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Comtech Telecommunications Corp. Reports Operating Results (10-Q)

March 10, 2011 | About:
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10qk

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Comtech Telecommunications Corp. (CMTL) filed Quarterly Report for the period ended 2011-01-31.

Comtech Telecommunications Corp. has a market cap of $741.3 million; its shares were traded at around $26.98 with a P/E ratio of 11 and P/S ratio of 1. The dividend yield of Comtech Telecommunications Corp. stocks is 3.7%. Comtech Telecommunications Corp. had an annual average earning growth of 25.7% over the past 10 years. GuruFocus rated Comtech Telecommunications Corp. the business predictability rank of 3-star.

Highlight of Business Operations:

For the six months ended January 31, 2011 and 2010, research and development expenses of $13.7 million and $14.0 million, respectively, related to our telecommunications transmission segment, $2.3 million and $2.6 million, respectively, related to our mobile data communications segment, and $4.7 million and $5.6 million, respectively, related to our RF microwave amplifiers segment, with the remaining expenses related to the amortization of stock-based compensation expense which is not allocated to our three reportable operating segments. Amortization of stock-based compensation expense recorded as research and development expenses was $0.5 million and $0.6 million for the six months ended January 31, 2011 and 2010, respectively.

Unallocated operating income was $1.1 million for the six months ended January 31, 2011 as compared to unallocated operating expenses of $10.1 million for the six months ended January 31, 2010. Excluding the net merger termination fee of $12.5 million, unallocated operating expenses for the six months ended January 31, 2011 was $11.4 million, which represents an increase of $1.3 million primarily due to increased cash-based incentive compensation costs associated with the overall higher level of net sales and operating income that we achieved during the six months ended January 31, 2011. Amortization of stock-based compensation expense, which is included in unallocated operating expenses, amounted to $2.9 million in the six months ended January 31, 2011 as compared to $3.4 million in the six months ended January 31, 2010.

On September 23, 2010, our Board of Directors approved a dividend program with targeted annual dividends aggregating $1.00 per share. The first quarterly dividend of $0.25 per common share, totaling $6.9 million, was paid on November 22, 2010. The second quarterly dividend of $0.25 per common share, totaling $6.7 million, was paid on February 21, 2011. On March 9, 2011, our Board of Directors declared a dividend of $0.25 per share payable on May 20, 2011 to shareholders of record at the close of business on April 21, 2011. Future dividends are subject to Board approval.

We have a committed $150.0 million unsecured revolving credit facility (“Credit Facility”) with a syndicate of bank lenders. The Credit Facility, as amended, expires on January 31, 2014 and provides for the extension of credit to us in the form of revolving loans, including letters of credit, at any time and from time to time during its term, in an aggregate principal amount at any time outstanding not to exceed $150.0 million for both revolving loans and letters of credit, with sub-limits of $15.0 million for commercial letters of credit and $35.0 million for standby letters of credit. Subject to certain limitations as defined, the Credit Facility may be used for acquisitions, stock repurchases, dividends, working capital and other general corporate purposes. At January 31, 2011, we had $1.9 million of standby letters of credit outstanding related to our guarantees of future performance on certain customer contracts and no outstanding commercial letters of credit. (See “Notes to Condensed Consolidated Financial Statements – Note (11) Credit Facility”).

In October 2010, we acquired the WAN optimization technology assets and assumed certain liabilities of Stampede for $5.3 million. As of January 31, 2011, $1.2 million of the total purchase price was paid. The next purchase price payment of $0.3 million is scheduled to be paid in April 2011 with the contingent earn-out payments payable over a three year period ending October 1, 2013. Included in the $5.3 million is $3.8 million which represents the fair value of contingent earn-out payments that we expect to make over a three year period ending October 1, 2013. Such amounts are not included in the above table.

On September 23, 2010, our Board of Directors authorized the repurchase of up to $100,000,000 of our common stock. There is no time restriction on this authorization and repurchases may be made in open-market or privately negotiated transactions and may be made pursuant to SEC Rule 10b5-1 trading plans. During the six months ended January 31, 2011, we repurchased 1,628,848 shares in open-market transactions for an aggregate cost of $46,804,000 (including transaction costs) with an average price per share of $28.73. In addition, during the period October 1, 2010 through October 31, 2010, an “affiliated purchaser,” as defined in Rule 10b-18(a)(3), purchased 5,000 shares at an average price of $28.29 which are included in the table below. As of January 31, 2011, we have the authority to repurchase up to an additional $53,244,000 of our common stock.

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