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, include 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 December 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 third quarter and first nine months of fiscal years 2013 and 2012 is as follows (in thousands):

	Three months ended December 30, 2012
	Commercial Segment		Retail Segment		Total
Revenues
Public carrier, contractor and program manager market	$	32,554	$	--	$	32,554
Private system operator and government market		30,199		--		30,199
Commercial dealer and reseller market		36,786		--		36,786
Retailer, dealer agent and Tier 2/3 carrier market		--		39,927		39,927
Revenues, excluding Tier 1 carrier market		99,539		39,927		139,466
Tier 1 carrier market		--		64,993		64,993
Total revenues		99,539		104,920		204,459

Gross Profit
Public carrier, contractor and program manager market		6,832		--		6,832
Private system operator and government market		8,476		--		8,476
Commercial dealer and reseller market		10,227		--		10,227
Retailer, dealer agent and Tier 2/3 carrier market		--		8,697		8,697
Gross profit, excluding Tier 1 carrier market		25,535		8,697		34,232
Tier 1 carrier market		--		4,738		4,738
Total gross profit		25,535		13,435		38,970

Directly allocatable expenses		11,434		7,421		18,855
Segment net profit contribution	$	14,101	$	6,014		20,115
Corporate support expenses						11,385
Income before provision for income taxes					$	8,730

	Nine months ended December 30, 2012
	Commercial Segment		Retail Segment			Total
Revenues
Public carrier, contractor and program manager market	$	78,383		$	--	$	78,383
Private system operator and government market		94,063			--		94,063
Commercial dealer and reseller market		104,049			--		104,049
Retailer, dealer agent and Tier 2/3 carrier market		--			107,931		107,931
Revenues, excluding Tier 1 carrier market		276,495			107,931		384,426
Tier 1 carrier market		--			209,689		209,689
Total revenues		276,495			317,620		594,115

Gross Profit
Public carrier, contractor and program manager market		16,925			--		16,925
Private system operator and government market		25,867			--		25,867
Commercial dealer and reseller market		28,826			--		28,826
Retailer, dealer agent and Tier 2/3 carrier market		--			22,893		22,893
Gross profit, excluding Tier 1 carrier market		71,618			22,893		94,511
Tier 1 carrier market		--			18,577		18,577
Total gross profit		71,618			41,470		113,088

Directly allocatable expenses		32,246			21,951		54,197
Segment net profit contribution	$	39,372		$	19,519	$	58,891
Corporate support expenses							34,562
Income before provision for income taxes						$	24,329

	Three months ended December 25, 2011
		Commercial Segment		Retail Segment		Total
Revenues
Public carrier, contractor and program manager market		$	18,573	$	--	$	18,573
Private system operator and government market			33,617		--		33,617
Commercial dealer and reseller market			32,724		--		32,724
Retailer, dealer agent and Tier 2/3 carrier market			--		33,404		33,404
Revenues, excluding Tier 1 carrier market			84,914		33,404		118,318
Tier 1 carrier market			--		107,932		107,932
Total revenues			84,914		141,336		226,250

Gross Profit
Public carrier, contractor and program manager market			4,336		--		4,336
Private system operator and government market			8,632		--		8,632
Commercial dealer and reseller market			8,784		--		8,784
Retailer, dealer agent and Tier 2/3 carrier market			--		7,233		7,233
Gross profit, excluding Tier 1 carrier market			21,752		7,233		28,985
Tier 1 carrier market			--		10,492		10,492
Total gross profit			21,752		17,725		39,477

Directly allocatable expenses			10,400		8,680		19,080
Segment net profit contribution		$	11,352	$	9,045		20,397
Corporate support expenses							12,590
Income before provision for income taxes						$	7,807

	Nine months ended December 25, 2011
	Commercial Segment		Retail Segment		Total
Revenues
Public carrier, contractor and program manager market	$	56,804	$	--	$	56,804
Private system operator and government market		96,158		--		96,158
Commercial dealer and reseller market		92,861		--		92,861
Retailer, dealer agent and Tier 2/3 carrier market		--		88,946		88,946
Revenues, excluding Tier 1 carrier market		245,823		88,946		334,769
Tier 1 carrier market		--		203,834		203,834
Total revenues		245,823		292,780		538,603

Gross Profit
Public carrier, contractor and program manager market		12,995		--		12,995
Private system operator and government market		26,764		--		26,764
Commercial dealer and reseller market		25,896		--		25,896
Retailer, dealer agent and Tier 2/3 carrier market		--		19,228		19,228
Gross profit, excluding Tier 1 carrier market		65,655		19,228		84,883
Tier 1 carrier market		--		25,784		25,784
Total gross profit		65,655		45,012		110,667

Directly allocatable expenses		30,747		22,197		52,944
Segment net profit contribution	$	34,908	$	22,815		57,723
Corporate support expenses						36,739
Income before provision for income taxes					$	20,984

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 third quarter and first nine months of fiscal years 2013 and 2012 are as follows (in thousands):

	Three months ended December 30, 2012		Nine months ended December 30, 2012
Revenues
Base station infrastructure	$	61,400	$	167,580
Network systems		19,649		59,551
Installation, test and maintenance		13,357		36,137
Mobile device accessories		110,053		330,847
Total revenues	$	204,459	$	594,115

Gross Profit
Base station infrastructure	$	17,726	$	48,886
Network systems		3,784		11,422
Installation, test and maintenance		3,077		8,443
Mobile device accessories		14,383		44,337
Total gross profit	$	38,970	$	113,088

	Three months ended December 25, 2011		Nine months ended December 25, 2011
Revenues
Base station infrastructure	$	50,237	$	146,909
Network systems		18,861		57,474
Installation, test and maintenance		12,112		34,188
Mobile device accessories		145,040		300,032
Total revenues	$	226,250	$	538,603

Gross Profit
Base station infrastructure	$	15,504	$	45,407
Network systems		4,073		11,718
Installation, test and maintenance		2,736		7,655
Mobile device accessories		17,164		45,887
Total gross profit	$	39,477	$	110,667