Segment Information

3 Months Ended

Oct. 31, 2012

Segment Reporting [Abstract]

Segment Information

(16)    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 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. Prior to July 31, 2012, we manufactured, designed and sold microsatellites, primarily to U.S. government customers. As of October 31, 2012, we completed a restructuring plan to wind-down our microsatellite product line. Sales related to our microsatellite product line for the three months ended October 31, 2012 were $883,000. We expect no additional sales for the remainder of fiscal 2013.

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, 2012
	Telecommunications Transmission			RF Microwave Amplifiers		Mobile Data Communications	Unallocated		Total
Net sales	$	53,327,000		25,289,000		12,337,000	—		$	90,953,000
Operating income (loss)	12,259,000			1,718,000		3,471,000	(4,086,000	)	13,362,000
Interest income and other (expense)	(9,000		)	(22,000	)	9,000	298,000		276,000
Interest expense	159,000			—		—	1,952,000		2,111,000
Depreciation and amortization	2,436,000			980,000		152,000	784,000		4,352,000
Expenditure for long-lived assets, including intangibles	841,000			207,000		15,000	—		1,063,000
Total assets at October 31, 2012	233,446,000			95,785,000		8,511,000	367,852,000		705,594,000

	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
Expenditure 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

Operating income in our telecommunications transmission segment for the three months ended October 31, 2012 includes a $2,378,000 benefit related to a change in fair value of the earn-out liability associated with our acquisition of Stampede. See Note (9) - "Accrued Expenses and Other Current Liabilities."

Operating income in our mobile data communications segment for the three months ended October 31, 2012 includes an $822,000 pre-tax net restructuring charge related to the wind-down of our microsatellite product line. See Note (10) - "Cost Reduction Actions."

Unallocated operating loss for the three months ended October 31, 2011 includes $2,638,000 of professional fees related to a withdrawn contested proxy solicitation in connection with our fiscal 2011 annual meeting of stockholders.

Unallocated expenses result from such corporate expenses as legal, accounting and executive compensation. In addition, for the three months ended October 31, 2012 and 2011, unallocated expenses include $745,000, and $873,000, 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, 2012 and 2011 by the telecommunications transmission segment to the RF microwave amplifiers segment were $1,234,000 and $714,000, respectively.

Intersegment sales for the three months ended October 31, 2012 and 2011 by the telecommunications transmission segment to the mobile data communications segment were $2,507,000 and $3,490,000, respectively.

All other intersegment sales were immaterial for the three months ended October 31, 2012 and 2011.

All intersegment sales have been eliminated from the tables above.