Quarterly report pursuant to Section 13 or 15(d)

Interim Segment Information

v2.4.0.8
Interim Segment Information
 3 Months Ended
Jun. 30, 2013
Segment Reporting [Abstract]  
Interim Segment Information
Interim Segment Information
Westell’s Chief Executive Officer is the chief operating decision maker (“CODM”). In the first quarter of fiscal 2014, the Company revised its segment reporting structure to realign internal reporting as a result of the Kentrox acquisition and the discontinued operations of the CNS segment. Segment operating income (loss) excludes unallocated Westell, Inc. general & administrative expenses (“G&A”). Unallocated costs include a portion of executive costs plus costs for corporate development, corporate governance, compliance and unutilized office space. In order to provide information that is comparable year to year, fiscal 2013 segment information has been restated to reflect the required reallocation of G&A costs previously allocated to the discontinued CNS segment. 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’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 time-division multiplexing/synchronous optical networks ("TDM/SONET") 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 carrier applications; wireless signal conditioning and monitoring products for cellular networks; tower-mounted amplifiers; multi-carrier power amplifier boosters; cell site antenna-sharing products for cell site optimization; and custom systems integration (“CSI”) services. Legacy products are sold primarily into wireline markets, but the Company also is actively working to increase revenues from wireless telecommunications products. The Westell segment customer base is highly concentrated and comprised primarily of major telecommunications service providers including local exchange carriers ("LECs") (“telephone companies”), independent operating domestic local exchange carriers ("IOCs"), and multiple system operators ("MSOs") public telephone administrations located in North America.
Kentrox: The Company's Kentrox segment designs, distributes, markets and services intelligent site management solutions, which provide comprehensive monitoring, management and control of a broad range of devices.  The Company's Kentrox products provide a suite of remote monitoring and control devices, which when combined with its Optima management system, provide a comprehensive, bi-directional site management solution.  The Kentrox solution addresses customer needs such as power management (generator management, battery, fuel, and rectifier monitoring, tenant power metering, etc.), environmental management (HVAC monitoring, energy monitoring and control, aircraft warning light management, and environmental monitoring), security management (access management, asset tampering, and surveillance), and communications management (microwave and distributed antenna systems management).  Customers include major wireless and fixed-line telecommunications carriers, tower providers, cable and broadband network providers, utility companies, and enterprises.  Kentrox provides solutions to customers in North and South America, Australia, Africa, and Europe.
 



Segment information for the three months ended June 30, 2013 and 2012 is set forth below: 
 
Three months ended June 30, 2013
(in thousands)
Westell
 
Kentrox
 
Unallocated
 
Total
Revenue
$
10,452

 
$
12,004

 
$
—

 
$
22,456

Cost of goods sold
6,895

 
6,785

 
—

 
13,680

Gross profit
3,557

 
5,219

 
—

 
8,776

Gross margin
34.0
%
 
43.5
%
 
—

 
39.1
%
Operating expenses:
 
 
 
 
 
 
 
Sales and marketing
2,086

 
1,332

 
—

 
3,418

Research and development
1,712

 
987

 
—

 
2,699

General and administrative
1,097

 
931

 
1,544

 
3,572

Restructuring
—

 
66

 
—

 
66

Intangible amortization
234

 
1,388

 
—

 
1,622

Total operating expenses
5,129

 
4,704

 
1,544

 
11,377

Operating income (loss)
$
(1,572
)
 
$
515

 
(1,544
)
 
(2,601
)
Other income (expense)
 
 
 
 
(130
)
 
(130
)
Income (loss) before income taxes and discontinued operations
 
 
 
 
(1,674
)
 
(2,731
)
Income tax benefit (expense)
 
 
 
 
(19
)
 
(19
)
Net income (loss) from continuing operations
 
 
 
 
$
(1,693
)
 
$
(2,750
)
 
 
 
 
 
 
 
 
 
 
 
Three months ended June 30, 2012
(in thousands)
 
 
Westell
 
Unallocated
 
Total
Revenue
 
 
$
9,418

 
$
—

 
$
9,418

Cost of goods sold
 
 
6,645

 
—

 
6,645

Gross profit
 
 
2,773

 
—

 
2,773

Gross margin
 
 
29.4
%
 
—

 
29.4
%
Operating expenses:
 
 
 
 
 
 
 
Sales and marketing
 
 
1,875

 
—

 
1,875

Research and development
 
 
1,517

 
—

 
1,517

General and administrative
 
 
1,248

 
1,331

 
2,579

Restructuring
 
 
92

 
—

 
92

Intangible amortization
 
 
208

 
—

 
208

Total operating expenses
 
 
4,940

 
1,331

 
6,271

Operating income (loss)
 
 
$
(2,167
)
 
(1,331
)
 
(3,498
)
Other income (expense)
 
 
 
 
84

 
84

Income (loss) before income taxes and discontinued operations
 
 
 
 
(1,247
)
 
(3,414
)
Income tax benefit (expense)
 
 
 
 
1,247

 
1,247

Net income (loss) from continuing operations
 
 
 
 
$
—

 
$
(2,167
)
 
 
 
 
 
 
 
 
Depreciation and amortization
Three months ended June 30,
 
 
 
 
(in thousands)
2013
 
2012
 
 
 
 
Westell segment depreciation and amortization
$
365

 
$
329

 
 
 
 
Kentrox segment depreciation and amortization
1,410

 
—

 
 
 
 
Total depreciation and amortization
$
1,775

 
$
329

 
 
 
 


Asset information, although available, is not reported to or used by the CODM.