Segment Information

6 Months Ended

Jan. 31, 2016

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. As of January 31, 2016, our chief operating decision maker function, for purposes of FASB ASC 280, consisted of our President and Chief Executive Officer ("CEO").

While our results of operations are primarily reviewed on a consolidated basis, during the three and six months ended January 31, 2016, our chief operating decision maker managed the enterprise in three operating segments: (i) telecommunications transmission, (ii) RF microwave amplifiers, and (iii) mobile data communications, which are the same as our reportable operating segments.

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 January 31, 2016
	Telecommunications Transmission			RF Microwave Amplifiers		Mobile Data Communications	Unallocated		Total
Net sales	$	38,544,000		24,933,000		6,846,000	—		$	70,323,000
Operating income (loss)	4,803,000			1,382,000		3,735,000	(6,731,000	)	3,189,000
Interest income and other (expense)	(15,000		)	(7,000	)	2,000	130,000		110,000
Interest expense	73,000			—		—	—		73,000
Depreciation and amortization	1,715,000			860,000		79,000	1,082,000		3,736,000
Expenditure for long-lived assets, including intangibles	777,000			29,000		8,000	13,000		827,000
Total assets at January 31, 2016	212,211,000			87,070,000		6,415,000	156,474,000		462,170,000

	Three months ended January 31, 2015
	Telecommunications Transmission			RF Microwave Amplifiers		Mobile Data Communications	Unallocated		Total
Net sales	$	53,867,000		21,646,000		6,289,000	—		$	81,802,000
Operating income (loss)	11,049,000			969,000		2,709,000	(4,104,000	)	10,623,000
Interest income and other (expense)	(26,000		)	(7,000	)	3,000	120,000		90,000
Interest expense	69,000			—		—	—		69,000
Depreciation and amortization	2,196,000			906,000		72,000	1,069,000		4,243,000
Expenditure for long-lived assets, including intangibles	742,000			582,000		60,000	14,000		1,398,000
Total assets at January 31, 2015	240,413,000			92,918,000		6,002,000	132,154,000		471,487,000

	Six months ended January 31, 2016
	Telecommunications Transmission			RF Microwave Amplifiers		Mobile Data Communications	Unallocated		Total
Net sales	$	73,793,000		47,587,000		13,060,000	—		$	134,440,000
Operating income (loss)	7,164,000			3,350,000		6,734,000	(11,891,000	)	5,357,000
Interest income and other (expense)	(32,000		)	(7,000	)	5,000	256,000		222,000
Interest expense	148,000			—		—	—		148,000
Depreciation and amortization	3,658,000			1,734,000		160,000	2,141,000		7,693,000
Expenditure for long-lived assets, including intangibles	1,247,000			171,000		30,000	15,000		1,463,000
Total assets at January 31, 2016	212,211,000			87,070,000		6,415,000	156,474,000		462,170,000

	Six months ended January 31, 2015
	Telecommunications Transmission			RF Microwave Amplifiers		Mobile Data Communications	Unallocated		Total
Net sales	$	105,223,000		40,410,000		12,560,000	—		$	158,193,000
Operating income (loss)	19,215,000			2,032,000		5,576,000	(7,981,000	)	18,842,000
Interest income and other (expense)	(55,000		)	(25,000	)	6,000	248,000		174,000
Interest expense	136,000			—		—	198,000		334,000
Depreciation and amortization	4,409,000			1,785,000		142,000	2,413,000		8,749,000
Expenditure for long-lived assets, including intangibles	1,280,000			674,000		144,000	47,000		2,145,000
Total assets at January 31, 2015	240,413,000			92,918,000		6,002,000	132,154,000		471,487,000

Unallocated expenses result from corporate expenses such as executive compensation, accounting, legal and other regulatory compliance related costs. In addition, unallocated expenses include amortization of stock-based compensation of $1,074,000, and $2,125,000, respectively, for the three and six months ended January 31, 2016 and $1,061,000 and $2,398,000, respectively, for the three and six months ended January 31, 2015. Interest expense for the six months ended January 31, 2015 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 and six months ended January 31, 2016 include $2,337,000 and $3,729,000, respectively, of transaction costs primarily related to our acquisition of TCS. Unallocated expenses for the six months ended January 31, 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 January 31, 2015. Unallocated assets at January 31, 2016 consist principally of cash and deferred tax assets.

Intersegment sales for the three months ended January 31, 2016 and 2015 by the telecommunications transmission segment to the RF microwave amplifiers segment were $652,000 and $720,000, respectively. Intersegment sales for the six months ended January 31, 2016 and 2015 by the telecommunications transmission segment to the RF microwave amplifiers segment were $1,305,000 and $1,009,000, respectively.

Intersegment sales for the three months ended January 31, 2016 and 2015 by the telecommunications transmission segment to the mobile data communications segment were $87,000 and $141,000, respectively. Intersegment sales for the six months ended January 31, 2016 and 2015 by the telecommunications transmission segment to the mobile data communications segment were $108,000 and $337,000, respectively.

Intersegment sales for the three and six months ended January 31, 2016 by the RF microwave amplifiers segment to the telecommunications transmission segment were $13,000 and $32,000, respectively. There were no intersegment sales for the three and six months ended January 31, 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.

As discussed further in Note (18) - "Subsequent Events," in connection with the TCS acquisition, which closed on February 23, 2016 (the first month of our third quarter of fiscal 2016), we announced a new organizational structure in which our chief operating decision maker will manage the enterprise in two operating segments: commercial solutions and government solutions. As a result of these changes, effective with our third quarter ending April 30, 2016, we anticipate no longer reporting our financial results in three operating segments but rather our two new operating segments. We anticipate that historical operating segment financial information will be retrospectively reported for certain periods in a future SEC filing.