Segment Information

9 Months Ended

Apr. 30, 2013

Segment Reporting [Abstract]

Segment Information

(16)    Segment Information

Reportable operating segments are determined based on Comtech’s management approach. The management approach, as defined by FASB ASC 280, “Segment Reporting,” is based on the way that the chief operating decision-maker organizes the segments within an enterprise for making decisions about resources to be allocated and assessing their performance. Our chief operating decision-maker is our President and Chief Executive Officer.

While our results of operations are primarily reviewed on a consolidated basis, the chief operating decision-maker also manages the enterprise in three operating segments: (i) telecommunications transmission, (ii) RF microwave amplifiers, and (iii) mobile data communications.

Telecommunications transmission products include satellite earth station products (such as analog and digital modems, frequency converters, power amplifiers, transceivers and voice gateways) and over-the-horizon microwave communications products and systems (such as digital troposcatter modems).

RF microwave amplifier products include traveling wave tube amplifiers and solid-state, high-power broadband amplifier products that use the microwave and radio frequency spectrums.

Mobile data communications products and services include mobile satellite transceivers, satellite network and related engineering services (including program management) on a cost-plus-fixed-fee basis and the licensing of intellectual property for the support and sustainment of the U.S. Army's Blue Force Tracking (“BFT-1”) and the U.S. Army's Movement Tracking System (“MTS”) programs. These programs are currently in a sustainment mode. Other mobile data communications products include Sensor Enabled Notification System commercial asset tracking systems known as "SENS." Prior to July 31, 2012, we designed, manufactured and sold microsatellites, primarily to U.S. government customers. We completed a restructuring plan to wind-down our microsatellite product line in the first quarter of fiscal 2013.

Corporate management defines and reviews segment profitability based on the same allocation methodology as presented in the segment data tables below:

	Three months ended April 30, 2013
	Telecommunications Transmission			RF Microwave Amplifiers		Mobile Data Communications	Unallocated		Total
Net sales	$	45,410,000		16,169,000		8,277,000	—		$	69,856,000
Operating income (loss)	6,261,000			(121,000	)	2,434,000	(3,183,000	)	5,391,000
Interest income and other (expense)	(2,000		)	(10,000	)	3,000	296,000		287,000
Interest expense	55,000			—		—	1,954,000		2,009,000
Depreciation and amortization	2,378,000			984,000		125,000	729,000		4,216,000
Expenditure for long-lived assets, including intangibles	1,359,000			130,000		71,000	—		1,560,000
Total assets at April 30, 2013	227,138,000			94,832,000		13,780,000	340,612,000		676,362,000

	Three months ended April 30, 2012
	Telecommunications Transmission		RF Microwave Amplifiers	Mobile Data Communications	Unallocated		Total
Net sales	$	48,044,000	28,111,000	23,638,000	—		$	99,793,000
Operating income (loss)	8,463,000		2,587,000	2,638,000	(3,122,000	)	10,566,000
Interest income and other	15,000		9,000	7,000	339,000		370,000
Interest expense	163,000		—	—	2,029,000		2,192,000
Depreciation and amortization	2,530,000		1,121,000	366,000	856,000		4,873,000
Expenditure for long-lived assets, including intangibles	1,581,000		155,000	71,000	—		1,807,000
Total assets at April 30, 2012	244,208,000		102,816,000	37,203,000	362,133,000		746,360,000

	Nine months ended April 30, 2013
	Telecommunications Transmission			RF Microwave Amplifiers		Mobile Data Communications		Unallocated		Total
Net sales	$	144,506,000		61,820,000		29,060,000		—		$	235,386,000
Operating income (loss)	24,069,000			2,242,000		8,899,000		(10,510,000	)	24,700,000
Interest income and other (expense)	(37,000		)	(39,000	)	15,000		939,000		878,000
Interest expense (income)	294,000			—		(6,000	)	5,862,000		6,150,000
Depreciation and amortization	7,241,000			2,941,000		411,000		2,357,000		12,950,000
Expenditure for long-lived assets, including intangibles	3,428,000			472,000		112,000		5,000		4,017,000
Total assets at April 30, 2013	227,138,000			94,832,000		13,780,000		340,612,000		676,362,000

	Nine months ended April 30, 2012
	Telecommunications Transmission		RF Microwave Amplifiers	Mobile Data Communications	Unallocated		Total
Net sales	$	156,168,000	71,661,000	84,466,000	—		$	312,295,000
Operating income (loss)	29,816,000		4,105,000	16,409,000	(13,351,000	)	36,979,000
Interest income and other	35,000		3,000	23,000	1,239,000		1,300,000
Interest expense	495,000		—	—	6,026,000		6,521,000
Depreciation and amortization	7,604,000		3,325,000	1,183,000	2,862,000		14,974,000
Expenditure for long-lived assets, including intangibles	3,651,000		630,000	186,000	—		4,467,000
Total assets at April 30, 2012	244,208,000		102,816,000	37,203,000	362,133,000		746,360,000

Operating income in our telecommunications transmission segment for the nine months ended April 30, 2013 includes $3,267,000 of a benefit related to a change in fair value of the earn-out liability associated with our acquisition of Stampede. There was no such benefit during the three months ended April 30, 2013. Operating income in our telecommunications transmission segment for both the three and nine months ended April 30, 2012 includes $844,000 of a benefit related to a change in fair value of the earn-out liability associated with our acquisition of Stampede. See Note (9) - "Accrued Expenses and Other Current Liabilities."

Operating income in our mobile data communications segment, for the nine months ended April 30, 2013, includes a pre-tax restructuring charge of $569,000 related to the wind-down of our microsatellite product line. See Note (10) - "Cost Reduction Actions." There was no such charge during the three months ended April 30, 2013 or the three and nine months ended April 30, 2012.

Unallocated operating loss for the nine months ended April 30, 2012 includes $2,638,000 of professional fees related to a withdrawn contested proxy solicitation in connection with our fiscal 2011 annual meeting of stockholders.

Unallocated expenses include corporate expenses such as executive compensation, accounting, legal and other regulatory compliance related costs. In addition, for the three and nine months ended April 30, 2013, unallocated expenses include $694,000 and $2,245,000, respectively, of stock-based compensation expense and for the three and nine months ended April 30, 2012, unallocated expenses include $809,000 and $2,718,000, respectively, of stock-based compensation expense. Interest expense (which includes amortization of deferred financing costs) associated with our convertible senior notes and our Credit Facility is not allocated to the operating segments. Depreciation and amortization includes amortization of stock-based compensation. Unallocated assets consist principally of cash, deferred financing costs and deferred tax assets. Substantially all of our long-lived assets are located in the U.S.

Intersegment sales for the three months ended April 30, 2013 and 2012 by the telecommunications transmission segment to the RF microwave amplifiers segment were $361,000 and $1,333,000, respectively. Intersegment sales for the nine months ended April 30, 2013 and 2012 by the telecommunications transmission segment to the RF microwave amplifiers segment were $2,018,000 and $3,032,000, respectively.

Intersegment sales for the three months ended April 30, 2013 and 2012 by the telecommunications transmission segment to the mobile data communications segment were $18,000 and $1,047,000, respectively. Intersegment sales for the nine months ended April 30, 2013 and 2012 by the telecommunications transmission segment to the mobile data communications segment were $2,637,000 and $5,937,000, respectively.

All other intersegment sales were immaterial for the three and nine months ended April 30, 2013 and 2012.

All intersegment sales have been eliminated from the tables above.