We have been informally notified by the U.S. Army that it intends to award us a
new multi-year contract for BFT-1 sustainment services and that it will also
exercise its third year option to renew the BFT-1 annual $10.0 million
intellectual property license fee. If the U.S. Army does not award us a new
contract and does not exercise its option to renew the annual $10.0 million
intellectual property license fee, it would have a material adverse effect on
our fiscal 2014 business outlook.
Included in our mobile data communication segment sales for fiscal 2013 and
fiscal 2012 is revenue related to our Sensor Enabled Notification System
("SENS") technology-based solutions, a niche product line that allows our
customers to remotely track assets at a low-cost. Our SENS technology and
related products generated approximately $4.6 million in revenue in fiscal 2013
and $4.4 million in fiscal 2012. In the first quarter of fiscal 2014, we sold
certain of our SENS technology and products, including certain intellectual
property, to one of our customers for approximately $2.0 million. We retain the
right to use certain of this technology and, going forward, only expect to
generate a modest amount of ongoing royalties.
Looking forward, we expect that based on the level of our current backlog, the
anticipated award of a new BFT-1 contract for BFT-1 sustainment services
(including the annual $10.0 million intellectual property license fee) and other
niche products that we will continue to offer, annual net sales in our mobile
data communications segment in fiscal 2014 are anticipated to be lower than the
amount we achieved in fiscal 2013.
Our mobile data communications segment represented 11.9% of consolidated net
sales for fiscal 2013 as compared to 26.5% for fiscal 2012. Bookings, sales and
profitability in our mobile data communications segment can fluctuate
dramatically from period-to-period due to many factors, including unpredictable
funding, deployment and technology decisions by the U.S. government. As such,
period-to-period comparisons of our results may not be indicative of a trend or
Geography and Customer Type
Sales to the U.S. government (including sales to prime contractors of the U.S.
government) represented 34.7% and 48.9% of consolidated net sales for fiscal
2013 and 2012, respectively. International sales (which include sales to U.S.
companies for inclusion in products that are sold to international customers)
represented 50.1% and 38.7% of consolidated net sales for fiscal 2013 and 2012,
respectively. Domestic commercial sales represented 15.2% and 12.4% of
consolidated net sales for fiscal 2013 and 2012, respectively. The lower
percentage of consolidated net sales to the U.S. government during fiscal 2013
primarily reflects substantially lower sales to the U.S. Army for the MTS and
BFT-1 programs and the wind-down of our microsatellite product line, as
Excluding total net sales in our mobile data communications segment (which
derives a substantial majority of its net sales from the U.S. government), sales
to the U.S. government represented 28.2% of consolidated net sales in fiscal
2013 which was lower than the 32.4% in fiscal 2012. This decline is attributable
to lower sales due to ongoing U.S. government budget pressures.