Segment Information

6 Months Ended

Jan. 31, 2013

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 designed, manufactured and sold microsatellites, primarily to U.S. government customers. We completed a restructuring plan to wind-down our microsatellite product line in the first quarter 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 January 31, 2013
	Telecommunications Transmission			RF Microwave Amplifiers		Mobile Data Communications		Unallocated		Total
Net sales	$	45,769,000		20,362,000		8,446,000		—		$	74,577,000
Operating income (loss)	5,549,000			645,000		2,994,000		(3,241,000	)	5,947,000
Interest income and other (expense)	(26,000		)	(7,000	)	3,000		345,000		315,000
Interest expense (income)	80,000			—		(6,000	)	1,956,000		2,030,000
Depreciation and amortization	2,427,000			977,000		134,000		844,000		4,382,000
Expenditure for long-lived assets, including intangibles	1,228,000			135,000		26,000		5,000		1,394,000
Total assets at January 31, 2013	226,656,000			93,208,000		10,651,000		354,232,000		684,747,000

	Three months ended January 31, 2012
	Telecommunications Transmission		RF Microwave Amplifiers		Mobile Data Communications	Unallocated		Total
Net sales	$	51,328,000	22,437,000		25,376,000	—		$	99,141,000
Operating income (loss)	8,319,000		1,195,000		4,408,000	(3,268,000	)	10,654,000
Interest income and other (expense)	14,000		(3,000	)	7,000	416,000		434,000
Interest expense	166,000		—		—	2,017,000		2,183,000
Depreciation and amortization	2,507,000		1,101,000		397,000	1,084,000		5,089,000
Expenditure for long-lived assets, including intangibles	799,000		369,000		49,000	—		1,217,000
Total assets at January 31, 2012	241,369,000		103,445,000		25,160,000	395,426,000		765,400,000

	Six months ended January 31, 2013
	Telecommunications Transmission			RF Microwave Amplifiers		Mobile Data Communications		Unallocated		Total
Net sales	$	99,096,000		45,651,000		20,783,000		—		$	165,530,000
Operating income (loss)	17,808,000			2,363,000		6,465,000		(7,327,000	)	19,309,000
Interest income and other (expense)	(35,000		)	(29,000	)	12,000		643,000		591,000
Interest expense (income)	239,000			—		(6,000	)	3,908,000		4,141,000
Depreciation and amortization	4,863,000			1,957,000		286,000		1,628,000		8,734,000
Expenditure for long-lived assets, including intangibles	2,069,000			342,000		41,000		5,000		2,457,000
Total assets at January 31, 2013	226,656,000			93,208,000		10,651,000		354,232,000		684,747,000

	Six months ended January 31, 2012
	Telecommunications Transmission		RF Microwave Amplifiers		Mobile Data Communications	Unallocated		Total
Net sales	$	108,124,000	43,550,000		60,828,000	—		$	212,502,000
Operating income (loss)	21,353,000		1,518,000		13,771,000	(10,229,000	)	26,413,000
Interest income and other (expense)	20,000		(6,000	)	16,000	900,000		930,000
Interest expense	332,000		—		—	3,997,000		4,329,000
Depreciation and amortization	5,074,000		2,204,000		817,000	2,006,000		10,101,000
Expenditure for long-lived assets, including intangibles	2,070,000		475,000		115,000	—		2,660,000
Total assets at January 31, 2012	241,369,000		103,445,000		25,160,000	395,426,000		765,400,000

Operating income in our telecommunications transmission segment for the three and six months ended January 31, 2013 includes $889,000 and $3,267,000, respectively, of a 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 January 31, 2013, includes a benefit of $253,000 relating to an adjustment for actual pre-tax restructuring charges that were lower than expected and, for the six months ended January 31, 2013, includes a net $569,000 of pre-tax restructuring charges; all of which related to the wind-down of our microsatellite product line. See Note (10) - "Cost Reduction Actions."

Unallocated operating loss for the six months ended January 31, 2012 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 and six months ended January 31, 2013, unallocated expenses include $806,000 and $1,551,000, respectively, of stock-based compensation expense and for the three and six months ended January 31, 2012, unallocated expenses include $1,036,000 and $1,909,000, 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 January 31, 2013 and 2012 by the telecommunications transmission segment to the RF microwave amplifiers segment were $423,000 and $985,000, respectively. Intersegment sales for the six months ended January 31, 2013 and 2012 by the telecommunications transmission segment to the RF microwave amplifiers segment were $1,657,000 and $1,699,000, respectively.

Intersegment sales for the three months ended January 31, 2013 and 2012 by the telecommunications transmission segment to the mobile data communications segment were $112,000 and $1,400,000, respectively. Intersegment sales for the six months ended January 31, 2013 and 2012 by the telecommunications transmission segment to the mobile data communications segment were $2,619,000 and $4,890,000, respectively.

All other intersegment sales were immaterial for the three and six months ended January 31, 2013 and 2012.

All intersegment sales have been eliminated from the tables above.