Quarterly report pursuant to Section 13 or 15(d)

Interim Segment Information

 v2.3.0.11
Interim Segment Information
 3 Months Ended
Jun. 30, 2011
Interim Segment Information  
Interim Segment Information

Note 4. Interim Segment Information

CNS: The Company's CNS family of broadband products enables high-speed routing and networking of voice, data, video, and other advanced services in the home. The products allow service providers to deliver services, content, and applications over existing copper, fiber, coax, and wireless infrastructures. Westell CNS products are typically installed in consumer residences or small businesses as a key component of broadband service packages. During the first quarter of fiscal year 2012, the Company sold certain assets and liabilities of the CNS segment to NETGEAR.

OSP: The Company's Outside Plant Systems ("OSP") product family consists of next generation outdoor cabinets, enclosures, power distribution products, edge connectors (fiber, Ethernet and coax), remote monitoring devices, and DS1 and DS3 transmission plugs. These solutions are optimized for cellular backhaul, service delivery to business enterprise and smart grid applications. The Company's OSP segment also provides a value-added customized systems integration service, offering its customers a single source for complete turnkey solutions, reducing time-to-market and expenses incurred through third-party contractors and eliminating the need to design, assemble and test on the job site. Target customers include wireline service providers, wireless service providers, multi-service operators, utility providers and OEMs worldwide. The power distribution and remote monitoring products are designed and provided through the Company's Noran Tel subsidiary located in Regina, Saskatchewan, Canada.

 

ConferencePlus: The Company's subsidiary Conference Plus, Inc. provides audio, web and video conferencing services. Businesses and individuals use these services to hold audio, web and video conferences with multiple participants. ConferencePlus sells its services directly to customers, including Fortune 1000 companies, and also serves customers indirectly through its private-label reseller program.

Performance of these segments is primarily evaluated utilizing revenue and segment operating income (loss). 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 defines segment operating income (loss) as gross profit less direct expenses, including direct expenses from research and development expenses, sales and marketing expenses, and general and administrative ("G&A"). Certain operating expenses are allocated between the CNS and OSP segments, including rent, information technology costs, and accounting. The CNS segment received 28% and 62% of these resource costs and the OSP segment is allocated 72% and 38% of the costs in the first three months of fiscal years 2012 and 2011, respectively. Segment operating income (loss) excludes certain unallocated Westell, Inc. G&A costs.

Segment information for the three months ended June 30, 2011 and 2010 is set forth below:

 

     Three Months Ended June 30, 2011  
(in thousands)    CNS     OSP     CP     Unallocated     Total  

Revenue

    $ 8,356     $ 14,845     $ 11,155     $ —        $ 34,356  

Gross profit

      1,858       6,508       5,470       —          13,836  

Gross margin

      22.2 %     43.8 %     49.0 %        40.3 %

Operating expenses:

           

Sales & marketing

      517       1,482       1,898       —          3,897  

Research & development

      813       1,264       664       —          2,741  

General & administrative

      295       818       1,364       1,040       3,517  

Intangible amortization

      1       138       28       —          167  

Restructuring

      245       —          —          —          245  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Operating expenses

      1,871       3,702        3,954       1,040       10,567  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Operating income (loss)

      (13 )      2,806       1,516       (1,040 )      3,269  

Other income, net

      —          —          —          31,598       31,598  

Interest (expense)

      —          —          —          (0 )      (0 ) 

Income taxes

      —          —          —          (13,736 )      (13,736 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net income (loss)

    $ (13 )    $ 2,806     $ 1,516     $ 16,822     $ 21,131  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     Three Months Ended June 30, 2010  
(in thousands)    CNS     OSP     CP     Unallocated     Total  

Revenue

    $ 15,022     $ 15,724     $ 10,512     $ —        $ 41,258  

Gross profit

      3,590       6,911       5,114       —          15,615  

Gross margin

      23.9 %     44.0 %     48.6 %        37.8 %

Operating expenses:

           

Sales & marketing

      1,312       1,441       1,735       —          4,488  

Research & development

      1,974       981       583       —          3,538  

General & administrative

      740       638       1,359       612       3,349  

Intangible amortization

      1       134       28       —          163  

Restructuring

      —          —          —          —          —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Operating expenses

      4,027       3,194       3,705       612       11,538  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Operating income (loss)

      (437 )      3,717       1,409       (612 )      4,077  

Other income, net

      —          —          —          53       53  

Interest (expense)

      —          —          —          (1 )      (1 ) 

Income taxes

      —          —          —          473       473  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net income (loss)

    $ (437 )    $ 3,717     $ 1,409     $ (87 )    $ 4,602  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

Depreciation and amortization

(in thousands)

    Three Months Ended June 30,  
   2011      2010  

CNS depreciation and amortization

    $ 22      $ 199  

OSP depreciation and amortization

      217        234  

ConferencePlus depreciation and amortization

      355        349  
                 

Total depreciation and amortization

    $ 594      $ 782  
                 

The CNS and OSP segments use many of the same assets. For internal reporting purposes, the Company does not allocate assets between the CNS and OSP segments and therefore no asset or capital expenditure information by each of these segments is available. Combined CNS and OSP segment information is provided below.

 

Assets, excluding cash and cash equivalents, restricted cash, and short-term investments

(in thousands)

    June 30,
2011 		     March 31,
2011 		 

Combined equipment segments assets

    $ 80,845      $ 104,268  

ConferencePlus services assets

      10,782        10,221  
                 

Total assets, excluding cash and cash equivalents, restricted cash, and short-term investments

    $ 91,627      $ 114,489