FORM 8-K |
September 26, 2012
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0-7928
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Date of Report
(Date of earliest event reported)
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Commission File Number
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(Exact name of registrant as specified in its charter)
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Delaware
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11-2139466
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer Identification Number)
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68 South Service Road, Suite 230
Melville, New York 11747
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(Address of Principal Executive Offices) (Zip Code)
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(631) 962-7000
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(Registrant’s telephone number, including area code)
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Exhibit Number
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Description
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COMTECH TELECOMMUNICATIONS CORP. |
By:
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/s/ Michael D. Porcelain
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Name: Michael D. Porcelain
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Title: Senior Vice President and
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Chief Financial Officer
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·
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Backlog as of July 31, 2012 was $153.9 million compared to $145.0 million as of July 31, 2011.
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·
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Total bookings for the three and twelve months ended July 31, 2012 were $129.3 million and $434.0 million, respectively, compared to $89.1 million and $419.3 million for the three and twelve months ended July 31, 2011, respectively.
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·
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During the fourth quarter of fiscal 2012, due to ongoing and anticipated future pressure on our U.S. government customer to reduce its spending, the Company adopted a restructuring plan to wind-down its mobile data communications segment’s microsatellite product line. In connection with this plan, the Company recorded a pre-tax restructuring charge of $2.6 million (of which $0.7 million relates to accelerated depreciation of fixed assets that will no longer be used). The Company expects to record approximately $1.0 million of additional restructuring charges and expenses during the first quarter of fiscal 2013.
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·
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Adjusted EBITDA was $21.6 million and $76.2 million for the three and twelve months ended July 31, 2012, respectively, as compared to $27.8 million and $135.5 million for the three and twelve months ended July 31, 2011, respectively. Adjusted EBITDA is a Non-GAAP financial measure and is defined in the below table.
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·
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The Company’s effective income tax rate in the fourth quarter of fiscal 2012 was 35.5%, which includes a net discrete tax expense of approximately $0.1 million. The Company’s effective income tax rate of 26.4% for the twelve months ended July 31, 2012 reflects a net discrete tax benefit of $3.8 million. The Company’s effective income tax rate for the twelve months ending July 31, 2013 is expected to approximate 34.5%, excluding any discrete tax adjustments.
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·
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At July 31, 2012, the Company had $367.9 million of cash and cash equivalents which does not reflect a quarterly dividend payment of $4.8 million which was paid on August 20, 2012. During the twelve months ended July 31, 2012, the Company paid cash dividends of $22.6 million to its stockholders.
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·
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During the twelve months ended July 31, 2012, the Company repurchased 7,055,614 shares of its common stock at an aggregate cost of approximately $217.4 million (including transaction costs). Since establishing the Company’s first repurchase program on September 23, 2010, the Company has purchased a total of 11,353,122 shares of common stock for approximately $339.0 million (including transaction costs). The Company can make additional repurchases of up to $11.3 million pursuant to its existing $250.0 million repurchase program.
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·
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Additional information about the Company’s fiscal 2013 guidance is contained in the Company’s fourth quarter investor presentation which is located on the Company’s website at www.comtechtel.com.
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Three months ended July 31,
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2012
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2011
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Non-GAAP
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Microsatellite
Product Line
Restructuring
Adjustments
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GAAP
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GAAP
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Net sales
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$ | 112,775,000 | - | 112,775,000 | 140,327,000 | |||||||||||
Cost of sales
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62,370,000 | 1,270,000 | 63,640,000 | 81,396,000 | ||||||||||||
Gross profit
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50,405,000 | (1,270,000 | ) | 49,135,000 | 58,931,000 | |||||||||||
Expenses:
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Selling, general and administrative
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22,050,000 | 1,307,000 | 23,357,000 | 24,399,000 | ||||||||||||
Research and development
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9,880,000 | - | 9,880,000 | 11,970,000 | ||||||||||||
Amortization of intangibles
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1,600,000 | - | 1,600,000 | 2,027,000 | ||||||||||||
33,530,000 | 1,307,000 | 34,837,000 | 38,396,000 | |||||||||||||
Operating income (loss)
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16,875,000 | (2,577,000 | ) | 14,298,000 | 20,535,000 | |||||||||||
Other expenses (income):
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Interest expense
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2,311,000 | - | 2,311,000 | 2,127,000 | ||||||||||||
Interest income and other
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(295,000 | ) | - | (295,000 | ) | (544,000 | ) | |||||||||
Income (loss) before provision for income taxes
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14,859,000 | (2,577,000 | ) | 12,282,000 | 18,952,000 | |||||||||||
Provision for (benefit from) income taxes
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5,256,000 | (902,000 | ) | 4,354,000 | 7,064,000 | |||||||||||
Net income (loss)
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$ | 9,603,000 | (1,675,000 | ) | 7,928,000 | 11,888,000 | ||||||||||
Net income (loss) per share:
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Basic
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$ | 0.54 | (0.09 | ) | 0.45 | 0.47 | ||||||||||
Diluted
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$ | 0.45 | (0.07 | ) | 0.38 | 0.42 | ||||||||||
Weighted average number of common shares outstanding – basic
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17,756,000 | 17,756,000 | 17,756,000 | 25,454,000 | ||||||||||||
Weighted average number of common and common equivalent shares outstanding – diluted
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23,777,000 | 23,777,000 | 23,777,000 | 31,300,000 | ||||||||||||
Dividends declared per issued and outstanding common share as of the applicable dividend record date
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$ | 0.275 | 0.275 | 0.25 | ||||||||||||
Twelve months ended July 31,
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2012
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2011
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Non-GAAP (Unaudited)
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Microsatellite
Product Line
Restructuring
and Proxy Costs
Adjustments
(Unaudited)
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GAAP
(Audited)
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GAAP
(Audited)
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Net sales
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$ | 425,070,000 | - | 425,070,000 | 612,379,000 | |||||||||||
Cost of sales
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240,291,000 | 1,270,000 | 241,561,000 | 371,333,000 | ||||||||||||
Gross profit
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184,779,000 | (1,270,000 | ) | 183,509,000 | 241,046,000 | |||||||||||
Expenses:
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Selling, general and administrative
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83,161,000 | 3,945,000 | 87,106,000 | 94,141,000 | ||||||||||||
Research and development
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38,489,000 | - | 38,489,000 | 43,516,000 | ||||||||||||
Amortization of intangibles
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6,637,000 | - | 6,637,000 | 8,091,000 | ||||||||||||
Merger termination fee, net
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- | - | - | (12,500,000 | ) | |||||||||||
128,287,000 | 3,945,000 | 132,232,000 | 133,248,000 | |||||||||||||
Operating income (loss)
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56,492,000 | (5,215,000 | ) | 51,277,000 | 107,798,000 | |||||||||||
Other expenses (income):
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Interest expense
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8,832,000 | - | 8,832,000 | 8,415,000 | ||||||||||||
Interest income and other
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(1,595,000 | ) | - | (1,595,000 | ) | (2,421,000 | ) | |||||||||
Income (loss) before provision for income taxes
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49,255,000 | (5,215,000 | ) | 44,040,000 | 101,804,000 | |||||||||||
Provision for (benefit from) income taxes
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13,449,000 | ( 1,825,000 | ) | 11,624,000 | 33,909,000 | |||||||||||
Net income (loss)
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$ | 35,806,000 | (3,390,000 | ) | 32,416,000 | 67,895,000 | ||||||||||
Net income (loss) per share:
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Basic
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$ | 1.79 | (0.17 | ) | 1.62 | 2.53 | ||||||||||
Diluted
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$ | 1.55 | (0.13 | ) | 1.42 | 2.22 | ||||||||||
Weighted average number of common shares outstanding – basic
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19,995,000 | 19,995,000 | 19,995,000 | 26,842,000 | ||||||||||||
Weighted average number of common and common equivalent shares outstanding – diluted
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25,991,000 | 25,991,000 | 25,991,000 | 32,623,000 | ||||||||||||
Dividends declared per issued and outstanding common share as of the applicable dividend record date
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$ | 1.10 | 1.10 | 1.00 | ||||||||||||
July 31, 2012
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July 31, 2011
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Assets
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Current assets:
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Cash and cash equivalents
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$ | 367,894,000 | 558,804,000 | |||||
Accounts receivable, net
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56,242,000 | 70,801,000 | ||||||
Inventories, net
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72,361,000 | 74,661,000 | ||||||
Prepaid expenses and other current assets
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8,196,000 | 7,270,000 | ||||||
Deferred tax asset, net
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12,183,000 | 11,529,000 | ||||||
Total current assets
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516,876,000 | 723,065,000 | ||||||
Property, plant and equipment, net
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22,832,000 | 26,638,000 | ||||||
Goodwill
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137,354,000 | 137,354,000 | ||||||
Intangibles with finite lives, net
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38,833,000 | 45,470,000 | ||||||
Deferred tax asset, net, non-current
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438,000 | - | ||||||
Deferred financing costs, net
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2,487,000 | 3,823,000 | ||||||
Other assets, net
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958,000 | 1,159,000 | ||||||
Total assets
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$ | 719,778,000 | 937,509,000 | |||||
Liabilities and Stockholders’ Equity
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Current liabilities:
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Accounts payable
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$ | 20,967,000 | 23,501,000 | |||||
Accrued expenses and other current liabilities
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40,870,000 | 49,858,000 | ||||||
Dividends payable
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4,773,000 | 6,100,000 | ||||||
Customer advances and deposits
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14,516,000 | 11,011,000 | ||||||
Interest payable
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1,529,000 | 1,531,000 | ||||||
Income taxes payable
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- | 4,056,000 | ||||||
Total current liabilities
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82,655,000 | 96,057,000 | ||||||
Convertible senior notes
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200,000,000 | 200,000,000 | ||||||
Other liabilities
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5,098,000 | 6,360,000 | ||||||
Income taxes payable
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2,624,000 | 3,811,000 | ||||||
Deferred tax liability
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- | 2,101,000 | ||||||
Total liabilities
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290,377,000 | 308,329,000 | ||||||
Commitments and contingencies
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Stockholders’ equity:
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Preferred stock, par value $.10 per share; shares authorized and unissued 2,000,000
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- | - | ||||||
Common stock, par value $.10 per share; authorized 100,000,000 shares; issued 28,931,679 shares and 28,731,265 shares at July 31, 2012 and July 31, 2011, respectively
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2,893,000 | 2,873,000 | ||||||
Additional paid-in capital
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361,458,000 | 355,001,000 | ||||||
Retained earnings
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404,227,000 | 393,109,000 | ||||||
768,578,000 | 750,983,000 | |||||||
Less:
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Treasury stock, at cost (11,564,059 shares and 4,508,445 shares at July 31, 2012 and July 31, 2011, respectively)
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(339,177,000 | ) | (121,803,000 | ) | ||||
Total stockholders’ equity
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429,401,000 | 629,180,000 | ||||||
Total liabilities and stockholders’ equity
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$ | 719,778,000 | 937,509,000 | |||||
Three Months Ended July 31,
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Twelve Months Ended July 31,
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2012
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2011
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2012
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2011
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Reconciliation of GAAP Net Income to Adjusted EBITDA(1):
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GAAP net income
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$ | 7,928,000 | 11,888,000 | 32,416,000 | 67,895,000 | |||||||||||
Income taxes
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4,354,000 | 7,064,000 | 11,624,000 | 33,909,000 | ||||||||||||
Net interest expense and other
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2,016,000 | 1,583,000 | 7,237,000 | 5,994,000 | ||||||||||||
Amortization of stock-based compensation
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854,000 | 1,380,000 | 3,572,000 | 5,357,000 | ||||||||||||
Depreciation and other amortization
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3,906,000 | 5,928,000 | 16,162,000 | 22,344,000 | ||||||||||||
Accelerated depreciation expense related to the wind-down of microsatellite product line
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680,000 | - | 680,000 | - | ||||||||||||
Other restructuring charges related to the wind-down of microsatellite product line
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1,897,000 | - | 1,897,000 | - | ||||||||||||
Costs related to withdrawn fiscal 2011 contested proxy solicitation
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- | - | 2,638,000 | - | ||||||||||||
Adjusted EBITDA
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$ | 21,635,000 | 27,843,000 | 76,226,000 | 135,499,000 |
(1)
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Represents earnings before interest, income taxes, depreciation and amortization of intangibles and stock-based compensation, accelerated depreciation expense and other restructuring charges related to the wind-down of the Company’s mobile data communications segment’s microsatellite product line and costs related to a withdrawn fiscal 2011 contested proxy solicitation. Adjusted EBITDA is a non-GAAP operating metric used by management in assessing the Company’s operating results. The Company’s definition of Adjusted EBITDA may differ from the definition of EBITDA used by other companies and may not be comparable to similarly titled measures used by other companies. Adjusted EBITDA is also a measure frequently requested by the Company’s investors and analysts. The Company believes that investors and analysts may use Adjusted EBITDA, along with other information contained in its SEC filings, in assessing its ability to generate cash flow and service debt.
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