Quarterly report pursuant to Section 13 or 15(d)

Interim Segment Information (Notes)

v3.5.0.2
Interim Segment Information (Notes)
 3 Months Ended
Jun. 30, 2016
Segment Reporting [Abstract]  
Interim Segment Information
Interim Segment Information
Segment information is presented in accordance with a “management approach", which designates the internal reporting used by the chief operating decision-maker (CODM) for making decisions and assessing performance as the source of the Company's reportable segments. Westell’s Chief Executive Officer is the CODM. In the first quarter of fiscal 2017, the Company re-aligned the business and revised its segments into three reportable operating segments. The CODM continues to define segment profit as gross profit less research and development expenses. In order to provide information that is comparable year to year, fiscal year 2016 segment information has been restated to reflect the new reporting structure. The accounting policies of the segments are the same as those for Westell Technologies, Inc. described in the summary of significant accounting policies.
The Company’s three reportable segments are as follows:
In-Building Wireless (IBW) Segment
The IBW segment solutions include distributed antenna systems (DAS) conditioners, high-performance digital repeaters and bi-directional amplifiers (BDAs), and system components and antennas, all used by wireless service providers and neutral-host operators to fine tune radio frequency (RF) signals that helps extend coverage to areas not served well or at all by traditional cell sites.
Intelligent Site Management and Services (ISMS) Segment
The ISMS segment solutions, which were formally part of the Communications Solutions Group (CSG) segment, are as follows:
• Intelligent Site Management (ISM) solutions include a suite of remote monitoring and control devices which, when combined with the Company's Optima management software system, provide comprehensive machine-to-machine (M2M) communications that enable operators to remotely monitor, manage, and control site infrastructure and support systems.
• Service offerings include support agreements and deployment services. While the Company currently provides technical support and deployment services primarily for the ISM solution, it is Westell’s intent going-forward to offer these and other services across the entire Westell product portfolio, and potentially other non-Westell solutions.
Communications Network Solutions (CNS) Segment
The CNS segment solutions, which were also formally part of the Communications Solutions Group (CSG) segment, are as follows:
• Outside Plant (OSP) solutions, which are sold to wireline and wireless service providers as well as industrial network operators, include a broad range of offerings, including integrated cabinets, power distribution products, copper and fiber network connectivity panels, and synchronous optical networks/time division multiplexing (SONET/TDM) network interface units.
• Cell Site Optimization (CSO) solutions include tower mounted amplifiers (TMAs), small outdoor-hardened units mounted next to antennas on cell towers, enabling wireless service providers to improve the overall performance of a cell site, including increasing data throughput and reducing dropped connections.
Segment information for the three months ended June 30, 2016, and 2015 is set forth below: 
 
 
Three months ended June 30, 2016
 
(in thousands)
 
IBW
 
ISMS
 
CNS
 
Total
 
Revenue
 
$
6,121

 
$
4,139

 
$
4,556

 
$
14,816

 
Cost of revenue
 
5,127

(1) 
2,120

 
3,004

 
10,251

(1) 
Gross profit
 
994

 
2,019

 
1,552

 
4,565

 
Gross margin
 
16.2
%
 
48.8
%
 
34.1
%
 
30.8
%
 
Research and development
 
2,364

 
1,294

 
619

 
4,277

 
Segment profit (loss)
 
$
(1,370
)
 
$
725

 
$
933

 
288

 
Operating expenses:
 
 
 
 
 
 
 
 
 
Sales and marketing
 
 
 
 
 
 
 
3,381

 
General and administrative
 
 
 
 
 
 
 
2,345

 
Intangible amortization
 
 
 
 
 
 
 
1,200

 
Restructuring
 
 
 
 
 
 
 
(36
)
 
Long-lived assets impairment
 
 
 
 
 
 
 
1,181

 
Operating profit (loss)
 
 
 
 
 
 
 
(7,783
)
 
Other income (expense), net
 
 
 
 
 
 
 
17

 
Income tax benefit (expense)
 
 
 
 
 
 
 
(2
)
 
Net income (loss) from continuing operations
 
 
 
 
 
 
 
$
(7,768
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended June 30, 2015
 
(in thousands)
 
IBW
 
ISMS
 
CNS
 
Total
 
Revenue
 
$
9,070

 
$
4,505

 
$
7,995

 
$
21,570

 
Cost of revenue
 
5,069

 
2,294

 
5,778

 
13,141

 
Gross profit
 
4,001

 
2,211

 
2,217

 
8,429

 
Gross margin
 
44.1
%

49.1
%
 
27.7
%
 
39.1
%
 
Research and development
 
3,162

 
1,281

 
643

 
5,086

 
Segment profit (loss)
 
$
839

 
$
930

 
$
1,574

 
3,343

 
Operating expenses:
 
 
 
 
 
 
 
 
 
Sales and marketing
 
 
 
 
 
 
 
3,196

 
General and administrative
 
 
 
 
 
 
 
2,969

 
Intangible amortization
 
 
 
 
 
 
 
1,399

 
Restructuring
 
 
 
 
 
 
 
17

 
Long-lived assets impairment
 
 
 
 
 
 
 
—

 
Operating profit (loss)
 
 
 
 
 
 
 
(4,238
)
 
Other income (expense), net
 
 
 
 
 
 
 
38

 
Income tax benefit (expense)
 
 
 
 
 
 
 
62

 
Net income (loss) from continuing operations
 
 
 
 
 
 
 
$
(4,138
)
 


(1) The three months ended June 30, 2016, includes E&O expense for ClearLink DAS inventory and pipeline inventory. See Note 14, Subsequent Event.

Segment asset information is not reported to or used by the CODM.