Segment Information

6 Months Ended

Jan. 31, 2015

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. Our chief operating decision-makers are our President and Chief Executive Officer and our Executive Chairman.

While our results of operations are primarily reviewed on a consolidated basis, the chief operating decision-makers also manage 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 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 and MTS programs, which are 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.

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, 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

	Three months ended January 31, 2014
	Telecommunications Transmission			RF Microwave Amplifiers		Mobile Data Communications		Unallocated		Total
Net sales	$	56,521,000		22,041,000		6,937,000		—		$	85,499,000
Operating income (loss)	10,268,000			1,077,000		3,273,000		(3,446,000	)	11,172,000
Interest income and other (expense)	(18,000		)	(13,000	)	3,000		256,000		228,000
Interest expense (income)	61,000			—		(3,000	)	1,940,000		1,998,000
Depreciation and amortization	2,231,000			945,000		63,000		1,085,000		4,324,000
Expenditure for long-lived assets, including intangibles	1,981,000			163,000		246,000		7,000		2,397,000
Total assets at January 31, 2014	244,478,000			90,733,000		7,114,000		312,889,000		655,214,000

	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

	Six months ended January 31, 2014
	Telecommunications Transmission			RF Microwave Amplifiers		Mobile Data Communications		Unallocated		Total
Net sales	$	110,886,000		42,238,000		15,743,000		—		$	168,867,000
Operating income (loss)	19,197,000			1,668,000		7,379,000		(6,973,000	)	21,271,000
Interest income and other (expense)	(12,000		)	(18,000	)	6,000		525,000		501,000
Interest expense (income)	120,000			—		(3,000	)	3,899,000		4,016,000
Depreciation and amortization	4,490,000			1,888,000		137,000		2,048,000		8,563,000
Expenditure for long-lived assets, including intangibles	2,914,000			257,000		246,000		7,000		3,424,000
Total assets at January 31, 2014	244,478,000			90,733,000		7,114,000		312,889,000		655,214,000

Unallocated expenses result from such corporate expenses as executive compensation, accounting, legal and other regulatory compliance related costs. In addition, unallocated expenses for the three and six months ended January 31, 2015 and 2014 include $1,061,000 and $2,398,000, respectively, and $1,069,000 and $2,016,000, respectively, of stock-based compensation expense. Interest expense for the three and six months ended January 31, 2014 primarily reflects interest on our 3.0% convertible senior notes which were settled in May 2014. Interest expense for both the six months ended January 31, 2015 and 2014 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. Depreciation and amortization includes amortization of stock-based compensation. In addition, 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 or the three and six months ended January 31, 2014. Unallocated assets at January 31, 2015 consist principally of cash 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, 2015 and 2014 by the telecommunications transmission segment to the RF microwave amplifiers segment were $720,000 and $464,000, respectively. Intersegment sales for the six months ended January 31, 2015 and 2014 by the telecommunications transmission segment to the RF microwave amplifiers segment were $1,009,000 and $765,000, respectively.

Intersegment sales for the three months ended January 31, 2015 and 2014 by the telecommunications transmission segment to the mobile data communications segment were $141,000 and $134,000, respectively. Intersegment sales for the six months ended January 31, 2015 and 2014 by the telecommunications transmission segment to the mobile data communications segment were $337,000 and $172,000, respectively.

Intersegment sales for the three and six months ended January 31, 2014 by the RF microwave amplifiers segment to the telecommunications transmission segment were $68,000 and $134,000, 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.

All intersegment sales have been eliminated from the tables above.