Annual report pursuant to Section 13 and 15(d)

Segment Information

v2.4.0.8
Segment Information
 12 Months Ended
Mar. 31, 2014
Segment Reporting [Abstract]  
Segment Information
Segment and Related Information:
Segment information is presented in accordance with a “management approach,” which designates the internal reporting used by the chief operating decision-maker (CODM) for making decisions and assessing performance as the source of the Company's reportable segments. Westell’s Chief Executive Officer is the CODM. In 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. 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 and 2012 segment information has been restated to reflect the new segment profit measurement and the required reallocation of costs previously allocated to the discontinued CNS segment.
The Company’s three 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 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.
CSI: The Company's CSI segment designs, markets, and distributes products that enable anytime, anywhere in-building wireless connectivity for 3G/4G cellular and public safety coverage. CSI’s suite of products includes high-performance digital repeaters, DAS interface units (DIUs), PIM compliant system components and antennas, as well as E911 and location-based enhancement solutions for in-building wireless DAS networks. CSI’s repeaters and system components have been implemented in thousands of solutions throughout the U.S., Canada, Mexico, and Europe.
Segment information for the fiscal years ended March 31, 2014, 2013 and 2012, is set forth below:
 
Fiscal Year Ended March 31, 2014
(in thousands)
CSI
 
Kentrox
 
Westell
 
Total
Revenue
$
3,676

 
$
46,174

 
$
52,223

 
$
102,073

Gross profit
1,364

 
23,517

 
17,077

 
41,958

Gross margin
37.1
%
 
50.9
%
 
32.7
%
 
41.1
%
Research & development
625

 
3,778

 
6,936

 
11,339

Segment profit
$
739

 
$
19,739

 
$
10,141

 
30,619

Operating expenses:
 
 
 
 
 
 
 
Sales & marketing
 
 
 
 
 
 
14,663

General & administrative
 
 
 
 
 
 
14,027

Intangible amortization
 
 
 
 
 
 
4,908

Restructuring
 
 
 
 
 
 
335

Operating income (loss)
 
 
 
 
 
 
(3,314
)
Other income (expense), net
 
 
 
 
 
 
(56
)
Income tax (expense) benefit
 
 
 
 
 
 
8,782

Net income (loss) from continuing operations
 
 
 
 
 
 
$
5,412

 
 
 
 
 
 
 
 
 
 
 
 
 
Fiscal Year Ended March 31, 2013
(in thousands)
 
 
 
 
Westell
 
Total
Revenue
 
 
 
 
$
38,808

 
$
38,808

Gross profit
 
 
 
 
13,325

 
13,325

Gross margin
 
 
 
 
34.3
%
 
34.3
%
Research & development
 
 
 
 
5,928

 
5,928

Segment profit
 
 
 
 
$
7,397

 
7,397

Operating expenses:
 
 
 
 
 
 


Sales & marketing
 
 
 
 
 
 
7,492

General & administrative
 
 
 
 
 
 
9,310

Intangible amortization
 
 
 
 
 
 
887

Restructuring
 
 
 
 
 
 
149

Goodwill impairment
 
 
 
 
 
 
2,884

Operating income (loss)
 
 
 
 
 
 
(13,325
)
Other income (expense), net
 
 
 
 
 
 
175

Income tax (expense) benefit
 
 
 
 
 
 
(29,392
)
Net income (loss) from continuing operations
 
 
 
 
 
 
$
(42,542
)
 
Fiscal Year Ended March 31, 2012
(in thousands)
Westell
 
Total
Revenue
$
43,629

 
$
43,629

Gross profit
17,172

 
17,172

Gross margin
39.4
%
 
39.4
%
Research & development
5,460

 
5,460

Segment profit
$
11,712

 
11,712

Operating expenses:
 
 
 
Sales & marketing
 
 
5,843

General & administrative
 
 
6,996

Intangible amortization
 
 
544

Restructuring
 
 
276

Operating income (loss)
 
 
(1,947
)
Other income (expense), net
 
 
331

Income tax (expense) benefit
 
 
686

Net income (loss) from continuing operations
 
 
$
(930
)
 
Asset information, although available, is not reported to or used by the CODM.
Enterprise-wide and Geographic Information
More than 90% of the Company’s revenues were generated in the United States in fiscal years 2014, 2013 and 2012. More than 90% of the Company's long-lived assets are located in the United States.
Significant Customers and Concentration of Credit
The Company is dependent on certain major companies operating in telecommunications markets that represent more than 10% of the total revenue. Sales to major customers and successor companies that exceed 10% of total revenue are as follows:
 
Fiscal Year Ended March 31,
 
2014
 
2013
 
2012
Verizon
23.9
%
 
17.1
%
 
17.6
%
Telamon
30.3
%
 
12.4
%
 
14.3
%
AT&T
8.8
%
 
8.7
%
 
10.4
%
Time Warner Cable
2.3
%
 
10.4
%
 
3.1
%

Major companies operating in telecommunications markets comprise a significant portion of the Company’s trade receivables. Receivables from major customers that exceed 10% of total accounts receivable balance are as follows:
 
Fiscal Year Ended March 31,
 
2014
 
2013
Verizon
30.6
%
 
11.4
%
Telamon
8.5
%
 
12.6
%
AT&T
16.7
%
 
5.5
%
Time Warner Cable
1.4
%
 
19.8
%