Quarterly report pursuant to Section 13 or 15(d)

Interim Segment Information (Notes)

v3.6.0.2
Interim Segment Information (Notes)
 9 Months Ended
Dec. 31, 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), specialty repeaters for Public Safety in-building wireless coverage, and system components and antennas, all to enable cellular coverage into areas not served well or at all by the existing "macro" cellular network.
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 devices which provide comprehensive machine-to-machine (M2M) communications that enable operators to remotely monitor, manage, and control site infrastructure and support systems. ISM remotes can be and often are combined with the Company’s ISM Optima management software system.
• Service offerings include support agreements and deployment services.
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 include a broad range of essential outdoor network infrastructure offerings, including integrated cabinets, power distribution products, copper and fiber network connectivity panels, and T1 network interface units.
• Cell Site Optimization (CSO) solutions include tower mounted amplifiers (TMAs), outdoor-hardened units mounted 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 three and nine months ended December 31, 2016, and 2015, is set forth below: 
 
 
Three months ended December 31, 2016
(in thousands)
 
IBW
 
ISMS
 
CNS
 
Total
Revenue
 
$
6,224

 
$
5,525

 
$
3,234

 
$
14,983

Cost of revenue
 
3,713


2,730

 
2,486

 
8,929

Gross profit
 
2,511

 
2,795

 
748

 
6,054

Gross margin
 
40.3
%
 
50.6
%
 
23.1
%
 
40.4
%
Research and development
 
1,307

 
805

 
302

 
2,414

Segment profit
 
$
1,204

 
$
1,990

 
$
446

 
3,640

Operating expenses:
 
 
 
 
 
 
 
 
Sales and marketing
 
 
 
 
 
 
 
1,943

General and administrative
 
 
 
 
 
 
 
1,777

Intangible amortization
 
 
 
 
 
 
 
1,212

Restructuring
 
 
 
 
 
 
 
490

Operating profit (loss)
 
 
 
 
 
 
 
(1,782
)
Other income (expense), net
 
 
 
 
 
 
 
(15
)
Income tax benefit (expense)
 
 
 
 
 
 
 
(10
)
Net income (loss) from continuing operations
 
 
 
 
 
 
 
$
(1,807
)
 
 
 
 
 
 
 
 
 
 
 
Three months ended December 31, 2015
(in thousands)
 
IBW
 
ISMS
 
CNS
 
Total
Revenue
 
$
8,680

 
$
6,147

 
$
5,388

 
$
20,215

Cost of revenue
 
5,361

 
3,209

 
3,682

 
12,252

Gross profit
 
3,319

 
2,938

 
1,706

 
7,963

Gross margin
 
38.2
%
 
47.8
%
 
31.7
%
 
39.4
%
Research and development
 
2,701

 
1,363

 
829

 
4,893

Segment profit
 
$
618

 
$
1,575

 
$
877

 
3,070

Operating expenses:
 
 
 
 
 
 
 
 
Sales and marketing
 
 
 
 
 
 
 
3,900

General and administrative
 
 
 
 
 
 
 
2,627

Intangible amortization
 
 
 
 
 
 
 
1,418

Operating profit (loss)
 
 
 
 
 
 
 
(4,875
)
Other income (expense), net
 
 
 
 
 
 
 
85

Income tax benefit (expense)
 
 
 
 
 
 
 
(7
)
Net income (loss) from continuing operations
 
 
 
 
 
 
 
$
(4,797
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine months ended December 31, 2016
(in thousands)
 
IBW
 
ISMS
 
CNS
 
Total
Revenue
 
$
18,989

 
$
14,773

 
$
13,817

 
$
47,579

Cost of revenue
 
13,251

(1) 
7,552

 
9,790

 
30,593

Gross profit
 
5,738

 
7,221

 
4,027

 
16,986

Gross margin
 
30.2
%
 
48.9
%
 
29.1
%
 
35.7
%
Research and development
 
5,265

 
3,336

 
1,417

 
10,018

Segment profit
 
$
473

 
$
3,885

 
$
2,610

 
6,968

Operating expenses:
 
 
 
 
 
 
 
 
Sales and marketing
 
 
 
 
 
 
 
8,220

General and administrative
 
 
 
 
 
 
 
6,340

Intangible amortization
 
 
 
 
 
 
 
3,613

Restructuring
 
 
 
 
 
 
 
3,055

Long-lived assets impairment
 
 
 
 
 
 
 
1,181

Operating profit (loss)
 
 
 
 
 
 
 
(15,441
)
Other income (expense), net
 
 
 
 
 
 
 
76

Income tax benefit (expense)
 
 
 
 
 
 
 
(20
)
Net income (loss) from continuing operations
 
 
 
 
 
 
 
$
(15,385
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Nine months ended December 31, 2015
(in thousands)
 
IBW
 
ISMS
 
CNS
 
Total
Revenue
 
$
28,569

 
$
16,538

 
$
22,192

 
$
67,299

Cost of revenue
 
16,702

 
8,225

 
15,749

 
40,676

Gross profit
 
11,867

 
8,313

 
6,443

 
26,623

Gross margin
 
41.5
%

50.3
%
 
29.0
%
 
39.6
%
Research and development
 
8,638

 
3,946

 
2,020

 
14,604

Segment profit
 
$
3,229

 
$
4,367

 
$
4,423

 
12,019

Operating expenses:
 
 
 
 
 
 
 
 
Sales and marketing
 
 
 
 
 
 
 
11,209

General and administrative
 
 
 
 
 
 
 
8,089

Intangible amortization
 
 
 
 
 
 
 
4,249

Restructuring
 
 
 
 
 
 
 
17

Operating profit (loss)
 
 
 
 
 
 
 
(11,545
)
Other income (expense), net
 
 
 
 
 
 
 
62

Income tax benefit (expense)
 
 
 
 
 
 
 
75

Net income (loss) from continuing operations
 
 
 
 
 
 
 
$
(11,408
)


(1) The nine months ended December 31, 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.