Segment Information

9 Months Ended

Apr. 30, 2015

Segment Reporting [Abstract]

Segment Information

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 function for purposes of FASB ASC 280 consists of our President and Chief Executive Officer and our Executive Chairman.

While our results of operations are primarily reviewed on a consolidated basis, the chief operating decision makers also manage 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 BFT-1 and 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.

Segment information is presented in the tables below:

	Three months ended April 30, 2015
	Telecommunications Transmission			RF Microwave Amplifiers	Mobile Data Communications	Unallocated		Total
Net sales	$	45,642,000		19,676,000	6,315,000	—		$	71,633,000
Operating income (loss)	7,283,000			1,254,000	2,642,000	(4,019,000	)	7,160,000
Interest income and other (expense)	(6,000		)	6,000	4,000	103,000		107,000
Interest expense	72,000			—	—	—		72,000
Depreciation and amortization	2,198,000			940,000	78,000	1,255,000		4,471,000
Expenditure for long-lived assets, including intangibles	403,000			117,000	149,000	19,000		688,000
Total assets at April 30, 2015	237,811,000			95,217,000	6,213,000	134,554,000		473,795,000

	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

	Nine months ended April 30, 2015
	Telecommunications Transmission			RF Microwave Amplifiers		Mobile Data Communications	Unallocated		Total
Net sales	$	150,865,000		60,086,000		18,875,000	—		$	229,826,000
Operating income (loss)	26,498,000			3,286,000		8,218,000	(12,000,000	)	26,002,000
Interest income and other (expense)	(61,000		)	(19,000	)	10,000	351,000		281,000
Interest expense	208,000			—		—	198,000		406,000
Depreciation and amortization	6,607,000			2,725,000		220,000	3,668,000		13,220,000
Expenditure for long-lived assets, including intangibles	1,683,000			791,000		293,000	66,000		2,833,000
Total assets at April 30, 2015	237,811,000			95,217,000		6,213,000	134,554,000		473,795,000

	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

Unallocated expenses result from such corporate expenses as executive compensation, accounting, legal and other regulatory compliance related costs. In addition, unallocated expenses for the three and nine months ended April 30, 2015 and 2014 include $1,244,000 and $3,642,000, respectively, and $1,070,000 and $3,086,000, respectively, of stock-based compensation expense. Interest expense for the three and nine months ended April 30, 2014 primarily reflects interest on our 3.0% convertible senior notes which were settled in May 2014. Interest expense for both the nine months ended April 30, 2015 and 2014 includes interest on a committed $100,000,000 secured revolving credit facility that expired on October 31, 2014 and amortization of deferred financing costs, neither of which is allocated to the operating segments. Depreciation and amortization includes amortization of stock-based compensation. In addition, unallocated expenses for the nine months ended April 30, 2015 include $585,000 of expenses related to our strategic alternatives analysis which we concluded in December 2014. There were no such expenses during the three months ended April 30, 2015 or the three and nine months ended April 30, 2014. Unallocated assets at April 30, 2015 consist principally of cash and deferred tax assets.

Intersegment sales for the three months ended April 30, 2015 and 2014 by the telecommunications transmission segment to the RF microwave amplifiers segment were $824,000 and $521,000, respectively. Intersegment sales for the nine months ended April 30, 2015 and 2014 by the telecommunications transmission segment to the RF microwave amplifiers segment were $1,833,000 and $1,286,000, respectively.

Intersegment sales for the three months ended April 30, 2015 and 2014 by the telecommunications transmission segment to the mobile data communications segment were $127,000 and $41,000, respectively. Intersegment sales for the nine months ended April 30, 2015 and 2014 by the telecommunications transmission segment to the mobile data communications segment were $464,000 and $213,000, respectively.

Intersegment sales for the three and nine months ended April 30, 2014 by the RF microwave amplifiers segment to the telecommunications transmission segment were $3,000 and $137,000, respectively. There were no intersegment sales for the three and nine months ended April 30, 2015 by the RF microwave amplifiers segment to the telecommunications transmission segment.

Substantially all of our long-lived assets are located in the U.S. and all intersegment sales are eliminated in consolidation and are excluded from the tables above.

In December 2014, our Board of Directors named a new President and Chief Executive Officer, succeeding our former President and Chief Executive Officer who is currently serving as Executive Chairman of our Board of Directors. Our new President and Chief Executive Officer was, and continues to be, a member of our Board of Directors. In March 2015, our President and Chief Executive Officer initiated an assessment of our operations to determine if changes in our business approach or operations would help us better serve our customers and potentially reduce our annual operating expenses. In connection with this review, in May 2015, we formed a joint venture consisting solely of our domestic operating subsidiaries whose main purpose is to further facilitate collaboration and allow us to propose on new opportunities (such as large U.S. government solicitations) with a unified approach. We also expanded, and expect to continue to expand, our corporate marketing and business development function to enhance our focus on existing and untapped market opportunities. This assessment of our operations is continuing and future changes may result in a change in our management approach which in turn may change the way we define our reportable operating segments, as such terms are defined by FASB ASC 280.