Ladies and gentlemen, thank you for standing by. Welcome to Comtech Telecommunication Corp.'s Fourth Quarter Fiscal 2012 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded this Thursday, September 27, 2012. I would now like to turn the conference over to Ms. Maria Salerno of Comtech Telecommunications. Please go ahead, ma'am.

Thank you, and good morning. Welcome to the Comtech Telecommunications Corp. conference call for the fourth quarter and fiscal year ended July 31, 2012. With us on the call this morning are Fred Kornberg, President and Chief Executive Officer of Comtech; and Michael Porcelain, Senior Vice President and Chief Financial Officer. Before we proceed, I need to remind you of the company's Safe Harbor language. Certain information presented in this call will include, but not be limited to, information relating to the future performance and financial condition of the company, the company's plans, objectives and business outlook; the plans, objectives and business outlook of the company's management, and the company's assumptions regarding such performance, business outlook and plans are forward-looking in nature and involve certain significant risks and uncertainties. Actual results could differ materially from such forward-looking information. Any forward-looking statements are qualified in their entirety by cautionary statements contained in the company's Securities and Exchange Commission filings. I am pleased now to introduce the President and Chief Executive Officer of Comtech, Fred Kornberg. Fred?

Thanks, Maria, and good morning, everyone, and thank you for joining us on this call. Yesterday afternoon, despite ongoing challenging market conditions, we reported a solid fourth quarter result of $112.8 million in revenue and a GAAP diluted EPS of $0.38. For the year, our revenues totaled $425.1 million of revenues and a GAAP diluted EPS of $1.42. Excluding a $2.6 million pretax restructuring charge related to the wind down of our microsatellite product line, our non-GAAP diluted EPS for the fourth quarter was $0.45. And excluding this charge and cost associated with a contested proxy that occurred early in the year, our non-GAAP EPS for the year was $1.55. Our adjusted EBITDA for the fourth quarter was $21.6 million and $76.2 million for the full fiscal year. As indicated in yesterday's press release, we enter fiscal 2013 with optimism. Based on our backlog and additional expected bookings, we believe we can achieve revenues of $375 million to $395 million and a GAAP diluted EPS between $1.40 to $1.50 in fiscal 2013. This guidance assumes virtually no revenue from our microsatellite product line, which in fiscal 2012 was $17.7 million. Our GAAP guidance also includes approximately an additional $1 million or $0.03 of diluted EPS of additional restructuring charges that we expect to record in the first quarter of fiscal 2013. Our adjusted EBITDA guidance is expected to be in the range of $70 million to $74 million for fiscal 2003 -- '13. In light of our expectations of generating solid operating cash flows in fiscal 2013 and beyond, our Board of Directors approved a dividend for our first quarter of fiscal 2013 of $0.275. This dividend is expected to be paid on November 20, 2012 to stockholders of record on October 19, 2012. To date, we have paid out approximately $47.5 million of dividends over the past 8 consecutive quarters, and believe our dividend program is an excellent way to return capital to our stockholders. Now let me turn it over to Mike Porcelain to provide a brief overview of our financial results. Mike?

Thanks, Fred, and good morning, everyone. As Fred mentioned, I'll walk you through Q4 and make a few comments about the full year, and as I normally do, I will provide some additional commentary on our expected financial results for fiscal 2013. During Q4, we generated revenues of $112.8 million, of which 51.8% were for U.S. government end users, 35.4% were for international end users, with the remainder being for domestic commercial end customers. For the full year fiscal 2012, we finished at $425.1 million of revenue, with nearly 50% being generated from the U.S. government and approximately 39% being generated from international end users. Looking forward, we expect that U.S. government sales, as a percentage of total expected sales, will significantly decline from the levels we achieved in Q4 due to a change in overall segment sales mix as a result of lower expected sales on our mobile data communication segment. Now let me walk you through sales by each segment. Net sales from our telecom transmission were $53.8 million in Q4 of fiscal 2012 as compared to $58.1 million we achieved in Q4 of last year, representing a decrease of 7.4%. This decline is attributable to lower sales of both Satellite Earth Station products and over-the-horizon microwave system products. During the quarter, we began recording some nominal revenue related to our $55 million over-the-horizon microwave system contract, and we do expect to record revenue related to this contract over the next 3 years. For the full year fiscal 2012, net sales on our telecom transmission segment were $210 million. As Fred will discuss in a bit more detail, we expect sales in this segment to increase in fiscal 2013 driven by increased sales of both Satellite Earth Station and over-the-horizon microwave system products. Net sales on our RF…

Thanks, Mike. I'd like to provide a brief update on each of our current product lines, and I'll start with our telecommunications segment, which is the backbone of our current business. The solid Satellite Earth Station product bookings in the second and third quarters contributed to our fourth quarter being the strongest revenue quarter of fiscal 2012 for this product line. Bookings also increased slightly in the fourth quarter as compared to the third quarter. The increase in the fourth quarter bookings was primarily attributable to continued strength in the international part of this product line. As we've discussed before, our products are key enablers in making satellite networks more efficient in addressing severe bandwidth shortages in the satellite area. Today, satellite for backhaul is the preferred solution to moving voice, video and data back to central switching stations when new cellular networks are being rolled out in less developed parts of the world. Despite challenging economic conditions, we continue to invest heavily in R&D, resulting in new product introductions such as our advanced VSAT product line. In fiscal 2012, we were awarded a $3.5 million order from Harris CapRock for our advanced VSAT products, which will be used by Harris CapRock maritime customers, including their Royal Caribbean Cruise lines. This was a significant order, as it enters us into the large market for maritime communication solutions, and positions us to take market share from some of the entrenched players in the market. On the U.S. government side of the Satellite Earth station product line, the current paralysis in Washington and the threat of sequestration continues to make bookings a challenge. That said, a few months ago, we received our first U.S. government order for modems using our Carrier-in-Carrier technology. This is important since it allows us to sell our…

[Operator Instructions] We can go first to the side of Joe Nadol with JPMorgan.

It's actually Chris Sands, in for Joe this morning. A quick question, and Fred, you touched on at the end there regarding capital deployment. The share repurchase authorization is down to a level that's well below where you've been running the last few years, which I guess gives you less optionality on that front. Can you just discuss, is it more M&A opportunities you're seeing or what the strategy there might be?

I think to answer both, I think, both questions. I think at this time, our Board of Directors believes that we have purchased an appropriate amount of shares. And as far as the M&A opportunities, we're always looking, but there's nobody on the -- let's say, on the target area right now.

Your next is Mark Jordan with Noble Financial.

Question relative to mobile data. With the wind down of the microsat business and that you're just focused on the sustainment of BFT-1, in short, for a proxy to -- or an estimate of that group, should we just take the $80.7 million and divide it by 3, and assume that that's a reasonable guesstimate of the revenue that could be derived from that segment in fiscal '13?

Yes, we do have some lingering orders that are not -- were not in that $85 million order, which we'll kind of ship out in Q1, but if you do look out beyond Q1, I think that is the right way to look at it.

Okay. And should one assume that, that -- say, $27 million would be spread equally because, I guess, you're taking the property rights equally one fold every month, and that the service is being linear also?

Yes, I think, right now, that's how we're looking at it. Obviously, the specific orders on that could come in, could change the mix of work, but right now, we do see pretty much a level workload once we get beyond Q2.

Okay. Do you have a CapEx, expected CapEx, number for, say, '13 and what might be a reasonable range for '14?

We haven't really taken a look at '14. Although, I wouldn't expect it to be much different than '13 at this point. We're looking at somewhere between $8 million and $10 million for the company as a whole.

Okay. Could you fill in the backlog? I think you gave mobile data had, what, a $16.1 million backlog, but the other 2 components would comprise the 153.9?

Sure, the $16.6 million number, Mark, was just the mobile data comm backlog related to BFT-1 business activities. So the mobile data comm backlog, as a whole, is $19.9 million. Our RF amplifier segment was $46.2 million, and our telecom transmission segment, which includes the benefit of the large Algerian contract was $87.8 million.

Okay. Final question relative to the overall tropo business, you did state a goal or expectation for having at least one large contract that could be received in fiscal '13. If you look at your pipeline, that one -- how many opportunities do you have out there to fulfill that one slot that you've expected?

We have a number of opportunities. As I mentioned, with the current North African end user, we, obviously, we and our prime contractor have just submitted another proposal, which is equivalent to the contract that we just got. The customer is saying that this could happen in our fiscal 2013, but as we all know, things take a long time and necessarily those timelines are not necessarily met. Having said that, we also have a number of other opportunities in other parts of the world that are in the pipeline that vary anywhere from $20 million to $40 million. We expect that out of the 5 or more opportunities that we have that we'll land one.

[Operator Instructions] We'll go next to the side of Chris Quilty with Raymond James.

Just, first, a quick question for Mike. With regard to the over-the-horizon order, do you take the entire $55 million into the backlog even though it's a 3-year performance period?

Yes.

Okay. And how about with reference to the BFT, MTS contracts, is that just the one year without the option periods?

Yes. Whatever we have is in terms of a funded order goes in our backlog for mobile data comm, so that would be correct, and so it will come up to about $16.6 million of MTS and BFT-1 backlog as of 7/31, and a piece of that is related, like I say, to some lingering orders that we had gotten outside of our first BFT-1 sustainment contract. And just a real quick note, on the $55 million, not all of that's in backlog because we did record some nominal revenue in Q4, so it's not exactly that full number.

Got you. And again, on the OTH percentage of completion accounting and you tend to be fairly conservative in the early years of that, and then based upon performance, you take in incremental profits or losses towards the back end of the contract?

That's the right way to look at it.

Okay. Focusing on the telecom business, I think you mentioned that the strength you saw was international. Can you identify particular end market applications where the strength was coming from?

It's primarily in the backhaul area, and it's pretty well around the world, Asia, Africa. Europe is down a bit from our prior numbers, but in general, it's really spread around.

Okay. And by backhaul, you mean cellular backhaul?

Cellular backhaul, yes.

Okay. And in terms of new products in that area, the new contract with Harris for some of the maritime and mobility applications, was that based upon an existing product? Or is that an entirely new product that you won that contract with?

That's a product that we developed in the past, call it 12 months. So it's relatively a new product for us, and we're really entering a new market area for us.

Okay. And it's different than you had an effort back 1 year, 2 years ago focused on Terraria [ph]. I haven't heard any announcement associated with that particular effort. Is that still ongoing?

Yes. The 2 are different, and I think we can say that we dropped the other one.

Okay. And when you look at the market opportunity here in terms of maritime and mobility, where you really haven't had a presence, I think most of that dominated by iDirect, how big of an addressable market?

It's hard to quantify because, as you mentioned, iDirect is a major player in that market, and a lot of the market is so-called TDMA. Our technology in the area is not necessarily TDMA, but another version of the SCPC version. We think that our SCPC version today is extremely competitive with the TDMA versions, and so that we believe we can attack this market and capture a good deal, but it's really hard to quantify.

Okay. RF amplifier business, I mean, you hit the sort of EBIT margins you were targeting in the long-term. Should we see that as sustainable? Or were there onetime items in the quarter that boosted the margin performance?

Yes. It was definitely a good quarter, no doubt about it. I mean, we got over 11%. That's probably not a number to look at next year, but other than that, I will say a lot of the Q4 was product mix, and we'd like to see some of the CREW orders come into bring that margin up a little bit, but that's not going to happen until '14. So I would expect our margin profile in '13 to look very similar to what we did in '12 for the year.

Okay, and you have retired all of those money-losing development programs in the RF segment?

Well, not retired, but we did shift the development products out the door. So I mean, those are very good active programs for us, and some of them relate to the CREW 3.3 activity. So retire wouldn't be the right word, but shipped and accepted by the customer would be better.

Okay. I meant retired the losses and moved on to profitability?

Yes, that would be fair.

And I'm showing no further questions in queue at this time.

No other questions? Okay, thanks, again, for joining us today, and we look forward to speaking with you again in December.

And this concludes today's program. Have a great day. You may disconnect at this time.