Note 7. Business Segments

The Company evaluates its business within two segments: commercial and retail. The commercial segment consists of the following customer markets: (1) public carriers, that are generally responsible for building and maintaining the infrastructure system and provide airtime service to individual subscribers; and (2) integrators and value-added resellers, which is a newly identified market within our internal structure resulting from the Company’s recent implementation of an enhanced go-to-market strategy and the consolidation of our previously identified value-added resellers, government channels and private system operator markets. This new strategy and the corresponding consolidation of these customer markets is expected to increase sales opportunities across the consolidated group as well as provide better coverage to customers and better align territories with supplier partners. In conjunction with our identification of the integrators and value-added resellers as a newly identified market, as described above, market revenue and gross profit as reported for the prior periods reflected in this Quarterly Report on Form 10 Q have been reclassified accordingly.

The retail segment consists of the retail market which includes retailers, independent dealer agents and carriers.

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 the segment level. 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 2019 and 2018 are as follows (in thousands):


	Three Months Ended
	September 30, 2018						September 24, 2017
	Commercial		Retail				Commercial		Retail
	Segment		Segment		Total		Segment		Segment		Total
Revenues
Public Carrier	$	39,694	$	—	$	39,694	$	27,423	$	—	$	27,423
Integrators and value-added resellers		68,650		—		68,650		70,183		—		70,183
Retail		—		50,292		50,292		—		47,478		47,478
Total revenues	$	108,344	$	50,292	$	158,636	$	97,606	$	47,478	$	145,084

Gross Profit
Public Carrier	$	4,780	$	—	$	4,780	$	3,777	$	—	$	3,777
Integrators and value-added resellers		16,912		—		16,912		16,408		—		16,408
Retail		—		9,703		9,703		—		9,738		9,738
Total gross profit	$	21,692	$	9,703	$	31,395	$	20,185	$	9,738	$	29,923

Directly allocable expenses		8,562		4,544		13,106		7,796		3,716		11,512
Segment net profit contribution	$	13,130	$	5,159		18,289	$	12,389	$	6,022		18,411
Corporate support expenses						16,616						15,319
Income before provision for income taxes					$	1,673					$	3,092


	Six Months Ended
	September 30, 2018						September 24, 2017
	Commercial		Retail				Commercial		Retail
	Segment		Segment		Total		Segment		Segment		Total
Revenues
Public Carrier	$	80,054	$	—	$	80,054	$	54,021	$	—	$	54,021
Integrators and value-added resellers		134,197		—		134,197		134,709		—		134,709
Retail		—		95,304		95,304		—		96,364		96,364
Total revenues	$	214,251	$	95,304	$	309,555	$	188,730	$	96,364	$	285,094

Gross Profit
Public Carrier	$	10,406	$	—	$	10,406	$	7,905	$	—	$	7,905
Integrators and value-added resellers		32,829		—		32,829		31,980		—		31,980
Retail		—		18,858		18,858		—		19,205		19,205
Total gross profit	$	43,235	$	18,858	$	62,093	$	39,885	$	19,205	$	59,090

Directly allocable expenses		16,643		8,353		24,996		16,318		7,466		23,784
Segment net profit contribution	$	26,592	$	10,505		37,097	$	23,567	$	11,739		35,306
Corporate support expenses						33,862						30,997
Income before provision for income taxes					$	3,235					$	4,309

Supplemental revenue and gross profit information by product category for the second quarter and first six months of fiscal years 2019 and 2018 are as follows (in thousands):


	Three Months Ended
	September 30, 2018		September 24, 2017
Revenues
Base station infrastructure	$	75,515	$	59,448
Network systems		22,564		29,180
Installation, test and maintenance		8,891		7,679
Mobile device accessories		51,666		48,777
Total revenues	$	158,636	$	145,084

Gross Profit
Base station infrastructure	$	15,534	$	14,086
Network systems		3,561		3,921
Installation, test and maintenance		1,803		1,433
Mobile device accessories		10,497		10,483
Total gross profit	$	31,395	$	29,923




	Six Months Ended
	September 30, 2018		September 24, 2017
Revenues
Base station infrastructure	$	149,829	$	118,518
Network systems		45,341		53,017
Installation, test and maintenance		16,322		14,671
Mobile device accessories		98,063		98,888
Total revenues	$	309,555	$	285,094

Gross Profit
Base station infrastructure	$	31,250	$	28,143
Network systems		7,224		7,750
Installation, test and maintenance		3,276		2,852
Mobile device accessories		20,343		20,345
Total gross profit	$	62,093	$	59,090