    169,069
    
    
    $
    146,070Net income
    
    $
    8,736
    
    
    $
    4,882Basic net income per common share
    
    $
    0.55
    
    
    $
    0.33Diluted net income per common share
    
    $
    0.52
    
    
    $
    0.31
 4. Accounts Receivable
  F-12




---



##### 



GLOBECOMM SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
 5. Inventories
  June 30,
    
    
    June 30,2008
    
    
    2007(In thousands)Raw materials and component parts
    
    $
    187
    
    
    $
    230Work-in-progress
    
    
    20,183
    
    
    
    17,50720,370
    
    
    
    17,737Less progress payments
    
    
    3,926
    
    
    
    1,443$
    16,444
    
    
    $
    16,294
 6. Fixed Assets
  June 30,
    
    
    June 30,2008
    
    
    2007
    
    
    Depreciable life(In thousands)Land
    
    $
    2,116
    
    
    $
    2,116
    
    
    Building and improvements
    
    
    13,689
    
    
    
    8,037
    
    
    10-25 yearsComputer equipment
    
    
    4,427
    
    
    
    3,743
    
    
    3-5 yearsMachinery and equipment
    
    
    4,539
    
    
    
    3,926
    
    
    3-5 yearsNetwork operations center
    
    
    21,860
    
    
    
    13,137
    
    
    3-10 yearsSatellite earth station equipment
    
    
    13,136
    
    
    
    9,838
    
    
    10 yearsFurniture and fixtures
    
    
    1,829
    
    
    
    1,576
    
    
    5 yearsLeasehold improvements
    
    
    337
    
    
    
    63
    
    
    Shorter of lease term or estimated lifeConstruction-in-progress
    
    
    
    
    
    
    14,489
    
    
    61,933
    
    
    
    56,925Less accumulated depreciation and amortization
    
    
    28,554
    
    
    
    23,687$
    33,379
    
    
    $
    33,238
 7. Long Term Debt
  Acquisition Loan
    
    $
    15,733Other note at 7% interest due November 2007
    
    
    11215,845Less current portion
    
    
    3,312Long term debt
    
    $
    12,533
  F-13




---



##### 



GLOBECOMM SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
 7. Long Term Debt (continued)
 Line of Credit
  8. Common Stock
 Private Placement
  Offering
  9. Stock Incentive and Stock Purchase Plans
   F-14




---



##### 



GLOBECOMM SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
 9. Stock Option and Stock Purchase Plans (continued)
    Years Ended June 30,2008
    
    
    2007
    
    
    2006Weighted-
    
    
    
    
    
    
    Weighted-
    
    
    
    
    
    
    Weighted-Shares
    
    
    Average
    
    
    Shares
    
    
    Average
    
    
    Shares
    
    
    AverageUnder
    
    
    Exercise
    
    
    Under
    
    
    Exercise
    
    
    Under
    
    
    ExerciseOption
    
    
    Price
    
    
    Option
    
    
    Price
    
    
    Option
    
    
    PriceBalance, beginning of year
    
    
    1,863
    
    
    $
    8.32
    
    
    
    2,809
    
    
    $
    7.55
    
    
    
    3,258
    
    
    $
    7.16Grants
    
    
    58
    
    
    
    13.08
    
    
    
    94
    
    
    
    10.86
    
    
    
    79
    
    
    
    6.90Exercised
    
    
    (168
    )
    
    
    5.81
    
    
    
    (1,002
    )
    
    
    6.42
    
    
    
    (477
    )
    
    
    4.38Canceled
    
    
    (98
    )
    
    
    14.36
    
    
    
    (38
    )
    
    
    7.52
    
    
    
    (51
    )
    
    
    11.58Balance, end of year
    
    
    1,655
    
    
    
    8.38
    
    
    
    1,863
    
    
    
    8.32
    
    
    
    2,809
    
    
    
    7.55Exercisable, end of year
    
    
    1,578
    
    
    $
    8.24
    
    
    
    1,782
    
    
    $
    8.22
    
    
    
    2,760
    
    
    $
    7.55Weighted-average fair value
options granted during the
year
    
    
    
    
    
    $
    5.82
    
    
    
    
    
    
    $
    5.26
    
    
    
    
    
    
    $
    3.77
  Options Outstanding
    
    Options ExercisableWeighted-Average
    
    Weighted-
    
    
    
    
    
    Weighted-Range of
    
    
    
    
    
    Remaining
    
    Average
    
    
    
    
    
    AverageExercise
    
    Number
    
    Contractual
    
    Exercise
    
    Number
    
    ExercisePrice
    
    Outstanding
    
    Life (Years)
    
    Price
    
    Exercisable
    
    Price$1.47 - $1.47
    
    
    2
    
    
    
    5.5
    
    
    $
    1.47
    
    
    
    2
    
    
    $
    1.47$3.14 - $4.42
    
    
    434
    
    
    
    4.5
    
    
    
    3.79
    
    
    
    434
    
    
    
    3.79$5.06 - $7.49
    
    
    686
    
    
    
    3.9
    
    
    
    6.61
    
    
    
    672
    
    
    
    6.60$7.75 - $11.57
    
    
    228
    
    
    
    3.5
    
    
    
    9.88
    
    
    
    205
    
    
    
    9.92$11.75 - $14.80
    
    
    140
    
    
    
    5.9
    
    
    
    12.92
    
    
    
    100
    
    
    
    12.60$18.88 - $28.00
    
    
    165
    
    
    
    1.5
    
    
    
    22.01
    
    
    
    165
    
    
    
    22.011,655
    
    
    
    3.9
    
    
    $
    8.38
    
    
    
    1,578
    
    
    $
    8.24
  F-15




---



##### 



GLOBECOMM SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
 9. Stock Option and Stock Purchase Plans (continued)
   10. Basic and Diluted Net Income Per Common Share
  11. Retirement Plan
  12. Related Party Transactions
  F-16




---



##### 



GLOBECOMM SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
 13. Income Taxes
   June 30, 2008
    
    
    June 30, 2007(In thousands)Deferred tax assets:Net operating loss carryforwards
    
    $
    17,239
    
    
    $
    24,631Accruals and reserves
    
    
    1,391
    
    
    
    1,336Write-down of investments
    
    
    383
    
    
    
    426AMT tax credit
    
    
    659
    
    
    
    333Capital loss carryforwards
    
    
    
    
    
    
    540Projects in progress
    
    
    240
    
    
    
    15019,912
    
    
    
    27,416Valuation allowance for deferred tax assets
    
    
    (6,561
    )
    
    
    (26,466
    )13,351
    
    
    
    950Deferred tax liabilities:Depreciation and amortization
    
    
    (838
    )
    
    
    (950
    )Net deferred tax assets
    
    $
    12,513
    
    
    $
    
  Years Ended June 30,2008
    
    
    2007
    
    
    2006(in thousands)Current:Federal
    
    $
    340
    
    
    
    189
    
    
    
    78State
    
    
    15
    
    
    
    22
    
    
    
    10355
    
    
    
    211
    
    
    
    88Deferred:Federal
    
    
    (11,680
    )
    
    
    
    
    
    
    State
    
    
    (833
    )
    
    
    
    
    
    
    (12,513
    )
    
    
    
    
    
    
    Total (benefit) provision for income taxes
    
    $
    (12,158
    )
    
    
    211
    
    
    
    88
    F-17




---



##### 



GLOBECOMM SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
 13. Income Taxes (continued)
    Years Ended June 30,2008
    
    2007
    
    2006U.S. Federal statutory rate
    
    
    35
    %
    
    
    34
    %
    
    
    34
    %Other
    
    
    2
    
    
    
    4
    
    
    
    3Change in valuation allowance
    
    
    (119
    )
    
    
    (36
    )
    
    
    (35
    )(82
    )%
    
    
    2
    %
    
    
    2
    %
 14. Segment Information
    Years Ended June 30,2008
    
    
    2007
    
    
    2006(In thousands)Revenues:Infrastructure solutions
    
    $
    134,712
    
    
    $
    114,642
    
    
    $
    99,136Services
    
    
    63,408
    
    
    
    36,628
    
    
    
    29,273Intercompany eliminations
    
    
    (1,595
    )
    
    
    (525
    )
    
    
    (2,373
    )Total revenues
    
    $
    196,525
    
    
    $
    150,745
    
    
    $
    126,036Income from operations:Infrastructure solutions
    
    $
    7,315
    
    
    $
    4,790
    
    
    $
    2,370Services
    
    
    6,091
    
    
    
    2,506
    
    
    
    837Interest income
    
    
    1,733
    
    
    
    1,370
    
    
    
    965Gain on liquidation of foreign subsidiary
    
    
    
    
    
    
    
    
    
    
    264Interest expense
    
    
    (285
    )
    
    
    (205
    )
    
    
    Intercompany eliminations
    
    
    7
    
    
    
    76
    
    
    
    144Income before income taxes
    
    $
    14,861
    
    
    $
    8,537
    
    
    $
    4,580Depreciation and amortization:Infrastructure solutions
    
    $
    2,027
    
    
    $
    1,327
    
    
    $
    1,201Services
    
    
    3,761
    
    
    
    2,065
    
    
    
    1,893Intercompany eliminations
    
    
    (46
    )
    
    
    (59
    )
    
    
    (71
    )Total depreciation and amortization
    
    $
    5,742
    
    
    $
    3,333
    
    
    $
    3,023
 F-18




---



##### 



GLOBECOMM SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
 14. Segment Information (continued)
 Years Ended June 30,2008
    
    
    2007
    
    
    2006(In thousands)Expenditures for long-lived assets:Infrastructure solutions
    
    $
    1,990
    
    
    $
    8,875
    
    
    $
    1,410Services
    
    
    3,018
    
    
    
    8,933
    
    
    
    1,074Total expenditures for long-lived assets
    
    $
    5,008
    
    
    $
    17,808
    
    
    $
    2,484
 June 30,
    
    
    June 30,2008
    
    
    2007(in thousands)Assets:Infrastructure solutions
    
    $
    216,023
    
    
    $
    183,988Services
    
    
    46,358
    
    
    
    29,735Intercompany eliminations
    
    
    (69,289
    )
    
    
    (70,840
    )Total assets
    
    $
    193,092
    
    
    $
    142,883
 15. Significant Customers and Concentrations of Credit Risk
    Years Ended June 30,2008
    
    2007
    
    2006Africa
    
    
    5
    %
    
    
    7
    %
    
    
    13
    %North and South America
    
    
    3
    %
    
    
    10
    %
    
    
    5
    %Asia
    
    
    15
    %
    
    
    4
    %
    
    
    8
    %Europe
    
    
    4
    %
    
    
    7
    %
    
    
    17
    %Middle East
    
    
    21
    %
    
    
    24
    %
    
    
    22
    %48
    %
    
    
    52
    %
    
    
    65
    %
  F-19




---



##### 



GLOBECOMM SYSTEMS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
 16. Commitments and Contingencies
 Lease Commitments
   2009
    
    $
    14,8842010
    
    
    3,0592011
    
    
    9372012
    
    
    7262013
    
    
    319Thereafter
    
    
    284$
    20,209
  Employment Agreements
  17. Subsequent Event
  F-20




---



##### 



GLOBECOMM SYSTEMS INC.
 
 SCHEDULE IIVALUATION AND QUALIFYING ACCOUNTS
 Balance at
    
    
    
    
    
    
    
    
    
    
    Balance atBeginning of
    
    
    
    
    
    
    
    
    
    
    End ofDescription
    
    Period
    
    
    Additions
    
    
    Deductions
    
    
    PeriodYear ended June 30, 2008:Reserves and allowances deducted
from asset accounts:Reserve for estimated doubtful
accounts receivable
    
    $
    1,113,000
    
    
    $
    560,000
    
    
    $
    (839,000
    )(a)
    
    $
    834,000Valuation allowance on deferred
tax assets
    
    
    26,466,000
    
    
    
    
    
    
    
    (19,905,000
    )(b)
    
    
    6,561,000$
    27,579,000
    
    
    $
    560,000
    
    
    $
    (20,744,000
    )
    
    $
    7,395,000Year ended June 30, 2007:Reserves and allowances deducted
from asset accounts:Reserve for estimated doubtful
accounts receivable
    
    $
    825,000
    
    
    $
    546,000
    
    
    $
    (258,000
    )(a)
    
    $
    1,113,000Valuation allowance on deferred
tax assets
    
    
    28,958,000
    
    
    
    
    
    
    
    (2,492,000
    )(b)
    
    
    26,466,000$
    29,783,000
    
    
    $
    546,000
    
    
    $
    (2,750,000
    )
    
    $
    27,579,000Year ended June 30, 2006:Reserves and allowances deducted
from asset accounts:Reserve for estimated doubtful
accounts receivable
    
    $
    815,000
    
    
    $
    426,000
    
    
    $
    (416,000
    )(a)
    
    $
    825,000Valuation allowance on deferred
tax assets
    
    
    30,926,000
    
    
    
    
    
    
    
    (1,968,000
    )(b)
    
    
    28,958,000$
    31,741,000
    
    
    $
    426,000
    
    
    $
    (2,384,000
    )
    
    $
    29,783,000
 
 (a)
    
    Reduction in allowance due to write-off of accounts receivable balances (net of
recovery).(b)
    
    Reduction in valuation allowance for net deferred tax assets. S-1




---



##### 



Index of Exhibits
 ExhibitNo.3.1
    
    Amended and Restated Certificate of Incorporation
(incorporated by reference to Exhibit 3.1 of the Registrants
Annual Report on Form 10-K for the fiscal year ended June 30,
1998).3.2
    
    Amended and Restated By-laws of the Registrant (incorporated
by reference to Exhibit 3.2 of the Registrants Annual Report
on Form 10-K for the fiscal year ended June 30, 1998).4.2
    
    See Exhibits 3.1 and 3.2 for provisions of the Amended and
Restated Certificate of Incorporation and Amended and Restated
By-laws of the Registrant defining rights of holders of Common
Stock of the Registrant (incorporated by reference to Exhibit
4.2 of the Registrants Registration Statement on Form S-1,
File No. 333-22425 (the Registration Statement)).10.1
    
    Employment Agreement dated as of October 9, 2001 by and
between the Registrant and David E. Hershberg (incorporated by
reference to Exhibit 10.9 of the Registrants Quarterly Report
on Form 10-Q, for the quarter ended September 30, 2001).10.2
    
    Employment Agreement dated as of October 9, 2001 by and
between the Registrant and Kenneth A. Miller (incorporated by
reference to Exhibit 10.10 of the Registrants Quarterly
Report on Form 10-Q, for the quarter ended September 30,
2001).10.3
    
    The Amended and Restated 1997 Stock Incentive Plan
(incorporated by reference to Exhibit 99 of the Registrants
Registration Statement on Form S-8 Registration, File No.
333-112351).10.4
    
    1999 Employee Stock Purchase Plan (incorporated by reference
to Exhibit 99.8 of the Registrants Registration Statement on
Form S-8, File No. 333-70527).10.5
    
    Rights Agreement, dated as of December 3, 1998, between the
Registrant and American Stock Transfer and Trust Company,
which includes the form of Certificate of Designation for the
Series A Junior Participating Preferred Stock as Exhibit A,
the form of Rights Certificate as Exhibit B and the Summary of
Rights to Purchase Series A Preferred Shares as Exhibit C
(incorporated by reference to Exhibit 4 of Registrants
Current Report on Form 8-K, dated December 3, 1998).10.6
    
    Negotiable Promissory Note, dated April 1, 2001, between the
Registrant and Donald G. Woodring (incorporated by reference to
Exhibit 10.19 of the Registrants Annual Report on Form 10-K
for the year ended June 30, 2001).10.7
    
    Employment Agreement, dated as of October 9, 2001, by and
between Stephen C. Yablonski and the Registrant (incorporated
by reference to Exhibit 10.20 of the Registrants Quarterly
Report on Form 10-Q, for the quarter ended September 30,
2001).10.8
    
    Employment Agreement, dated as of October 9, 2001, by and
between Andrew C. Melfi and the Registrant (incorporated by
reference to Exhibit 10.21 of the Registrants Quarterly
Report on Form 10-Q, for the quarter ended September 30,
2001).10.9
    
    Employment Agreement, dated as of October 9, 2001, by and
between Donald G. Woodring and the Registrant (incorporated by
reference to Exhibit 10.22 of the Registrants Quarterly
Report on Form 10-Q, for the quarter ended September 30,
2001).10.10
    
    Employment Agreement, dated as of October 9, 2001, by and
between Paul J. Johnson and the Registrant (incorporated by
reference to Exhibit 10.23 of the Registrants Quarterly
Report on Form 10-Q, for the quarter ended September 30,
2001).10.11
    
    Employment Agreement, dated as of October 9, 2001, by and
between Paul Eterno and the Registrant (incorporated by
reference to Exhibit 10.24 of the Registrants Quarterly
Report on Form 10-Q, for the quarter ended September 30,
2001).10.12*
    
    Settlement Agreement, dated as of October 1, 2002, by and
between Loral SkynetÒ, a division of Loral SpaceCom
Corporation and the Registrant (incorporated by reference to
Exhibit 10.28 of the Registrants Quarterly Report on Form
10-Q, for the quarter ended September 30, 2002).10.13
    
    Letter Agreement, dated as of January 31, 2003, by and between
Donald G. Woodring and the Registrant (incorporated by
reference to Exhibit 10.30 of the Registrants Quarterly
Report on Form 10-Q, for the quarter ended December 31, 2002).




---



##### 



ExhibitNo.10.14
    
    Term Loan Agreement dated May 2, 2007, by and between the Registrant and Citibank, N.A. (incorporated by
reference to Exhibit 10.23 of the Registrants Annual Report on Form 10-K for the year ended June 30, 2007).10.15
    
    2006 Incentive Stock Plan. (incorporated by reference to Appendix A of the Registrants Definitive proxy on
schedule 14A, filed with the Commission on October 13, 2006).10.16
    
    Asset Purchase Agreement, dated May 2, 2007, by and between the Registrant and Lyman Bros., Inc. (incorporated
by reference to Exhibit 2.1 of the Registrants Registration Statement on Form 8-K, file No. 000-22839).10.17
    
    Form of Securities Purchase Agreement, dated as of December 31, 2003, by and between the Registrant and each
of the purchasers listed on Exhibit A thereto (incorporated herein by reference to Exhibit 4.5 of the
Registrants Registration Statement on Form S-3, File No. 333-112024).10.18
    
    Form of Warrant, dated as of December 31, 2003, by and between the Registrant and each of the purchasers
listed on Exhibit A thereto (incorporated herein by reference to Exhibit 4.5 of the Registrants Registration
Statement on Form S-3, File No. 333-112024).10.19
    
    Credit Facility dated December 31, 2007, by and between the Registrant and Citibank, N.A. (incorporated by
reference to Exhibit 10.1 of the Registrants Registration Statement on Form 8-K, file No. 000-22839).10.20
    
    Amendment to Employment Agreement, dated as of May 15, 2008, by and between Andrew C. Melfi and the Registrant
(filed herewith).10.21**
    
    Employment Agreement, dated as of
April 23, 2007, by and between William Raney and the Registrant (filed
herewith).10.22**
    
    Amendment to Employment Agreement,
dated as of April 1, 2008, by and between William Raney and the
Registrant (filed herewith).10.23
    
    Employment Agreement, dated as of June 30, 2008, by and between Keith Hall and the Registrant (filed herewith).10.24
    
    Employment Agreement, dated as of June 30, 2008, by and between Tom Coyle and the Registrant (filed herewith).14
    
    Registrants Code of Ethics and Business Conduct (incorporated by reference to Exhibit 14 of the Registrants
Annual Report on Form 10-K for the year ended June 30, 2004).21
    
    Subsidiaries of the Registrant (filed herewith).23
    
    Consent of Independent Registered Public Accounting Firm (filed herewith).31.1
    
    Chief Executive Officer Certification required by Rules 13a-14 and 15d-14 under the Securities Exchange Act of
1934, as amended (filed herewith).31.2
    
    Chief Financial Officer Certification required by Rules 13a-14 and 15d-14 under the Securities Exchange Act
of 1934, as amended (filed herewith).32
    
    Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes Oxley Act of
2002 (filed herewith).
 
 *
    
    Confidential treatment granted for portions of this agreement.**
    
    Portions of this agreement have been omitted and filed
seperately with the secretary of the Securities and Exchange
Commission pursuant to a confidential treatment request.