Quarterly report pursuant to Section 13 or 15(d)

Interim Segment Information

v2.4.0.8
Interim Segment Information
 9 Months Ended
Dec. 31, 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 nine months ended December 31, 2013, and 2012 is set forth below: 

 
 
 
Three months ended December 31, 2013
(in thousands)
 
 
Kentrox
 
Westell
 
Total
Revenue
 
 
$
14,705

 
$
10,531

 
$
25,236

Cost of goods sold
 
 
5,906

 
7,095

 
13,001

Gross profit
 
 
8,799

 
3,436

 
12,235

Gross margin
 
 
59.8
%
 
32.6
%
 
48.5
%
Research and development
 
 
912

 
1,615

 
2,527

Segment profit
 
 
$
7,887

 
$
1,821

 
9,708

Operating expenses:
 
 
 
 
 
 
 
Sales and marketing
 
 
 
 
 
 
3,508

General and administrative
 
 
 
 
 
 
3,402

Restructuring
 
 
 
 
 
 
38

Intangible amortization
 
 
 
 
 
 
737

Operating income (loss)
 
 
 
 
 
 
2,023

Other income (expense)
 
 
 
 
 
 
(31
)
Income tax benefit (expense)
 
 
 
 
 
 
(38
)
Net income (loss) from continuing operations
 
 
 
 
 
 
$
1,954

 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended December 31, 2012
(in thousands)
 
 
 
 
Westell
 
Total
Revenue
 
 
 
 
$
8,873

 
$
8,873

Cost of goods sold
 
 
 
 
5,783

 
5,783

Gross profit
 
 
 
 
3,090

 
3,090

Gross margin
 
 
 
 
34.8
%
 
34.8
%
Research and development
 
 
 
 
1,375

 
1,375

Segment profit
 
 
 
 
$
1,715

 
1,715

Operating expenses:
 
 
 
 
 
 


Sales and marketing
 
 
 
 


 
1,862

General and administrative
 
 
 
 


 
2,135

Restructuring
 
 
 
 
 
 
—

Intangible amortization
 
 
 
 


 
234

Operating income (loss)
 
 
 
 
 
 
(2,516
)
Other income (expense)
 
 
 
 


 
43

Income tax benefit (expense)
 
 
 
 


 
1,295

Net income (loss) from continuing operations
 
 
 
 
 
 
$
(1,178
)
 
 
 
 
 
 
 
 

 
 
 
Nine months ended December 31, 2013
(in thousands)
 
 
Kentrox
 
Westell
 
Total
Revenue
 
 
$
42,812

 
$
34,840

 
$
77,652

Cost of goods sold
 
 
20,686

 
23,532

 
44,218

Gross profit

 
22,126

 
11,308

 
33,434

Gross margin

 
51.7
%
 
32.5
%
 
43.1
%
Research and development
 
 
2,757

 
5,088

 
7,845

Segment profit
 
 
$
19,369

 
$
6,220

 
25,589

Operating expenses:
 
 
 
 
 
 


Sales and marketing
 
 
 
 
 
 
10,812

General and administrative
 
 
 
 
 
 
10,200

Restructuring
 
 
 
 
 
 
273

Intangible amortization
 
 
 
 
 
 
3,588

Operating income (loss)

 
 
 
 
 
716

Other income (expense)
 
 
 
 
 
 
(63
)
Income tax benefit (expense)
 
 
 
 
 
 
(125
)
Net income (loss) from continuing operations
 
 
 
 
 
 
$
528

 
 
 
 
 
 
 
 
 
 
 
 
 
Nine months ended December 31, 2012
(in thousands)
 
 
 
 
Westell
 
Total
Revenue
 
 
 
 
$
28,145

 
$
28,145

Cost of goods sold
 
 
 
 
18,833

 
18,833

Gross profit
 
 
 
 
9,312

 
9,312

Gross margin
 
 
 

33.1
%
 
33.1
%
Research and development
 
 
 
 
4,372

 
4,372

Segment profit
 
 
 
 
$
4,940

 
4,940

Operating expenses:
 
 
 
 
 
 


Sales and marketing
 
 
 
 
 
 
5,568

General and administrative
 
 
 
 
 
 
6,837

Restructuring
 
 
 
 
 
 
149

Intangible amortization
 
 
 
 
 
 
652

Operating income (loss)
 
 
 
 


 
(8,266
)
Other income (expense)
 
 
 
 
 
 
134

Income tax benefit (expense)
 
 
 
 
 
 
3,219

Net income (loss) from continuing operations
 
 
 
 


 
$
(4,913
)
 
 
 
 
 
 
 
 

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