Quarterly report pursuant to Section 13 or 15(d)

Interim Segment Information

v2.4.0.6
Interim Segment Information
 3 Months Ended
Jun. 30, 2012
Interim Segment Information [Abstract]  
Interim Segment Information
Note 4. Interim Segment Information

The Company’s two reportable segments are as follows:

Westell: The Company’s Westell product family consists of indoor and outdoor cabinets, enclosures and mountings; power distribution products; network interface devices (“NIDs”) for TDM/SONET networks and service demarcation; span powering equipment; remote monitoring devices; copper/fiber connectivity panels; managed Ethernet switches for utility and industrial networks; Ethernet extension devices for providing native Ethernet service handoff in cellular backhaul applications; wireless signal conditioning and monitoring products for cellular networks; tower-mounted amplifiers; multi-carrier power amplifier boosters; and cell site antenna-sharing products for cell site optimization; and custom systems integration (“CSI”) services. Traditional products are sold primarily into wireline markets, but the Company also is actively moving to generate revenues from wireless telecommunications products. The power distribution and remote monitoring products are designed through the Company’s Noran Tel subsidiary located in Regina, Saskatchewan, Canada. The Company is relocating the majority of the Canadian operations to its location in Aurora, Illinois. The remaining operations in Canada will be focused on product development and sales. The Company expects to complete this transition during the second quarter of fiscal year 2013.

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. 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. The Company completed the remaining contractual product shipments under this contract in December 2011. In fiscal year 2013, the Company continues to provide warranty services under its contractual obligations and to sell ancillary products and software on a project basis to the retained customer. The Company expects this activity to abate going forward. The Company also retained the Homecloud product development program, which continues. The Homecloud product family which is under development aims to provide a new suite of services into the home, with an initial focus on media and information management, sharing and delivery and prospective functionality applicable to enhanced security; home control; and network management.

Management evaluates performance of these segments primarily by 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 expenses, including direct expenses from research and development expenses, sales and marketing expenses, and general and administrative (“G&A”). In fiscal year 2012, certain operating expenses were allocated between the Westell and CNS segments, including rent, information technology costs, and accounting. The Westell segment was allocated 72% of these resource costs and the CNS segment was allocated 28% of the costs in fiscal year 2012. Segment operating income (loss) excludes certain unallocated G&A costs. Unallocated costs include a portion of executive costs plus costs for corporate development, corporate governance, compliance and unutilized office space. When combined with the operating segments and after elimination of intersegment expenses, these costs total amounts reported in the Condensed Consolidated Financial Statements.

Segment information for the three months ended June 30, 2012 and 2011, excluding the results of the discontinued ConferencePlus segment, is set forth below:

 

                                 
    Three Months Ended June 30, 2012  
(in thousands)   Westell     CNS     Unallocated     Total  

Revenue

   $ 9,418     $ 1,112     $ —       $ 10,530  

Gross profit

     2,773       1,023       —         3,796  

Gross margin

     29.4 %     92.0 %             36.0 %

Operating expenses:

                                

Sales and marketing

     1,875       9       —         1,884  

Research and development

     1,449       378       —         1,827  

General and administrative

     1,248       2       1,331       2,581  

Restructuring

     92       —         —         92  

Intangible amortization

     208       1       —         209  
   

 

 

    

 

 

    

 

 

    

 

 

  

Total operating expenses

     4,872       390       1,331       6,593  
   

 

 

    

 

 

    

 

 

    

 

 

  

Operating income (loss) from continuing operations

   $ (2,099 )    $ 633       (1,331 )      (2,797 ) 
   

 

 

    

 

 

                  

Other income (expense)

                     84       84  

Income taxes

                     973       973  
                   

 

 

    

 

 

  

Net income (loss) from continuing operations

                   $ (274 )    $   (1,740 ) 
                   

 

 

    

 

 

  

 

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

Revenue

   $ 14,845     $ 8,356     $ —       $ 23,201  

Gross profit

     6,508       1,858       —         8,366  

Gross margin

     43.8 %     22.2 %             36.1 %

Operating expenses:

                                

Sales and marketing

     1,482       517       —         1,999  

Research and development

     1,264       813       —         2,077  

General and administrative

     818       295       1,040       2,153  

Restructuring

     —         245       —         245  

Intangible amortization

     138       1       —         139  
   

 

 

    

 

 

    

 

 

    

 

 

  

Total operating expenses

     3,702       1,871       1,040       6,613  
   

 

 

    

 

 

    

 

 

    

 

 

  

Operating income (loss) from continuing operations

   $ 2,806     $ (13 )      (1,040 )      1,753  
   

 

 

    

 

 

                  

Gain on CNS asset sale

                     31,608       31,608  

Other income (expense)

                     18       18  

Income taxes

                     (13,228 )      (13,228 ) 
                   

 

 

    

 

 

  

Net income (loss) from continuing operations

                   $ 17,358     $ 20,151