Segment Information

3 Months Ended

Oct. 31, 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 ("CEO") 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 program, which is 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 October 31, 2015
	Telecommunications Transmission			RF Microwave Amplifiers	Mobile Data Communications	Unallocated		Total
Net sales	$	35,249,000		22,654,000	6,214,000	—		$	64,117,000
Operating income (loss)	2,361,000			1,968,000	2,999,000	(5,160,000	)	2,168,000
Interest income and other (expense)	(17,000		)	—	3,000	126,000		112,000
Interest expense	75,000			—	—	—		75,000
Depreciation and amortization	1,943,000			874,000	81,000	1,059,000		3,957,000
Expenditure for long-lived assets, including intangibles	470,000			142,000	22,000	2,000		636,000
Total assets at October 31, 2015	223,949,000			87,086,000	4,859,000	143,148,000		459,042,000

	Three months ended October 31, 2014
	Telecommunications Transmission			RF Microwave Amplifiers		Mobile Data Communications	Unallocated		Total
Net sales	$	51,356,000		18,764,000		6,271,000	—		$	76,391,000
Operating income (loss)	8,166,000			1,063,000		2,867,000	(3,877,000	)	8,219,000
Interest income and other (expense)	(29,000		)	(18,000	)	3,000	128,000		84,000
Interest expense	67,000			—		—	198,000		265,000
Depreciation and amortization	2,213,000			879,000		70,000	1,344,000		4,506,000
Expenditure for long-lived assets, including intangibles	538,000			92,000		84,000	33,000		747,000
Total assets at October 31, 2014	239,365,000			87,467,000		4,898,000	137,509,000		469,239,000

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 months ended October 31, 2015 and 2014 include $1,051,000 and $1,337,000, respectively, of amortization of stock-based compensation. Interest expense for the three months ended October 31, 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. Unallocated expenses for the three months ended October 31, 2015 include $1,392,000 of expenses related to our focused acquisition plan, the large majority of which related to our activities which resulted in the signing of a definitive merger agreement to acquire TCS, as discussed further in Note (18) - "Subsequent Events." Unallocated expenses for the three months ended October 31, 2014 include $585,000 of expenses related to our strategic alternatives analysis which we concluded in December 2014. Unallocated assets at October 31, 2015 consist principally of cash and deferred tax assets.

Intersegment sales for the three months ended October 31, 2015 and 2014 by the telecommunications transmission segment to the RF microwave amplifiers segment were $653,000 and $289,000, respectively.

Intersegment sales for the three months ended October 31, 2015 and 2014 by the telecommunications transmission segment to the mobile data communications segment were $21,000 and $196,000, respectively.

Intersegment sales for the three months ended October 31, 2015 by the RF microwave amplifiers segment to the telecommunications transmission segment were $19,000. There were no intersegment sales for the three months ended October 31, 2014 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 fiscal 2015, our President and CEO 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 November 2015, our President and CEO expanded this assessment to consider the impact of the TCS acquisition. The 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.