Business Segments

3 Months Ended

Jun. 25, 2017

Operating Segment

Operating Segment

Note 8. Business Segments

Beginning with the first quarter of fiscal year 2018, the Company modified the structure of its internal organization in an effort to better serve the market place. Retail inventory typically has a shorter more defined life cycle and is, typically, ultimately used by individual end users. Commercial inventory typically has a life cycle that tends to be tied to changes in regulation or technology and includes products typically used by business entities or governments. Reflective of these differences, our sales and product teams have been reorganized and will each now report to either a retail or commercial leader. The Company concluded that corresponding changes to its reportable segments are warranted and now evaluates its business within two segments: commercial and retail. The commercial segment consists of the following customer markets:  (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) government system operators including federal agencies and state and local governments that run wireless networks for their own use;  (3) private system operators including commercial entities such as enterprise customers, major utilities and transportation companies; (4) 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 consists of the retailers, independent dealer agents and carriers market. All prior financial periods reflected in this Quarterly Report on Form 10-Q have been restated to reflect this change.

During the first quarter of fiscal year 2018, in conjunction with the, modification of the structure of the internal organization of the Company, as described above, the Company reviewed several customer types, including a large repair center customer, and reclassified them from the private system operators market to the either the commercial dealers and resellers market or the retailer, independent dealer agent and carriers market, based on their purchase history. The Company has restated prior periods reflected in this Quarterly Report on Form 10-Q to reflect these changes.

The Company evaluates goodwill at the segment level. In conjunction with the change in segments, the Company evaluated its goodwill using level 3 fair value imputes, and no impairment was identified.

To provide investors with better visibility, the Company also discloses revenue and gross profit by its four product categories:

· Base station infrastructure products are used to build, repair and upgrade wireless telecommunications systems. Products include base station antennas, cable and transmission lines, small towers, lightning protection devices, connectors, power systems, miscellaneous hardware, and mobile antennas. Base station infrastructure service offerings include 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, distributed antenna systems (DAS), 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 device accessories 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.

The Company evaluates revenue, gross profit, and income before provision for income taxes at a consolidated level.  Certain cost of sales and other applicable expenses have been allocated to each market unit or product type based on a percentage of revenues and/or gross profit, where appropriate.

Segment activity for the first quarter of fiscal years 2018 and 2017 are as follows (in thousands):

	Three Months Ended
	June 25, 2017						June 26, 2016
	Commercial		Retail				Commercial		Retail
	Segment		Segment		Total		Segment		Segment		Total
Revenues
Public Carriers, Contractors & Program Managers	$	26,598	$	—	$	26,598	$	16,578	$	—	$	16,578
Government System Operators		8,445		—		8,445		9,852		—		9,852
Private System Operators		21,042		—		21,042		20,305		—		20,305
Commercial Dealers & Resellers		35,040		—		35,040		34,291		—		34,291
Retailer, Independent Dealer Agents & Carriers		—		48,886		48,886		—		47,834		47,834
Total revenues	$	91,125	$	48,886	$	140,011	$	81,026	$	47,834	$	128,860
Gross Profit
Public Carriers, Contractors & Program Managers	$	4,128	$	—	$	4,128	$	3,017	$	—	$	3,017
Government System Operators		2,004		—		2,004		2,140		—		2,140
Private System Operators		4,607		—		4,607		4,566		—		4,566
Commercial Dealers & Resellers		8,961		—		8,961		9,283		—		9,283
Retailer, Independent Dealer Agents & Carriers		—		9,467		9,467		—		8,100		8,100
Total gross profit	$	19,700	$	9,467	$	29,167	$	19,006	$	8,100	$	27,106
Directly allocable expenses		7,697		2,570		10,267		7,230		2,495		9,725
Segment net profit contribution	$	12,003	$	6,897		18,900	$	11,776	$	5,605		17,381
Corporate support expenses						17,683						17,242
Income before provision for income taxes					$	1,217					$	139

Supplemental revenue and gross profit information by product category for the first quarter of fiscal years 2018 and 2017 are as follows (in thousands):

	Three Months Ended
	June 25, 2017		June 26, 2016
Revenues
Base station infrastructure	$	59,070	$	52,395
Network systems		23,837		18,430
Installation, test and maintenance		6,993		8,755
Mobile device accessories		50,111		49,280
Total revenues	$	140,011	$	128,860
Gross Profit
Base station infrastructure	$	14,057	$	13,428
Network systems		3,829		2,898
Installation, test and maintenance		1,419		1,568
Mobile device accessories		9,862		9,212
Total gross profit	$	29,167	$	27,106