Quarterly report pursuant to Section 13 or 15(d)

Interim Segment Information

v2.4.0.8
Interim Segment Information
 6 Months Ended
Sep. 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. In the second quarter of fiscal year 2014, the CODM further refined the structure and defined segment profit as gross profit less research and development expenses because of the integration of sales and marketing and general and administrative functions. In order to provide information that is comparable year to year, fiscal 2013 segment information has been restated to reflect the new segment profit measurement and the required reallocation of G&A costs previously allocated to the discontinued CNS segment. 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:
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.
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; copper/fiber connectivity panels; managed Ethernet switches for utility and industrial networks; Ethernet extension devices for providing native Ethernet service handoff in carrier applications; signal conditioning and monitoring products for distributed antenna systems ("DAS"); 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. 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"), multiple system operators ("MSOs"), and public telephone administrations located in North America.
Segment information for the three and six months ended September 30, 2013, and 2012 is set forth below: 

 
 
 
Three months ended September 30, 2013
(in thousands)
 
 
Kentrox
 
Westell
 
Total
Revenue
 
 
$
16,103

 
$
13,857

 
$
29,960

Cost of goods sold
 
 
7,995

 
9,542

 
17,537

Gross profit
 
 
8,108

 
4,315

 
12,423

Gross margin
 
 
50.4
%
 
31.1
%
 
41.5
%
Research and development
 
 
858

 
1,761

 
2,619

Segment profit
 
 
$
7,250

 
$
2,554

 
9,804

Operating expenses:
 
 
 
 
 
 
 
Sales and marketing
 
 
 
 
 
 
3,886

General and administrative
 
 
 
 
 
 
3,226

Intangible amortization
 
 
 
 
 
 
1,229

Restructuring
 
 
 
 
 
 
169

Operating income (loss)
 
 
 
 
 
 
1,294

Other income (expense)
 
 
 
 
 
 
98

Income tax benefit (expense)
 
 
 
 
 
 
(68
)
Net income (loss) from continuing operations
 
 
 
 
 
 
$
1,324

 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended September 30, 2012
(in thousands)
 
 
 
 
Westell
 
Total
Revenue
 
 
 
 
$
9,854

 
$
9,854

Cost of goods sold
 
 
 
 
6,405

 
6,405

Gross profit
 
 
 
 
3,449

 
3,449

Gross margin
 
 
 
 
35.0
%
 
35.0
%
Research and development
 
 
 
 
1,480

 
1,480

Segment profit
 
 
 
 
$
1,969

 
1,969

Operating expenses:
 
 
 
 
 
 


Sales and marketing
 
 
 
 


 
1,831

General and administrative
 
 
 
 


 
2,123

Intangible amortization
 
 
 
 


 
210

Restructuring
 
 
 
 


 
57

Operating income (loss)
 
 
 
 
 
 
(2,252
)
Other income (expense)
 
 
 
 


 
7

Income tax benefit (expense)
 
 
 
 


 
677

Net income (loss) from continuing operations
 
 
 
 
 
 
$
(1,568
)
 
 
 
 
 
 
 
 

 
 
 
Six months ended September 30, 2013
(in thousands)
 
 
Kentrox
 
Westell
 
Total
Revenue
 
 
$
28,107

 
$
24,309

 
$
52,416

Cost of goods sold
 
 
14,780

 
16,437

 
31,217

Gross profit

 
13,327

 
7,872

 
21,199

Gross margin

 
47.4
%
 
32.4
%
 
40.4
%
Research and development
 
 
1,845

 
3,473

 
5,318

Segment profit
 
 
$
11,482

 
$
4,399

 
15,881

Operating expenses:
 
 
 
 
 
 


Sales and marketing
 
 
 
 
 
 
7,304

General and administrative
 
 
 
 
 
 
6,798

Intangible amortization
 
 
 
 
 
 
2,851

Restructuring

 
 
 
 
 
235

Operating income (loss)

 
 
 
 
 
(1,307
)
Other income (expense)
 
 
 
 
 
 
(32
)
Income tax benefit (expense)
 
 
 
 
 
 
(87
)
Net income (loss) from continuing operations
 
 
 
 
 
 
$
(1,426
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Six months ended September 30, 2012
(in thousands)
 
 
 
 
Westell
 
Total
Revenue
 
 
 
 
$
19,272

 
$
19,272

Cost of goods sold
 
 
 
 
13,050

 
13,050

Gross profit
 
 
 
 
6,222

 
6,222

Gross margin
 
 
 

32.3
%
 
32.3
%
Research and development
 
 
 
 
2,997

 
2,997

Segment profit
 
 
 
 
$
3,225

 
3,225

Operating expenses:
 
 
 
 
 
 


Sales and marketing
 
 
 
 
 
 
3,706

General and administrative
 
 
 
 
 
 
4,702

Intangible amortization
 
 
 
 
 
 
418

Restructuring
 
 
 
 
 
 
149

Operating income (loss)
 
 
 
 


 
(5,750
)
Other income (expense)
 
 
 
 
 
 
91

Income tax benefit (expense)
 
 
 
 
 
 
1,924

Net income (loss) from continuing operations
 
 
 
 


 
$
(3,735
)
 
 
 
 
 
 
 
 

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