COMTECH TELECOMMUNICATIONS CORP current report, Q2 FY2013

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Business Context and Reporting Period

Company: COMTECH TELECOMMUNICATIONS CORP
Filing Type: Form 8-K (Current Report)
Date of Report: April 8, 2013
Date of Earliest Event: April 3, 2013
Context: The filing reports the entry into a material definitive agreement involving a modification to a government sustainment contract.

Key Financial Metrics

This filing does not report general financial statements (revenue, profit, cash flow, or margins) for a reporting period. It discloses specific contract values:

  • New Contract Value: $43.6 million (Two-year modified BFT-1 sustainment contract).
  • Year 1 Value (Definitized): $22.8 million.
  • Year 2 Value (Definitized): $20.8 million.
  • Performance Period (Year 2): April 1, 2013 to March 31, 2014.
  • Previous Contract Value: Not-to-exceed $80.7 million (Three-year term).

Material Changes Versus Prior Period

The Company modified its existing three-year Blue Force Tracking ("BFT-1") sustainment contract with the U.S. Army. The original contract had a not-to-exceed value of $80.7 million. The new agreement reduces the term to two years with a total value of $43.6 million. The modification allows the U.S. government to fund orders in stages.

Guidance, Outlook, and Risks

Management Commentary: The filing incorporates a press release (Exhibit 99.1) announcing the contract modification and the receipt of an initial order for Year 2 of the BFT-1 sustainment services.
Risks/Contingencies: The filing does not explicitly detail new risks or contingencies beyond the structural change in the contract funding mechanism (staged funding).

Investor Verification Checklist

  • Verify the impact of the contract reduction from a $80.7 million not-to-exceed value to a $43.6 million fixed value on future revenue recognition.
  • Confirm the specific terms of the "staged funding" mechanism and its effect on cash flow timing.
  • Review the attached Press Release (Exhibit 99.1) for additional details on the initial order for Year 2.
  • Assess the strategic implications of shortening the contract term from three years to two years.