Segment Information

9 Months Ended

Apr. 30, 2014

Segment Reporting [Abstract]

Segment Information

(15)    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 narrow and broadband amplifier products that use the microwave and radio frequency spectrums.

Mobile data communications products and services substantially relate to our support of the U.S. Army's Blue Force Tracking (“BFT-1”) and the U.S. Army's Movement Tracking System (“MTS”) programs, which are currently in a sustainment mode. We currently perform engineering services and satellite network operations on a cost-plus-fixed-fee basis and program management services on a firm-fixed-price basis and we license certain of our intellectual property to the U.S. Army.

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, 2014
	Telecommunications Transmission		RF Microwave Amplifiers		Mobile Data Communications	Unallocated		Total
Net sales	$	61,235,000	22,499,000		5,171,000	—		$	88,905,000
Operating income (loss)	10,353,000		1,445,000		2,318,000	(3,549,000	)	10,567,000
Interest income and other (expense)	21,000		(14,000	)	3,000	246,000		256,000
Interest expense	62,000		—		—	1,931,000		1,993,000
Depreciation and amortization	2,193,000		939,000		62,000	1,086,000		4,280,000
Expenditure for long-lived assets, including intangibles	916,000		158,000		38,000	—		1,112,000
Total assets at April 30, 2014	251,156,000		89,177,000		5,811,000	287,461,000		633,605,000

	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

	Nine months ended April 30, 2014
	Telecommunications Transmission		RF Microwave Amplifiers		Mobile Data Communications		Unallocated		Total
Net sales	$	172,121,000	64,737,000		20,914,000		—		$	257,772,000
Operating income (loss)	29,550,000		3,113,000		9,697,000		(10,522,000	)	31,838,000
Interest income and other (expense)	9,000		(32,000	)	9,000		771,000		757,000
Interest expense (income)	182,000		—		(3,000	)	5,830,000		6,009,000
Depreciation and amortization	6,683,000		2,827,000		199,000		3,134,000		12,843,000
Expenditure for long-lived assets, including intangibles	3,830,000		415,000		284,000		7,000		4,536,000
Total assets at April 30, 2014	251,156,000		89,177,000		5,811,000		287,461,000		633,605,000

	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

Operating income in our telecommunications transmission segment for the nine months ended April 30, 2014 and 2013 includes a benefit of $239,000 and $3,267,000, respectively, 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, 2014 and 2013.

Operating income in our mobile data communications segment for the three and nine months ended April 30, 2014 includes a benefit of $56,000 relating to the reversal of previously accrued costs that were lower than expected and, for the nine months ended April 30, 2013, includes a net pre-tax restructuring charge of $569,000 related to the wind-down of our microsatellite product line. There was no such charge or benefit during the three months ended April 30, 2013. See Note (9) - "Cost Reduction Actions."

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, 2014 and 2013, unallocated expenses include $1,070,000 and $3,086,000, respectively, and $694,000 and $2,245,000, 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, 2014 and 2013 by the telecommunications transmission segment to the RF microwave amplifiers segment were $521,000 and $361,000, respectively. Intersegment sales for the nine months ended April 30, 2014 and 2013 by the telecommunications transmission segment to the RF microwave amplifiers segment were $1,286,000 and $2,018,000, respectively.

Intersegment sales for the three months ended April 30, 2014 and 2013 by the telecommunications transmission segment to the mobile data communications segment were $41,000 and $18,000, respectively. Intersegment sales for the nine months ended April 30, 2014 and 2013 by the telecommunications transmission segment to the mobile data communications segment were $213,000 and $2,637,000, respectively.

Intersegment sales for both the three months ended April 30, 2014 and 2013 by the RF microwave amplifiers segment to the telecommunications transmission segment were $3,000. Intersegment sales for the nine months ended April 30, 2014 and 2013 by the RF microwave amplifiers segment to the telecommunications transmission segment were $137,000 and $9,000, respectively.

All intersegment sales have been eliminated from the tables above.