Annual report pursuant to Section 13 and 15(d)

Segment Information

v3.7.0.1
Segment Information
 12 Months Ended
Mar. 31, 2017
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 the first quarter of fiscal year 2017, the Company re-aligned the business and revised its segments into three reportable operating segments. The CODM continues to evaluate segment profit on gross profit less research and development expenses. The accounting policies of the segments are the same as those for Westell Technologies, Inc. described in the summary of significant accounting policies. 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 Company’s three reportable segments are as follows:
In-Building Wireless (IBW) Segment
The IBW segment solutions enable cellular coverage in stadiums, arenas, malls, buildings, and other indoor areas not served well or at all by the existing "macro" outdoor cellular network. For commercial service, the IBW segment solutions include distributed antenna systems (DAS) conditioners and digital repeaters. For the public safety market, the IBW segment solutions include half-watt and two-watt repeaters and a battery backup unit. The Company’s IBW segment also offers ancillary products that consist of passive system components and antennas for both the commercial and public safety markets.
Intelligent Site Management and Services (ISMS) Segment
The ISMS segment solutions, which were formerly part of the Communications Solutions Group (CSG) segment, include a suite of remote units which provide machine-to-machine (M2M) communications that enable operators to remotely monitor, manage, and control site infrastructure and support systems. Remote units can be and often are combined with the Company’s Optima management software system. The Company also offers support agreement services (i.e., maintenance) and deployment services (i.e., installation).
Communications Network Solutions (CNS) Segment
The CNS segment solutions, which were also formerly part of the CSG segment, include a broad range of outdoor network infrastructure offerings consisting of integrated cabinets, power distribution products, copper and fiber connectivity panels, T1 network interface units (NIUs), and tower mounted amplifiers (TMAs).
Segment information for the fiscal years ended March 31, 2017 and 2016, is set forth below:
 
Fiscal Year Ended March 31, 2017
(in thousands)
IBW
 
ISMS
 
CNS
 
Total
Revenue
$
25,933

 
$
19,321

 
$
17,711

 
$
62,965

Gross profit
8,671

 
9,778

 
5,300

 
23,749

Gross margin
33.4
%
(1) 
50.6
%
 
29.9
%
 
37.7
%
Research and development
6,738

 
3,955

 
1,674

 
12,367

Segment profit
$
1,933

 
$
5,823

 
$
3,626

 
11,382

Operating expenses:
 
 
 
 
 
 
 
Sales and marketing
 
 
 
 
 
 
10,344

General and administrative
 
 
 
 
 
 
7,991

Intangible amortization
 
 
 
 
 
 
4,764

Restructuring
 
 
 
 
 
 
3,155

Long-lived assets impairment
 
 
 
 
 
 
1,181

Operating income (loss) from continuing operations
 
 
 
 
 
 
(16,053
)
Other income (expense), net
 
 
 
 
 
 
170

Income tax (expense) benefit
 
 
 
 
 
 
(58
)
Net income (loss) from continuing operations
 
 
 
 
 
 
$
(15,941
)
 
 
 
 
 
 
 
 
 
Fiscal Year Ended March 31, 2016
(in thousands)
IBW
 
ISMS
 
CNS
 
Total
Revenue
$
34,407

 
$
21,783

 
$
32,013

 
$
88,203

Gross profit
13,944

 
11,122

 
9,450

 
34,516

Gross margin
40.5
%

51.1
%
 
29.5
%
 
39.1
%
Research and development
11,059

 
5,417

 
2,841

 
19,317

Segment profit
$
2,885

 
$
5,705

 
$
6,609

 
15,199

Operating expenses:
 
 
 
 
 
 


Sales and marketing
 
 
 
 
 
 
15,817

General and administrative
 
 
 
 
 
 
9,836

Intangible amortization
 
 
 
 
 
 
5,554

Restructuring
 
 
 
 
 
 
748

Long-lived assets impairment
 
 
 
 
 
 
—

Operating income (loss) from continuing operations
 
 
 
 
 
 
(16,756
)
Other income (expense), net
 
 
 
 
 
 
169

Income tax (expense) benefit
 
 
 
 
 
 
102

Net income (loss) from continuing operations
 
 
 
 
 
 
$
(16,485
)
(1) The fiscal year ended March 31, 2017, includes E&O expense for ClearLink DAS inventory and pipeline inventory. See Note 10, Restructuring Charges.
Segment asset information 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 2017and 2016. 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,
 
2017
 
2016
Verizon
21.9
%
 
23.1
%
AT&T
16.3
%
 
11.1
%
American Tower
10.0
%
 
9.5
%

Verizon, AT&T and American Tower are customers of all reporting segments.
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,
 
2017
 
2016
Verizon
19.0
%
 
32.8
%
AT&T
22.4
%
 
12.8
%
T-Mobile
13.3
%
 
2.6
%