Quarterly report pursuant to Section 13 or 15(d)

Interim Segment Information (Notes)

v3.5.0.2
Interim Segment Information (Notes)
 6 Months Ended
Sep. 30, 2016
Segment Reporting [Abstract]  
Interim Segment Information
Interim Segment 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 the first quarter of fiscal 2017, the Company re-aligned the business and revised its segments into three reportable operating segments. The CODM continues to define segment profit as gross profit less research and development expenses. In order to provide information that is comparable year to year, fiscal year 2016 segment information has been restated to reflect the new reporting structure. The accounting policies of the segments are the same as those for Westell Technologies, Inc. described in the summary of significant accounting policies included in the Company's Annual Report on Form 10-K for year ended March 31, 2016.
The Company’s three reportable segments are as follows:
In-Building Wireless (IBW) Segment
The IBW segment solutions include distributed antenna systems (DAS) conditioners, high-performance digital repeaters and bi-directional amplifiers (BDAs), and system components and antennas, all used by wireless service providers and neutral-host operators to fine tune radio frequency (RF) signals that helps extend coverage to areas not served well or at all by traditional cell sites.
Intelligent Site Management and Services (ISMS) Segment
The ISMS segment solutions, which were formerly part of the Communications Solutions Group (CSG) segment, are as follows:
• Intelligent Site Management (ISM) solutions include a suite of remote monitoring and control devices which, when combined with the Company's Optima management software system, provide comprehensive machine-to-machine (M2M) communications that enable operators to remotely monitor, manage, and control site infrastructure and support systems.
• Service offerings include support agreements and deployment services. While the Company currently provides technical support and deployment services primarily for the ISM solution.
Communications Network Solutions (CNS) Segment
The CNS segment solutions, which were also formerly part of the Communications Solutions Group (CSG) segment, are as follows:
• Outside Plant (OSP) solutions, which are sold to wireline and wireless service providers as well as industrial network operators, include a broad range of offerings, including integrated cabinets, power distribution products, copper and fiber network connectivity panels, and synchronous optical networks/time division multiplexing (SONET/TDM) network interface units.
• Cell Site Optimization (CSO) solutions include tower mounted amplifiers (TMAs), small outdoor-hardened units mounted next to antennas on cell towers, enabling wireless service providers to improve the overall performance of a cell site, including increasing data throughput and reducing dropped connections.
Segment information for the six months ended September 30, 2016, and 2015, is set forth below: 
 
 
Three months ended September 30, 2016
 
(in thousands)
 
IBW
 
ISMS
 
CNS
 
Total
 
Revenue
 
$
6,644

 
$
5,109

 
$
6,027

 
$
17,780

 
Cost of revenue
 
4,411

(1) 
2,702

 
4,300

 
11,413

 
Gross profit
 
2,233

 
2,407

 
1,727

 
6,367

 
Gross margin
 
33.6
%
 
47.1
%
 
28.7
%
 
35.8
%
 
Research and development
 
1,594

 
1,237

 
496

 
3,327

 
Segment profit (loss)
 
$
639

 
$
1,170

 
$
1,231

 
3,040

 
Operating expenses:
 
 
 
 
 
 
 
 
 
Sales and marketing
 
 
 
 
 
 
 
2,896

 
General and administrative
 
 
 
 
 
 
 
2,218

 
Intangible amortization
 
 
 
 
 
 
 
1,201

 
Restructuring
 
 
 
 
 
 
 
2,601

 
Operating profit (loss)
 
 
 
 
 
 
 
(5,876
)
 
Other income (expense), net
 
 
 
 
 
 
 
74

 
Income tax benefit (expense)
 
 
 
 
 
 
 
(8
)
 
Net income (loss) from continuing operations
 
 
 
 
 
 
 
$
(5,810
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended September 30, 2015
 
(in thousands)
 
IBW
 
ISMS
 
CNS
 
Total
 
Revenue
 
$
10,819

 
$
5,886

 
$
8,809

 
$
25,514

 
Cost of revenue
 
6,272

 
2,722

 
6,289

 
15,283

 
Gross profit
 
4,547

 
3,164

 
2,520

 
10,231

 
Gross margin
 
42.0
%
 
53.8
%
 
28.6
%
 
40.1
%
 
Research and development
 
2,775

 
1,302

 
548

 
4,625

 
Segment profit (loss)
 
$
1,772

 
$
1,862

 
$
1,972

 
5,606

 
Operating expenses:
 
 
 
 
 
 
 
 
 
Sales and marketing
 
 
 
 
 
 
 
4,113

 
General and administrative
 
 
 
 
 
 
 
2,493

 
Intangible amortization
 
 
 
 
 
 
 
1,432

 
Operating profit (loss)
 
 
 
 
 
 
 
(2,432
)
 
Other income (expense), net
 
 
 
 
 
 
 
(61
)
 
Income tax benefit (expense)
 
 
 
 
 
 
 
20

 
Net income (loss) from continuing operations
 
 
 
 
 
 
 
$
(2,473
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Six months ended September 30, 2016
 
(in thousands)
 
IBW
 
ISMS
 
CNS
 
Total
 
Revenue
 
$
12,765

 
$
9,248

 
$
10,583

 
$
32,596

 
Cost of revenue
 
9,538

(1) 
4,822

 
7,304

 
21,664

(1) 
Gross profit
 
3,227

 
4,426

 
3,279

 
10,932

 
Gross margin
 
25.3
%
 
47.9
%
 
31.0
%
 
33.5
%
 
Research and development
 
3,958

 
2,531

 
1,115

 
7,604

 
Segment profit (loss)
 
$
(731
)
 
$
1,895

 
$
2,164

 
3,328

 
Operating expenses:
 
 
 
 
 
 
 
 
 
Sales and marketing
 
 
 
 
 
 
 
6,277

 
General and administrative
 
 
 
 
 
 
 
4,563

 
Intangible amortization
 
 
 
 
 
 
 
2,401

 
Restructuring
 
 
 
 
 
 
 
2,565

 
Long-lived assets impairment
 
 
 
 
 
 
 
1,181

 
Operating profit (loss)
 
 
 
 
 
 
 
(13,659
)
 
Other income (expense), net
 
 
 
 
 
 
 
91

 
Income tax benefit (expense)
 
 
 
 
 
 
 
(10
)
 
Net income (loss) from continuing operations
 
 
 
 
 
 
 
$
(13,578
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Six months ended September 30, 2015
 
(in thousands)
 
IBW
 
ISMS
 
CNS
 
Total
 
Revenue
 
$
19,889

 
$
10,391

 
$
16,804

 
$
47,084

 
Cost of revenue
 
11,341

 
5,016

 
12,067

 
28,424

 
Gross profit
 
8,548

 
5,375

 
4,737

 
18,660

 
Gross margin
 
43.0
%

51.7
%
 
28.2
%
 
39.6
%
 
Research and development
 
5,937

 
2,583

 
1,191

 
9,711

 
Segment profit (loss)
 
$
2,611

 
$
2,792

 
$
3,546

 
8,949

 
Operating expenses:
 
 
 
 
 
 
 
 
 
Sales and marketing
 
 
 
 
 
 
 
7,309

 
General and administrative
 
 
 
 
 
 
 
5,462

 
Intangible amortization
 
 
 
 
 
 
 
2,831

 
Restructuring
 
 
 
 
 
 
 
17

 
Operating profit (loss)
 
 
 
 
 
 
 
(6,670
)
 
Other income (expense), net
 
 
 
 
 
 
 
(23
)
 
Income tax benefit (expense)
 
 
 
 
 
 
 
82

 
Net income (loss) from continuing operations
 
 
 
 
 
 
 
$
(6,611
)
 


(1) The three and six months ended September 30, 2016, includes E&O expense for ClearLink DAS inventory and pipeline inventory. See Note 2, Restructuring Charges.

Segment asset information is not reported to or used by the CODM.