Note 7. Business Segments

Since the beginning of the second quarter of fiscal 2012, the Company has evaluated its business in two segments – commercial and retail. The commercial segment includes: (1) public carriers, contractors and program managers that are generally responsible for building and maintaining the infrastructure system and provide airtime service to individual subscribers; (2) private system operators and governments including commercial entities such as major utilities and transportation companies, federal agencies and state and local governments that run wireless networks for their own use; and (3) commercial dealers and resellers that sell, install and/or service cellular telephone, wireless networking, broadband and two-way radio communications equipment primarily for the enterprise market. The retail segment includes: (1) retailers, dealer agents and Tier 2 and 3 carriers; and (2) Tier 1 carriers (including the Company's largest customer, AT&T Mobility, Inc.).

The Company evaluates revenue, gross profit and net profit contribution for each of its segments. Net profit contribution is defined as gross profit less any expenses that can be directly attributed or allocated to each segment. This includes sales, product management, purchasing, credit and collections and distribution team expenses, plus freight out and internal and external marketing costs. Corporate support expenses, which are not allocated to each segment, includes administrative costs – finance, human resources, information technology, operating facility occupancy expenses, depreciation, amortization and interest, plus the company-wide pay on performance bonus expense.

The Company does not segregate assets by segments, for internal reporting, for evaluating performance or for allocating capital. The Company has, however, allocated all goodwill and indefinite-lived intangible assets to the applicable segments (and reporting units within segments, where applicable) for purposes of its annual impairment tests. The Company's goodwill at September 30, 2012 relates to acquisitions within its commercial segment. Certain cost of sales and other applicable expenses have been allocated to each segment based on a percentage of revenues and/or gross profit, where appropriate.

Segment activity for the second quarter and first six months of fiscal years 2013 and 2012 is as follows (in thousands):

	Three months ended September 30, 2012
	Commercial Segment		Retail Segment		Total
Revenues
Public carrier, contractor & program manager market	$	25,811	$	--	$	25,811
Private system operator & government market		34,264		--		34,264
Commercial dealer & reseller market		35,655		--		35,655
Retailer, dealer agent & Tier 2/3 carrier market		--		36,363		36,363
Revenues, excluding Tier 1 carrier market		95,730		36,363		132,093
Tier 1 carrier market		--		65,145		65,145
Total revenues		95,730		101,508		197,238

Gross Profit
Public carrier, contractor & program manager market		5,635		--		5,635
Private system operator & government market		9,238		--		9,238
Commercial dealer & reseller market		9,801		--		9,801
Retailer, dealer agent & Tier 2/3 carrier market		--		7,569		7,569
Gross profit, excluding Tier 1 carrier market		24,674		7,569		32,243
Tier 1 carrier market		--		6,382		6,382
Total gross profit		24,674		13,951		38,625

Directly allocatable expenses		10,701		7,384		18,085
Segment net profit contribution	$	13,973	$	6,567		20,540
Corporate support expenses						11,814
Income before provision for income taxes					$	8,726

	Six months ended September 30, 2012
	Commercial Segment		Retail Segment		Total
Revenues
Public carrier, contractor & program manager market.	$	45,829	$	-	$	45,829
Private carrier & government system market		63,864		-		63,864
Commercial dealer & reseller market		67,263		-		67,263
Retailer, dealer agent & tier 2/3 carrier market		-		68,005		68,005
Revenues, excluding Tier 1 carrier market		176,956		68,005		244,961
Tier 1 carrier market		-		144,696		144,696
Total revenues		176,956		212,701		389,657

Gross Profit
Public carrier, contractor & program manager market		10,093		-		10,093
Private carrier & government system market		17,391		-		17,391
Commercial dealer & reseller market		18,599		-		18,599
Retailer, dealer agent & tier 2/3 carrier market		-		14,196		14,196
Gross profit, excluding tier 1 carrier market		46,083		14,196		60,279
Tier 1 carrier market		-		13,839		13,839
Total gross profit		46,083		28,035		74,118

Directly allocatable expenses		20,812		14,530		35,342
Segment net profit contribution	$	25,271	$	13,505		38,776
Corporate support expenses						23,177
Income before provision for income taxes					$	15,599

	Three months ended September 25, 2011
	Commercial Segment		Retail Segment		Total
Revenues
Public carrier, contractor & program manager market	$	20,065	$	-	$	20,065
Private system operator & government market		31,268		-		31,268
Commercial dealer & reseller market		31,257		-		31,257
Retailer, dealer agent & Tier 2/3 carrier market		-		26,847		26,847
Revenues, excluding Tier 1 carrier market		82,590		26,847		109,437
Tier 1 carrier market		-		39,400		39,400
Total revenues		82,590		66,247		148,837

Gross Profit
Public carrier, contractor & program manager market		4,309		-		4,309
Private system operator & government market		8,763		-		8,763
Commercial dealer & reseller market		8,962		-		8,962
Retailer, dealer agent & Tier 2/3 carrier market		-		5,911		5,911
Gross profit, excluding Tier 1 carrier market		22,034		5,911		27,945
Tier 1 carrier market		-		6,045		6,045
Total gross profit		22,034		11,956		33,990

Directly allocatable expenses		10,322		6,701		17,023
Segment net profit contribution	$	11,712	$	5,255		16,967
Corporate support expenses						11,210
Income before provision for income taxes					$	5,757

	Six months ended September 25, 2011
	Commercial Segment		Retail Segment		Total
Revenues
Public carrier, contractor & program manager market	$	38,231	$	-	$	38,231
Private system operator & government market		62,541		-		62,541
Commercial dealer & reseller market		60,136		-		60,136
Retailer, dealer agent & Tier 2/3 carrier market		-		55,542		55,542
Revenues, excluding Tier 1 carrier market		160,908		55,542		216,450
Tier 1 carrier market		-		95,902		95,902
Total revenues		160,908		151,444		312,352

Gross Profit
Public carrier, contractor & program manager market		8,658		-		8,658
Private system operator & government market		18,132		-		18,132
Commercial dealer & reseller market		17,112		-		17,112
Retailer, dealer agent & Tier 2/3 carrier market		-		11,995		11,995
Gross profit, excluding Tier 1 carrier market		43,902		11,995		55,897
Tier 1 carrier market		-		15,293		15,293
Total gross profit		43,902		27,288		71,190

Directly allocatable expenses		20,346		13,518		33,864
Segment net profit contribution	$	23,556	$	13,770		37,326
Corporate support expenses						24,149
Income before provision for income taxes					$	13,177

The Company also reviews revenue and gross profit by its four product categories:

Base station infrastructure products are used to build, repair and upgrade wireless telecommunications. Products include base station antennas, cable and transmission lines, small towers, lightning protection devices, connectors, power systems, miscellaneous hardware, and mobile antennas. Our base station infrastructure service offering includes connector installation, custom jumper assembly, site kitting and logistics integration.

Network systems products are used to build and upgrade computing and Internet networks. Products include fixed and mobile broadband equipment, wireless networking, filtering systems, two-way radios and security and surveillance products. This product category also includes training classes, technical support and engineering design services.

Installation, test and maintenance products are used to install, tune, maintain and repair wireless communications equipment. Products include sophisticated analysis equipment and various frequency-, voltage- and power-measuring devices, as well as an assortment of tools, hardware, GPS, safety and replacement and component parts and supplies required by service technicians.

Mobile devices and accessory products include cellular phone and data device accessories such as replacement batteries, cases, speakers, mobile amplifiers, power supplies, headsets, mounts, car antennas, music accessories and data and memory cards. Retail merchandising displays, promotional programs, customized order fulfillment services and affinity-marketing programs, including private label Internet sites, complement our mobile devices and accessory product offering.

Base station infrastructure, network systems and installation, test and maintenance products are primarily sold into the commercial segment, while mobile device and accessories products are primarily sold into the retail segment.

Supplemental revenue and gross profit information by product category for the second quarter and first six months of fiscal years 2013 and 2012 are as follows (in thousands):

	Three months ended September 30, 2012		Six months ended September 30, 2012
Revenues
Base station infrastructure	$	57,034	$	106,180
Network systems		22,166		39,902
Installation, test and maintenance		12,140		22,780
Mobile device accessories		105,898		220,795
Total revenues		197,238		389,657

Gross Profit
Base station infrastructure		16,756		31,160
Network systems		3,980		7,638
Installation, test and maintenance		2,826		5,366
Mobile device accessories		15,063		29,954
Total gross profit		38,625		74,118

	Three months ended September 25, 2011		Six months ended September 25, 2011
Revenues
Base station infrastructure	$	49,464	$	96,672
Network systems		19,140		38,613
Installation, test and maintenance		12,129		22,076
Mobile device accessories		68,104		154,991
Total revenues		148,837		312,352

Gross Profit
Base station infrastructure		14,928		29,903
Network systems		3,771		7,645
Installation, test and maintenance		2,616		4,920
Mobile device accessories		12,675		28,722
Total gross profit		33,990		71,190