COMTECH TELECOMMUNICATIONS CORP. CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Certain information in this Quarterly Report on Form 10-Q contains
forward-looking statements, including but not limited to, information relating
to our future performance and financial condition, plans and objectives of our
management and our assumptions regarding such future performance, financial
condition, and plans and objectives that involve certain significant known and
unknown risks and uncertainties and other factors not under our control which
may cause our actual results, future performance and financial condition, and
achievement of our plans and objectives to be materially different from the
results, performance or other expectations implied by these forward-looking
statements. These factors include, among other things: the risk that the
acquisitions of Gilat Satellite Networks Ltd. ("Gilat") and
OVERVIEW
We are a leading provider of advanced communications solutions for both commercial and government customers worldwide. Our solutions fulfill our customers' needs for secure wireless communications in some of the most demanding environments, including those where traditional communications are unavailable or cost-prohibitive, and in mission-critical and other scenarios where performance is crucial.
We manage our business through two reportable operating segments:
• Commercial Solutions - offers satellite ground station technologies
(such as modems and amplifiers) and public safety and location
technologies (such as 911 call routing and mapping solutions) to
commercial customers and smaller government customers, such as state
and local governments. This segment also serves certain large
government customers (including the U.S. government) that have
requirements for off-the-shelf commercial equipment.
• Government Solutions - provides mission-critical technologies (such as
tactical satellite-based networks and ongoing support for complicated
communication networks) and high-performance transmission technologies
(such as troposcatter systems and solid-state, high-power amplifiers)
to large government end-users (including those of foreign countries),
large international customers and domestic prime contractors.
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In fiscal 2020, we rebranded our operating segment product groups to better align with our end markets. Prior descriptions of these product lines were updated to reflect such changes.
Our Quarterly Financial Information Quarterly and period-to-period sales and operating results may be significantly affected by either short-term or long-term contracts with our customers. In addition, our gross profit is affected by a variety of factors, including the mix of products, systems and services sold, production efficiencies, estimates of warranty expense, price competition and general economic conditions. Our gross profit may also be affected by the impact of any cumulative adjustments to contracts that are accounted for over time.
Our contracts with the
CRITICAL ACCOUNTING POLICIES
We consider certain accounting policies to be critical due to the estimation process involved in each.
Revenue Recognition. In accordance with FASB ASC 606 - Revenue from Contracts with Customers ("ASC 606"), we record revenue in an amount that reflects the consideration to which we expect to be entitled in exchange for goods or services promised to customers. Under ASC 606, we follow a five-step model to: (1) identify the contract with our customer; (2) identify our performance obligations in our contract; (3) determine the transaction price for our contract; (4) allocate the transaction price to our performance obligations; and (5) recognize revenue using one of the following two methods:
• Over time - We recognize revenue using the over time method when there is
a continuous transfer of control to the customer over the contractual
period of performance. This generally occurs when we enter into a
long-term contract relating to the design, development or manufacture of
complex equipment or technology platforms to a buyer's specification (or
to provide services related to the performance of such contracts).
Continuous transfer of control is typically supported by contract clauses
which allow our customers to unilaterally terminate a contract for
convenience, pay for costs incurred plus a reasonable profit and take
control of work-in-process. Revenue recognized over time is generally
based on the extent of progress toward completion of the related
performance obligations. The selection of the method to measure progress
requires judgment and is based on the nature of the products or services
provided. In certain instances, typically for firm fixed-price contracts,
we use the cost-to-cost measure because it best depicts the transfer of
control to the customer which occurs as we incur costs on our contracts.
Under the cost-to-cost measure, the extent of progress toward completion
is measured based on the ratio of costs incurred to date to the total
estimated costs at completion, including warranty costs. Revenues,
including estimated fees or profits, are recorded proportionally as costs
are incurred. Costs to fulfill generally include direct labor, materials,
subcontractor costs, other direct costs and an allocation of indirect
costs. When these contracts are modified, the additional goods or services
are generally not distinct from those already provided. As a result, these
modifications form part of an existing contract and we must update the
transaction price and our measure of progress for the single performance
obligation and recognize a cumulative catch-up to revenue and gross
profits.
For over time contracts using a cost-to-cost measure of progress, we have an estimate at completion ("EAC") process in which management reviews the progress and execution of our performance obligations. This EAC process requires management judgment relative to assessing risks, estimating contract revenue and costs, and making assumptions for schedule and technical issues. Since certain contracts extend over a long period of time, the impact of revisions in revenue and or cost estimates during the progress of work may impact current period earnings through a cumulative adjustment. Additionally, if the EAC process indicates a loss, a provision is made for the total anticipated loss in the period that it becomes evident. Contract revenue and cost estimates for significant contracts are generally reviewed and reassessed at least quarterly.
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The cost-to-cost method is principally used to account for contracts in our mission-critical technologies and high-performance transmission technologies product lines and, to a lesser extent, certain location-based and messaging infrastructure contracts in our public safety and location technologies product line. For service-based contracts in our public safety and location technologies product line, we recognize revenue over time. These services are typically recognized as a series of services performed over the contract term using the straight-line method, or based on our customers' actual usage of the networks and platforms which we provide.
• Point in time - When a performance obligation is not satisfied over time,
we must record revenue using the point in time accounting method which
generally results in revenue being recognized upon shipment or delivery of
a promised good or service to a customer. This generally occurs when we
enter into short-term contracts or purchase orders where items are
provided to customers with relatively quick turn-around times.
Modifications to such contracts and or purchase orders, which typically
provide for additional quantities or services, are accounted for as a new
contract because the pricing for these additional quantities or services
are based on standalone selling prices.
Point in time accounting is principally applied to contracts in our satellite ground station technologies product line (which includes satellite modems, solid-state and traveling wave tube amplifiers) and certain contracts for our solid-state, high-power amplifiers in our high-performance transmission technologies product line. Point in time accounting is also applied to certain contracts in our mission-critical technologies product line. The contracts related to these product lines do not meet the requirements for over time revenue recognition because our customers cannot utilize the equipment for its intended purpose during any phase of our manufacturing process; customers do not simultaneously receive and or consume the benefits provided by our performance; customers do not control the asset (i.e., prior to delivery, customers cannot direct the use of the asset, sell or exchange the equipment, etc.); and, although many of our contracts have termination for convenience clauses and or an enforceable right to payment for performance completed to date, our performance creates an asset with an alternative use through the point of delivery.
In determining that our equipment has alternative use, we considered the underlying manufacturing process for our products. In the early phases of manufacturing, raw materials and work in process (including subassemblies) consist of common parts that are highly fungible among many different types of products and customer applications. Finished products are either configured to our standard configuration or based on our customers' specifications. Finished products, whether built to our standard specification or to a customers' specification, can be sold to a variety of customers and across many different end use applications with minimal rework, if needed, and without incurring a significant economic loss.
When identifying a contract with our customer, we consider when it has approval and commitment from both parties, if the rights of the parties are identified, if the payment terms are identified, if it has commercial substance and if collectability is probable.
When identifying performance obligations, we consider whether there are multiple promises and how to account for them. In our contracts, multiple promises are separated if they are distinct, both individually and in the context of the contract. If multiple promises in a contract are highly interrelated or comprise a series of distinct services performed over time, they are combined into a single performance obligation. In some cases, we may also provide the customer with an additional service-type warranty, which we recognize as a separate performance obligation. Service-type warranties do not represent a significant portion of our consolidated net sales. When service-type warranties represent a separate performance obligation, the revenue is deferred and recognized ratably over the extended warranty period. Our contracts, from time-to-time, may also include options for additional goods and services. To date, these options have not represented material rights to the customer as the pricing for them reflects standalone selling prices. As a result, we do not consider options we offer to be performance obligations for which we must allocate a portion of the transaction price. In many cases, we provide assurance-type warranty coverage for some of our products for a period of at least one year from the date of delivery.
When identifying the transaction price, we typically utilize the contract's stated price as a starting point. The transaction price in certain arrangements may include estimated amounts of variable consideration, including award fees, incentive fees or other provisions that can either increase or decrease the transaction price. We estimate variable consideration as the amount to which we expect to be entitled, and we include estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the estimation uncertainty is resolved. The estimation of this variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of our anticipated performance and all information (e.g., historical, current and forecasted) that is reasonably available to us.
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When allocating the contract's transaction price, we consider each distinct performance obligation. For contracts with multiple performance obligations, we allocate the contract's transaction price to each performance obligation using our best estimate of the standalone selling price of each distinct good or service in the contract. We determine standalone selling price based on the price at which the performance obligation is sold separately. If the standalone selling price is not observable through past transactions, we estimate the standalone selling price taking into account available information such as market conditions, including geographic or regional specific factors, competitive positioning, internal costs, profit objectives and internally approved pricing guidelines related to the performance obligations.
Almost all of our contracts with customers are denominated in
The timing of revenue recognition, billings and collections results in receivables, unbilled receivables and contract liabilities on our Condensed Consolidated Balance Sheet. Under typical payment terms for our contracts accounted for over time, amounts are billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals (e.g., monthly) or upon achievement of contractual milestones. For certain contracts with provisions that are intended to protect customers in the event we do not satisfy our performance obligations, billings occur subsequent to revenue recognition, resulting in unbilled receivables. Under ASC 606, unbilled receivables constitute contract assets. On large long-term contracts, and for contracts with international customers that do not do business with us regularly, payment terms typically require advanced payments and deposits. Under ASC 606, payments received from customers in excess of revenue recognized to date results in a contract liability. These contract liabilities are not considered to represent a significant financing component of the contract because we believe these cash advances and deposits are generally used to meet working capital demands which can be higher in the earlier stages of a contract. Also, advanced payments and deposits provide us with some measure of assurance that the customer will perform on its obligations under the contract. Under the typical payment terms for our contracts accounted for at a point in time, costs are accumulated in inventory until the time of billing, which generally coincides with revenue recognition.
We recognize the incremental costs to obtain or fulfill a contract as an expense when incurred if the amortization period of the asset is one year or less. Incremental costs to obtain or fulfill contracts with an amortization period greater than one year were not material.
As commissions payable to our internal sales and marketing employees or contractors are contingent upon multiple factors, such commissions are not considered direct costs to obtain or fulfill a contract with a customer and are expensed as incurred in selling, general and administrative expenses on our Condensed Consolidated Statements of Operations. As for commissions payable to our third-party sales representatives related to large long-term contracts, we do consider these types of commissions both direct and incremental costs to obtain and fulfill such contracts. Therefore, such types of commissions are included in total estimated costs at completion for such contracts and expensed over time through cost of sales on our Condensed Consolidated Statements of Operations.
Remaining performance obligations represent the transaction price of firm orders for which work has not been performed as of the end of a fiscal period. Remaining performance obligations, which we refer to as backlog, exclude unexercised contract options and potential orders under indefinite delivery / indefinite quantity ("IDIQ") contracts.
Impairment of
In accordance with FASB ASC 350 "Intangibles -
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On
In performing the quantitative assessment, we estimated the fair value of each
of our reporting units using a combination of the income and market approaches.
The income approach, also known as the discounted cash flow ("DCF") method,
utilizes the present value of cash flows to estimate fair value. The future cash
flows for our reporting units were projected based on our estimates, at that
time, of future revenues, operating income and other factors (such as working
capital and capital expenditures). For purposes of conducting our impairment
analysis, we assumed revenue growth rates and cash flow projections that are
below our actual long-term expectations. The discount rates used in our DCF
method were based on a weighted-average cost of capital ("WACC") determined from
relevant market comparisons, adjusted upward for specific reporting unit risks
(primarily the uncertainty of achieving projected operating cash flows). A
terminal value growth rate was applied to the final year of the projected
period, which reflects our estimate of stable, perpetual growth. We then
calculated a present value of the respective cash flows for each reporting unit
to arrive at an estimate of fair value under the income approach. Under the
market approach, we estimated a fair value based on comparable companies' market
multiples of revenues and earnings before interest, taxes, depreciation and
amortization and factored in a control premium. Finally, we compared our
estimates of fair values to our
Based on our quantitative evaluation, we determined that our Commercial Solutions and Government Solutions reporting units had estimated fair values in excess of their carrying values of at least 29.0% and 122.2%, respectively, and concluded that our goodwill was not impaired and that neither of our two reporting units was at risk of failing the quantitative assessment.
As of
However, it is possible that, during the remainder of fiscal 2020 or beyond,
business conditions (both in the
A significant decline in our customers' spending that is greater than we anticipate or a shift in funding priorities may also have a negative effect on future orders, sales, income and cash flows and we might be required to perform a quantitative assessment during the remainder of fiscal 2020 or beyond. If assumed net sales and cash flow projections are not achieved in future periods or our common stock price significantly declines from current levels, our Commercial Solutions and Government Solutions reporting units could be at risk of failing the quantitative assessment and goodwill and intangibles assigned to the respective reporting units could be impaired.
In any event, we are required to perform the next annual goodwill impairment
analysis on
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Provision for Warranty Obligations. We provide warranty coverage for most of our products, including products under long-term contracts, for a period of at least one year from the date of shipment. We record a liability for estimated warranty expense based on historical claims, product failure rates and other factors. Costs associated with some of our warranties that are provided under long-term contracts are incorporated into our estimates of total contract costs. There exist inherent risks and uncertainties in estimating warranty expenses, particularly on larger or longer-term contracts. If we do not accurately estimate our warranty costs, any changes to our original estimates could be material to our results of operations and financial condition.
Accounting for Income Taxes. Our deferred tax assets and liabilities are
determined based on temporary differences between financial reporting and tax
bases of assets and liabilities and applying enacted tax rates expected to be in
effect for the year in which we expect the differences to reverse. Our provision
for income taxes is based on domestic (including federal and state) and
international statutory income tax rates in the tax jurisdictions where we
operate, permanent differences between financial reporting and tax reporting and
available credits and incentives. We recognize potential interest and penalties
related to uncertain tax positions in income tax expense. The
Significant judgment is required in determining income tax provisions and tax positions. We may be challenged upon review by the applicable taxing authority and positions taken by us may not be sustained. We recognize all or a portion of the benefit of income tax positions only when we have made a determination that it is more likely than not that the tax position will be sustained upon examination, based upon the technical merits of the position and other factors. For tax positions that are determined as more likely than not to be sustained upon examination, the tax benefit recognized is the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. The development of valuation allowances for deferred tax assets and reserves for income tax positions requires consideration of timing and judgments about future taxable income, tax issues and potential outcomes, and are subjective critical estimates. A portion of our deferred tax assets consist of federal research and experimentation tax credit carryforwards, most of which was acquired in connection with our acquisition of TCS. No valuation allowance has been established on these deferred tax assets based on our evaluation that our ability to realize such assets has met the criteria of "more likely than not." We continuously evaluate additional facts representing positive and negative evidence in determining our ability to realize these deferred tax assets. In certain circumstances, the ultimate outcome of exposures and risks involves significant uncertainties. If actual outcomes differ materially from these estimates, they could have a material impact on our results of operations and financial condition.
Our federal income tax returns for fiscal 2017 through 2019 are subject to potential future Internal Revenue Service ("IRS") audit. None of our state income tax returns prior to fiscal 2015 are subject to audit. None of TCS's state income tax returns prior to calendar year 2015 are subject to audit. Future tax assessments or settlements could have a material adverse effect on our consolidated results of operations and financial condition.
Research and Development Costs. We generally expense all research and development costs. Research and development expenses include payroll, employee benefits, stock-based compensation expense, and other personnel-related expenses associated with product development. Research and development expenses also include third-party development and programming costs. Costs incurred internally in researching and developing software to be sold are charged to expense until technological feasibility has been established for the software. Judgment is required in determining when technological feasibility of a product is established. Technological feasibility for our advanced communication software solutions is generally reached after all high-risk development issues have been resolved through coding and testing. Generally, this occurs shortly before the products are released to customers and when we are able to validate the marketability of such product. Once technological feasibility is established, all software costs are capitalized until the product is available for general release to customers. To date, capitalized internally developed software costs were not material.
Provisions for Excess and Obsolete Inventory. We record a provision for excess and obsolete inventory based on historical and projected usage trends. Other factors may also influence our provision, including decisions to exit a product line, technological change and new product development. These factors could result in a change in the amount of excess and obsolete inventory on hand. Additionally, our estimates of future product demand may prove to be inaccurate, in which case we may have understated or overstated the provision required for excess and obsolete inventory. In the future, if we determine that our inventory was overvalued, we would be required to recognize such costs in our financial statements at the time of such determination. Any such charge could be material to our results of operations and financial condition.
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Allowance for Doubtful Accounts. We perform credit evaluations of our customers and adjust credit limits based upon customer payment history and current creditworthiness, as determined by our review of our customers' current credit information. Generally, we will require cash in advance or payment secured by irrevocable letters of credit before an order is accepted from an international customer that we do not do business with regularly. In addition, we seek to obtain insurance for certain domestic and international customers. We monitor collections and payments from our customers and maintain an allowance for doubtful accounts based upon our historical experience and any specific customer collection issues that we have identified. In light of ongoing tight credit market conditions, we continue to see requests from our customers for higher credit limits and longer payment terms. Because of our strong cash position and the nominal amount of interest we are earning on our cash and cash equivalents, we have, on a limited basis, approved certain customer requests. We continue to monitor our accounts receivable credit portfolio. To-date, there has been no material changes in our credit portfolio as a result of the COVID-19 pandemic and related worldwide restrictions on business activities.
Although our overall credit losses have historically been within the allowances we established, we cannot accurately predict our future credit loss experience, given the current poor business environment. Measurement of credit losses requires consideration of historical loss experience, including the need to adjust for changing business conditions, and judgments about the probable effects of relevant observable data, including present economic conditions such as delinquency rates and the financial health of specific customers. Future changes to the estimated allowance for doubtful accounts could be material to our results of operations and financial condition.
Business Outlook for Fiscal 2020
The third quarter of fiscal 2020 was challenging. Running from
• Net sales of
• An operating loss of$3.1 million (or Non-GAAP operating income of$3.3 million , excluding$6.0 million of acquisition plan expenses and a$0.5 million charge related to estimated contract settlement costs) and a net loss of$4.0 million (or Non-GAAP net income of$1.2 million , excluding acquisition plan expenses of$4.1 million (net of tax), a$0.3 million charge related to estimated contract settlement costs (net of tax) and a net discrete tax expense of$0.7 million );
• Cash flows from operating activities of
• Adjusted EBITDA (a Non-GAAP financial measure discussed below) of$12.5 million .
We achieved a consolidated book-to-bill ratio (a measure defined as bookings
divided by net sales) of 1.02 and finished the third quarter with consolidated
backlog of
Other recent developments in our business include:
• Our Commercial Solutions segment achieved a book-to-bill ratio of 0.73.
Our satellite ground station technologies product line, which has
historically required significant in-person meetings to generate new
business and finalize sales orders, has been most impacted by
restrictions on business activities. With our recent deployment of new
video sales channel methods and the partial resumption of businesses
activities in some places around the world, we believe this product
line has started to slowly recover. Importantly, we have been awarded
multiple satellite ground station technology solution contracts to
support several U.S. Department of Defense ("DoD") end customers, and
have received initial funding for these critical projects that we
expect will generate significant revenue for several years. In
addition, we believe that demand for our 911 public safety and location
technology solutions remains strong and we are in the process of
finalizing a number of large multi-year projects. During the quarter,
we were also awarded a multi-year contract valued at $9.1 million from
a U.S. tier-one mobile network operator for 5G virtual mobile
location-based technology solutions, including public safety
applications. Additionally, we also launched a new product line website
highlighting our public safety and location-based solutions and secured
several multi-year contracts valued at more than $15.0 million to
deploy new call-handling solutions in the Midwest.
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• Our Government Solutions segment achieved a book-to-bill ratio of 1.41.
Although this segment has experienced order and shipment delays, demand
for almost all of our mission-critical technologies and
high-performance transmission technologies remains strong. In
particular, we continue to provide Very Small Aperture Terminal
("VSAT") Satellite Communications Terminals to the U.S. government as
well as ongoing sustainment services for several critical programs,
including the SNAP and BFT-1 programs. Also, we continue to support the
U.S. government's cyber security posture and received large orders for
its Joint Cyber Analysis Course ("JCAC") training solutions. In June
2020 , we announced COMET - the world's smallest over-the-horizon
microwave terminal and received an initial order for the U.S. Special
Operations Command. We are continuing to make significant efforts to
win multi-year awards for several large new opportunities with the DoD .
During the quarter, we completed the integration of CGC Technology
Limited , a leading provider of high precision full motion fixed and
mobile X/Y satellite tracking antennas based in the United Kingdom ,
into our Government Solutions segment and are now working with several
top-tier European aerospace companies and other government entities to
meet expected long-term growth in LEO and MEO satellite constellations.
During the quarter, in response to lower levels of business activity, we
implemented a variety of cost saving measures, including reducing global
headcount by approximately 10%, reducing salaries, suspending merit increases
and eliminating certain discretionary expenses. Severance costs relating to
these actions were not material and cost reduction efforts continue. Although we
are deemed an essential business by the
Although the COVID-19 pandemic is by no means over and a second wave of COVID-19
could again alter the business landscape, we believe that the pandemic's worst
impact on our business is largely behind us. Our long-term fundamentals remain
strong as we continue to believe we are well-positioned for growth as business
conditions meaningfully improve. Although we have ceased during the current
environment to provide specific financial targets for fiscal 2020 and it remains
difficult to predict the timing of customer awards and related shipments, we do
expect fiscal 2020 fourth quarter consolidated net sales, net income and
Adjusted EBITDA to be somewhat better than the results we achieved during the
third fiscal quarter. We expect to incur acquisition plan expenses of
approximately
Our ability to achieve improved results during the fourth quarter will depend, in large part, on timely deliveries and the receipt of, and our performance on, orders from our customers. Fourth quarter results will be negatively impacted if orders and/or deliveries are delayed, business conditions further deteriorate, or our current or prospective customers materially postpone, reduce or even forgo purchases of our products and services.
We continue to be enthusiastic about our efforts on a number of large strategic orders and we are laser focused on positioning the company for a strong fiscal 2021.
On
Additional information related to our Business Outlook for Fiscal 2020 and a
definition and explanation of Adjusted EBITDA is included in the below section
"Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations - Comparison of the Results of Operations for the Three Months
Ended
Acquisition Plan Update
In
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In
In
During the third quarter of fiscal 2020, we closed an acquisition of
Other than for acquisition plan expenses, our fourth quarter fiscal 2020 business outlook does not include the impact of the pending acquisitions of UHP or Gilat, or the impact of any other expense we may incur in order to achieve our strategic objectives.
COMPARISON OF THE RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED
Commercial Solutions
Net sales in our Commercial Solutions segment were
Although net sales of our satellite ground station technologies during the three
months ended
Net sales in the three months ended
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Bookings, sales and profitability in our Commercial Solutions segment can fluctuate from period-to-period due to many factors, including changes in the general business environment. As such, period-to-period comparisons of our results may not be indicative of a trend or future performance.
Government Solutions
Net sales in our Government Solutions segment were
Our book-to-bill ratio (a measure defined as bookings divided by net sales) in
this segment for the third quarter of fiscal 2020 was 1.41. Bookings during the
quarter include: (i)
Net sales of our mission-critical technologies during the three months ended
Net sales of our high-performance transmission technologies during the three
months ended
We believe that fiscal 2020 net sales in our Government Solutions segment will
be lower than the level we achieved in fiscal 2019, largely due to the timing of
and performance on orders related to our
Geography and Customer Type
Sales by geography and customer type, as a percentage of related sales, for the
three months ended
Three months ended April 30,
2020 2019 2020 2019 2020 2019
Commercial Solutions Government Solutions Consolidated
U.S. government 9.2 % 19.2 % 60.3 % 60.8 % 30.7 % 38.9 %
Domestic 65.8 % 53.8 % 16.4 % 13.5 % 45.0 % 34.7 %
Total U.S. 75.0 % 73.0 % 76.7 % 74.3 % 75.7 % 73.6 %
International 25.0 % 27.0 % 23.3 % 25.7 % 24.3 % 26.4 %
Total 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %
Sales to
Domestic sales include sales to commercial customers, as well as to
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International sales for the three months ended
Gross Profit. Gross profit was
Gross profit, as a percentage of consolidated net sales, for the three months
ended
Our Commercial Solutions segment's gross profit, as a percentage of related
segment net sales, for the three months ended
Our Government Solutions segment's gross profit, as a percentage of related
segment net sales, for the three months ended
Included in consolidated cost of sales for the three months ended
Our consolidated gross profit, as a percentage of consolidated net sales, depends on the volume of sales, sales mix and related gross profit for each segment, and therefore is inherently difficult to forecast.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses were
Amortization of stock-based compensation expense recorded as selling, general
and administrative expenses was
Research and Development Expenses. Research and development expenses were
For the three months ended
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Whenever possible, we seek customer funding for research and development to
adapt our products to specialized customer requirements. During the three months
ended
Amortization of Intangibles. Amortization relating to intangible assets with
finite lives was
Our Business Outlook for Fiscal 2020 assumes total annual amortization of
intangible assets of approximately
Acquisition Plan Expenses. During the three months ended
During the fourth quarter of fiscal 2020, we expect to incur approximately
Operating (Loss) Income. Operating loss for the three months ended
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