Segment Information

3 Months Ended

Oct. 31, 2011

Segment Information [Abstract]

Segment Information

(16)Segment Information

Reportable operating segments are determined based on Comtech's management approach. The management approach, as defined by accounting standards which have been codified into 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 include satellite-based mobile location tracking and messaging hardware (such as mobile satellite transceivers and third-party produced ruggedized computers) and related services and the design and production of microsatellites.

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

	Three months ended October 31, 2011
	Telecommunications Transmission	RF Microwave Amplifiers	Mobile Data Communications	Unallocated	Total
Net sales	$         56,796,000	21,113,000	35,452,000	-	$   113,361,000
Operating income (loss)	13,034,000	323,000	9,363,000	(6,961,000)	15,759,000
Interest income and other (expense)	6,000	(3,000)	9,000	484,000	496,000
Interest expense	166,000	-	-	1,980,000	2,146,000
Depreciation and amortization	2,567,000	1,103,000	420,000	922,000	5,012,000
Expenditures for long-lived assets, including intangibles	1,271,000	106,000	66,000	-	1,443,000
Total assets at October 31, 2011	256,684,000	99,459,000	29,935,000	467,295,000	853,373,000

	Three months ended October 31, 2010
	Telecommunications Transmission	RF Microwave Amplifiers	Mobile Data Communications	Unallocated	Total
Net sales	$         49,141,000	22,800,000	106,219,000	-	$   178,160,000
Operating income	8,320,000	637,000	25,063,000	6,061,000	40,081,000
Interest income and other	71,000	3,000	12,000	608,000	694,000
Interest expense	81,000	-	-	1,982,000	2,063,000
Depreciation and amortization	2,765,000	1,121,000	872,000	1,575,000	6,333,000
Expenditures for long-lived assets, including intangibles	6,973,000	79,000	357,000	44,000	7,453,000
Total assets at October 31, 2010	257,135,000	100,356,000	60,485,000	610,877,000	1,028,853,000

Unallocated operating income for the three months ended October 31, 2011 included $2,638,000 of professional fees related to a contested proxy solicitation in connection with our upcoming fiscal 2011 annual meeting of stockholders. This contested proxy solicitation was initiated by a third party who publicly announced, on November 18, 2011, that it would not proceed with its proxy solicitation. There was no agreement with, consideration paid to, or any accommodation granted to this third party by us.

Unallocated operating income for the three months ended October 31, 2010 included the receipt of a net termination fee of $12,500,000 related to a Termination and Release Agreement dated September 7, 2010, by which we and CPI International, Inc. ("CPI") terminated a previously announced Merger Agreement dated May 8, 2010. There was no such benefit recorded for the three months ended October 31, 2011.

Unallocated expenses result from such corporate expenses as legal, accounting and executive compensation. In addition, for the three months ended October 31, 2011 and 2010, unallocated expenses include $873,000 and $1,508,000, 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 October 31, 2011 and 2010 by the telecommunications transmission segment to the RF microwave amplifiers segment were $714,000 and $708,000, respectively, and to the mobile data communications segment were $3,490,000and $6,651,000, respectively.

Intersegment sales for the three months ended October 31, 2011 and 2010 by the RF microwave amplifiers segment to the telecommunications transmission segment were $2,000 and $31,000, respectively.

All intersegment sales have been eliminated from the tables above.