SEC Comment Letter for COMTECH TELECOMMUNICATIONS (CMTL) — Dec 12, 2016
COMTECH TELECOMMUNICATIONS CORP /DE/ (CMTL) (CIK 0000023197)
Date: Dec. 12, 2016 · CIK: 0000023197 · Accession: 0000000000-16-104496
AI Filing Summary & Sentiment
Reasoning
Letter
Mail Stop 4628 December 12 , 2016 Via E-Mail Michael D. Porcelain Senior Vice President and Chief Financial Officer Comtech Telecommunications Corp. 68 South Service Road Suite 230 Melville, NY 11747
Re: Comtech Telecommunications Corp . Form 10-K for the Fiscal Year Ended July 31, 2016 Filed October 6 , 2016 File No. 0-7928
Dear Mr. Porcelain :
We have limited our review of your filing to your contacts with countries that have been identified as state sponsors of terrorism, and we have the following comments. Our review with respect to this issue does not preclude further review by the Assistant Director group with respect to other issues. In our comments , we ask you to p rovide us with information so we may better understand your disclosure.
Please respond to these comments within ten busine ss days by providing the requested information or advis e us as soon as possible when you will respond. If you do not believe our comments apply to your facts and circumstances, please tell us why in your response.
After reviewing your response to these comments, we may have additional comments.
Risk Factors, page 18 Our international sales and operations are subject to risks of c onducting business in foreign countries, including applicable laws relating to trade, export controls…, page 24
1. You disclose that for the fiscal years ended July 31, 2016, 2015 and 2014, you have conducted “virtually no” business with states designated as state sponsors of terrorism. Comtech PST Corporation and Comtech Mobile Datacom Corporation’s websites indicate that their products and technology may be exported to U.S.-sanctioned countr ies if specifically permitted by the U.S. Government. Sudan and S yria are designated by the State Department as state sponsors of terrorism, and are subject to U.S. economic sanctions and export controls. Please describe to us the nature and extent of any past, current, and anticipated contacts with Sudan and Syria, wh ether through subsidiaries, affiliates, distributors, resellers, or other direct or indirect arrangements . For instance ,
Michael D. Porcelain Comtech Telecommunications Corp. December 12 , 2016 Page 2
ZiSat’s website states that ZiSat C -band provides monthly subscription internet, voice and VPN capacity on C band for coverage in Afri ca, that this platform is powered by Comtech Modem and iDirect, and that its coverage area includes Sudan and Syria. You should describe any products, components, technology or services you have provided to Sudan and Syria, directly or indirectly, and any agreements, commercial arrangements, or other contacts with the governments of those countries or entities they control.
2. Please discuss the materiality of any contacts with Sudan or Syria you describe in response to the comment above, and whether those contacts constitute a material investment risk for your security holders. You should address materiality in quantitative terms, including the approximate dollar amounts of any associated rev enues, assets, and liabilities for the last three fiscal years and the subsequent interim period . Also, address materiality in terms of qualitative factors that a reasonable investor would deem important in making an investment decision, including the pot ential impact of corporate activities upon a company’s reputation and share value. Various state and municipal governments, universities, and other investors have proposed or adopted divestment or similar initiatives regarding investment in companies that do business with U.S. - designated state sponsors of terrorism. You should address the potential impact of the investor sentiment evidenced by such actions directed toward companies that have operations associated with S udan or Syria .
3. You state that you c ould face civil and criminal penalties if you are found to have violated U.S. sanctions laws in connection with the matters you have disclosed to OFAC. Please discuss for us the fines and penalties to which you may be subject, and whether the amount of th ose fines and penalties could be material to you.
4. Please tell us whether any of the contacts with Sudan and Syria you discuss in response to the comments above involve dual use products, components or technology.
We remind you that the company and its management are responsible for the accuracy and adequacy of their disclosures, notwithstanding any review, comments, action or absence of action by the staff.
You may contact Jennifer Hardy, Special Counsel, at (202) 551 -3767 or me at (202) 551 - 3470 if yo u have any questions about the comments or our review.
Sincerely,
/s/ Cecilia Blye
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Mail Stop 4628 December 12 , 2016 Via E-Mail Michael D. Porcelain Senior Vice President and Chief Financial Officer Comtech Telecommunications Corp. 68 South Service Road Suite 230 Melville, NY 11747 Re: Comtech Telecommunications Corp . Form 10-K for the Fiscal Year Ended July 31, 2016 Filed October 6 , 2016 File No. 0-7928 Dear Mr. Porcelain : We have limited our review of your filing to your contacts with countries that have been identified as state sponsors of terrorism, and we have the following comments. Our review with respect to this issue does not preclude further review by the Assistant Director group with respect to other issues. In our comments , we ask you to p rovide us with information so we may better understand your disclosure. Please respond to these comments within ten busine ss days by providing the requested information or advis e us as soon as possible when you will respond. If you do not believe our comments apply to your facts and circumstances, please tell us why in your response. After reviewing your response to these comments, we may have additional comments. Risk Factors, page 18 Our international sales and operations are subject to risks of c onducting business in foreign countries, including applicable laws relating to trade, export controls…, page 24 1. You disclose that for the fiscal years ended July 31, 2016, 2015 and 2014, you have conducted “virtually no” business with states designated as state sponsors of terrorism. Comtech PST Corporation and Comtech Mobile Datacom Corporation’s websites indicate that their products and technology may be exported to U.S.-sanctioned countr ies if specifically permitted by the U.S. Government. Sudan and S yria are designated by the State Department as state sponsors of terrorism, and are subject to U.S. economic sanctions and export controls. Please describe to us the nature and extent of any past, current, and anticipated contacts with Sudan and Syria, wh ether through subsidiaries, affiliates, distributors, resellers, or other direct or indirect arrangements . For instance , Michael D. Porcelain Comtech Telecommunications Corp. December 12 , 2016 Page 2 ZiSat’s website states that ZiSat C -band provides monthly subscription internet, voice and VPN capacity on C band for coverage in Afri ca, that this platform is powered by Comtech Modem and iDirect, and that its coverage area includes Sudan and Syria. You should describe any products, components, technology or services you have provided to Sudan and Syria, directly or indirectly, and any agreements, commercial arrangements, or other contacts with the governments of those countries or entities they control. 2. Please discuss the materiality of any contacts with Sudan or Syria you describe in response to the comment above, and whether those contacts constitute a material investment risk for your security holders. You should address materiality in quantitative terms, including the approximate dollar amounts of any associated rev enues, assets, and liabilities for the last three fiscal years and the subsequent interim period . Also, address materiality in terms of qualitative factors that a reasonable investor would deem important in making an investment decision, including the pot ential impact of corporate activities upon a company’s reputation and share value. Various state and municipal governments, universities, and other investors have proposed or adopted divestment or similar initiatives regarding investment in companies that do business with U.S. - designated state sponsors of terrorism. You should address the potential impact of the investor sentiment evidenced by such actions directed toward companies that have operations associated with S udan or Syria . 3. You state that you c ould face civil and criminal penalties if you are found to have violated U.S. sanctions laws in connection with the matters you have disclosed to OFAC. Please discuss for us the fines and penalties to which you may be subject, and whether the amount of th ose fines and penalties could be material to you. 4. Please tell us whether any of the contacts with Sudan and Syria you discuss in response to the comments above involve dual use products, components or technology. We remind you that the company and its management are responsible for the accuracy and adequacy of their disclosures, notwithstanding any review, comments, action or absence of action by the staff. You may contact Jennifer Hardy, Special Counsel, at (202) 551 -3767 or me at (202) 551 - 3470 if yo u have any questions about the comments or our review. Sincerely, /s/ Cecilia Blye Cecilia Blye, Chief Office of Global Security Risk cc: Larry Spirgel Assistant Director