During the past year, we took a number of cost reductions actions across the
company and we believe we are appropriately sized. Although we are expecting
consolidated net sales growth, total operating expenses (which includes research
and development expenses, selling, general and administrative expenses,
amortization of intangibles and amortization of stock-based compensation) in
fiscal 2014 are only expected to be slightly higher than the dollar amount
reported in fiscal 2013.
Based on our fiscal 2014 business outlook, and excluding the impact of any
potential discrete tax items, our fiscal 2014 estimated effective tax rate is
expected to approximate 36.5%, which represents an increase from the 36.0% in
We expect to supplement long-term organic growth opportunities by pursuing one or more acquisitions as appropriate opportunities arise and are mindful that, as discussed further in "Notes to Consolidated Financial Statements - Note (9) 3.0% Convertible Senior Notes" included in "Part II - Item 8. - Financial Statements and Supplementary Data," holders of
$200.0 millionof our 3.0% convertible senior notes may require us to repurchase some or all of the outstanding notes solely for cash on May 1, 2014. Accordingly, these notes are reflected as a current liability in our consolidated balance sheet at July 31, 2013.
Additional information related to our fiscal 2014 business outlook on certain income statement line items and recent operating segment booking trends is included in the below section entitled "Comparison of Fiscal 2013 and 2012."
Comparison of Fiscal 2013 and 2012
Net Sales. Consolidated net sales were
$319.8 millionand $425.1 millionfor fiscal 2013 and 2012, respectively, representing a decrease of $105.3 million, or 24.8%. As further discussed below, the significant period-over-period decrease reflects lower net sales in all of our operating segments, most notably our mobile data communications segment. Telecommunications transmission Net sales in our telecommunications transmission segment were $194.6 millionand $210.0 millionfor fiscal 2013 and 2012, respectively, a decrease of $15.4 million, or 7.3%. This decrease reflects significantly lower sales in our satellite earth station product line, partially offset by higher sales in our over-the-horizon microwave systems product line. Sales of our satellite earth station products were significantly lower during fiscal 2013 as compared to fiscal 2012, as a result of lower sales to both international and U.S. government customers. We believe that throughout fiscal 2013, as a result of challenging global business conditions, our customers were tentative about placing new orders. We finished the year on a positive note and have seen some signs of stabilization in certain of our end-markets. During the second half of fiscal 2013, we were awarded funded orders aggregating $8.8 millionprimarily for cost-plus-incentive-fee development and engineering services related to a new satellite earth station product contract with a potential value of approximately $29.0 millionto develop and produce the U.S. Navy'sATIP which will replace its legacy TDMA Interface Processor. Work on these orders is ongoing and is expected to continue through fiscal 2014. Although we believe that bookings and sales for this product line will continue to be impacted by challenging business conditions and the U.S. government budget issues that are discussed in the above Business Outlook for Fiscal 2014 section, we do expect annual net sales in this product line in fiscal 2014 to be slightly higher than the level we achieved in fiscal 2013 with growth being achieved in the latter part of fiscal 2014.