Quarterly report pursuant to Section 13 or 15(d)

Interim Segment Information

v2.3.0.15
Interim Segment Information
 6 Months Ended
Sep. 30, 2011
Interim Segment Information [Abstract]  
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 completed the CNS asset sale. The Company retained a major CNS customer relationship and contract, and the Company expects to complete the remaining $6.3 million of product shipments under this contract by December 31, 2011. The Company also retained the Homecloud product development program.

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 was allocated 72% and 38% of the costs in the three and six months ended September 30, 2011 and 2010, respectively. Segment operating income (loss) excludes certain unallocated Westell, Inc. G&A costs. Rent associated with resources supporting the assets sold to NETGEAR were not reallocated between the segments and are reflected in unallocated corporate costs.

 

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

 

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

Revenue

    $ 10,327     $ 10,401     $ 10,505     $ —        $ 31,233  

Gross profit

      2,289       3,932       5,111       —          11,332  

Gross margin

      22.2 %     37.8 %     48.7 %      —          36.3 %

Operating expenses:

           

Sales and marketing

      249       1,446       1,860       —          3,555  

Research and development

      649       1,342       678       —          2,669  

General and administrative

      256       604       1,342       905       3,107  

Restructuring

      32       —          —          —          32  

Intangible amortization

      1       137       13       —          151  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Operating expenses

      1,187       3,529       3,893       905       9,514  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Operating income (loss)

    $ 1,102     $ 403     $ 1,218       (905 )      1,818  
  

 

 

    

 

 

    

 

 

      

Other income (expense), net

            448       448  

Interest (expense)

            (5 )      (5 ) 

Income taxes

            1,237       1,237  
        

 

 

    

 

 

  

Net income

          $ 775     $ 3,498  
        

 

 

    

 

 

  

 

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

Revenue

    $ 24,598     $ 16,117     $ 10,353     $ —        $ 51,068  

Gross profit

      4,009       7,326       5,143       —          16,478  

Gross margin

      16.3 %     45.5 %     49.7 %      —          32.3 %

Operating expenses:

           

Sales and marketing

      1,267       1,509       1,895       —          4,671  

Research and development

      1,902       921       641       —          3,464  

General and administrative

      688       455       1,438       668       3,249  

Intangible amortization

      1       134       28       —          163  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Operating expenses

      3,858       3,019       4,002       668       11,547  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Operating income (loss)

    $ 151     $ 4,307     $ 1,141       (668 )      4,931  
  

 

 

    

 

 

    

 

 

      

Other income (expense), net

            (28 )      (28 ) 

Interest (expense)

            (2 )      (2 ) 

Income taxes

            (138 )      (138 ) 
        

 

 

    

 

 

  

Net income (loss)

          $ (836 )    $ 4,763  
        

 

 

    

 

 

  

 

     Six Months Ended September 30, 2011  
(in thousands)    CNS     OSP     CP     Unallocated     Total  

Revenue

    $ 18,683     $ 25,246     $ 21,660     $ —        $ 65,589  

Gross profit

      4,147       10,440       10,581       —          25,168  

Gross margin

      22.2 %     41.4 %     48.9 %      —          38.4 %

Operating expenses:

           

Sales and marketing

      766       2,928       3,758       —          7,452  

Research and development

      1,462       2,606       1,342       —          5,410  

General and administrative

      551       1,422       2,706       1,945       6,624  

Restructuring

      277       —          —          —          277  

Intangible amortization

      2       275       41       —          318  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Operating expenses

      3,058       7,231       7,847       1,945       20,081  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Operating income (loss)

    $ 1,089     $ 3,209     $ 2,734       (1,945 )      5,087  
  

 

 

    

 

 

    

 

 

      

Other income (expense), net

            32,046       32,046  

Interest (expense)

            (5 )      (5 ) 

Income taxes

            (12,499 )      (12,499 ) 
        

 

 

    

 

 

  

Net income

          $ 17,597     $ 24,629  
        

 

 

    

 

 

  

 

     Six Months Ended September 30, 2010  
(in thousands)    CNS     OSP     CP     Unallocated     Total  

Revenue

    $ 39,620     $ 31,841     $ 20,865     $ —        $ 92,326  

Gross profit

      7,599       14,237       10,257       —          32,093  

Gross margin

      19.2 %     44.7 %     49.2 %      —          34.8 %

Operating expenses:

           

Sales and marketing

      2,579       2,950       3,630       —          9,159  

Research and development

      3,876       1,902       1,224       —          7,002  

General and administrative

      1,428       1,093       2,797       1,280       6,598  

Intangible amortization

      2       268        56       —          326  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Operating expenses

      7,885       6,213       7,707       1,280       23,085  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Operating income (loss)

    $ (286 )    $ 8,024     $ 2,550       (1,280 )      9,008  
  

 

 

    

 

 

    

 

 

      

Other income (expense), net

            25       25  

Interest (expense)

            (3 )      (3 ) 

Income taxes

            335       335  
        

 

 

    

 

 

  

Net income (loss)

          $ (923 )    $ 9,365  
        

 

 

    

 

 

  

 

Depreciation and amortization

(in thousands)

    Three months ended
September 30,		      Six months ended
September 30,		  
   2011      2010      2011      2010  

CNS depreciation and amortization

    $ 34       $ 99       $ 56       $ 298   

OSP depreciation and amortization

      240         193         457         427   

CP depreciation and amortization

      323         353         678         702   
  

 

 

     

 

 

     

 

 

     

 

 

  

Total depreciation and amortization

    $ 597       $ 645       $ 1,191       $ 1,427   
  

 

 

     

 

 

     

 

 

     

 

 

  

 

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)

    September 30,
2011		      March 31,
2011		  

Combined CNS and OSP segments assets

    $ 78,596      $ 104,268  

ConferencePlus services assets

      9,790        10,221  
  

 

 

     

 

 

  

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

    $ 88,386      $ 114,489