Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
(Mark One)
x    
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 20162017
OR
¨    
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from          to    
Commission File Number 0-27266
 
Westell Technologies, Inc.
(Exact name of registrant as specified in its charter)
 
DELAWARE 36-3154957
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
  
750 North Commons Drive, Aurora, IL 60504
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code (630) 898-2500
Not applicable
(Former name, former address and former fiscal year, if changed since last report)
 
Indicate by check or mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer”filer,” “smaller reporting company,” and “smaller reporting“emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer ¨  Accelerated Filer ¨
    
Non-Accelerated Filer ¨  Smaller Reporting Company x
Emerging Growth Company
¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨
Indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the Exchange Act.    Yes  ¨    No  x
Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of October 21, 201623, 2017:
Class A Common Stock, $0.01 Par Value – 47,719,55412,068,162 shares Class B Common Stock, $0.01 Par Value – 13,937,1513,484,287 shares


Table of Contents

WESTELL TECHNOLOGIES, INC. AND SUBSIDIARIES
FORM 10-Q INDEX
 Page No.
 
Item 1.Financial Statements 
 
 
 
 
Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3.
Item 4.
 
Item 1.
Item 1A.
Item 2.
Item 6.
Cautionary Statement Regarding Forward-Looking Information
Certain statements contained herein that are not historical facts or that contain the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “may,” “will,” “plan,” “should,” or derivatives thereof and other words of similar meaning are forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those expressed in or implied by such forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, product demand and market acceptance risks, customer spending patterns, need for financing and capital, economic weakness in the United States (“U.S.”) economy and telecommunications market, the effect of international economic conditions and trade, legal, social and economic risks (such as import, licensing and trade restrictions), the impact of competitive products or technologies, competitive pricing pressures, customer product selection decisions, product cost increases, component supply shortages, new product development, excess and obsolete inventory, commercialization and technological delays or difficulties (including delays or difficulties in developing, producing, testing and selling new products and technologies), the ability to successfully consolidate and rationalize operations, the ability to successfully identify, acquire and integrate acquisitions, effects of the Company’s accounting policies, retention of key personnel and other risks more fully described in the Company's Form 10-K for the fiscal year ended March 31, 20162017, under Item 1A - Risk Factors. The Company undertakes no obligation to publicly update these forward-looking statements to reflect current events or circumstances after the date hereof or to reflect the occurrence of unanticipated events or otherwise.
Trademarks
The following terms used in this filing are the Company's trademarks: ClearLink®, Kentrox®, Optima Management System®, UDIT®, WESTELL TECHNOLOGIES®, and Westell®. All other trademarks appearing in this filing are the property of their holders.


WESTELL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
(unaudited)  (unaudited)   
September 30,
2016
 March 31,
2016
September 30,
2017
 March 31,
2017
 
Assets       
Current assets:       
Cash and cash equivalents$20,917
 $19,169
$19,200
 $21,778
 
Short-term investments
 10,555
5,011
 
 
Accounts receivable (net of allowance of $41 and $53 at September 30, 2016, and March 31, 2016, respectively)13,639
 16,361
Accounts receivable (net of allowance of $90 at September 30, 2017, and March 31, 2017)11,038
 12,075
 
Inventories12,678
 13,498
9,983
 12,511
 
Prepaid expenses and other current assets1,923
 1,900
1,034
 1,409
 
Total current assets49,157
 61,483
46,266
 47,773
 
Land, property and equipment, gross16,185
 17,198
9,065
 16,062
 
Less accumulated depreciation and amortization(13,731) (13,221)(7,267) (14,078) 
Land, property and equipment, net2,454
 3,977
1,798
 1,984
 
Intangible assets, net17,987
 20,388
13,529
 15,624
 
Other non-current assets168
 183
87
 160
 
Total assets$69,766
 $86,031
$61,680
 $65,541
 
       
Liabilities and Stockholders’ Equity       
Current liabilities:       
Accounts payable$4,619
 $7,856
$3,210
 $4,163
 
Accrued expenses3,570
 3,426
3,823
 4,273
 
Accrued restructuring2,951
 1,537
415
 1,171
 
Accrued compensation1,397
 2,506
Contingent consideration payable
 311
Deferred revenue1,318
 1,601
1,055
 2,359
 
Total current liabilities13,855
 17,237
8,503
 11,966
 
Deferred revenue non-current1,388
 1,236
929
 1,102
 
Net deferred income tax liability24
 10
Accrued restructuring non-current192
 550

 63
 
Other non-current liabilities249
 314
317
 236
 
Total liabilities15,708
 19,347
9,749
 13,367
 
Commitments and contingencies (Note 9)

 


 
 
Stockholders’ equity:       
Class A common stock, par $0.01, Authorized – 109,000,000 shares
Outstanding – 47,724,218 and 47,184,725 shares at September 30, 2016, and March 31, 2016,
respectively
477
 472
Class B common stock, par $0.01, Authorized – 25,000,000 shares
Issued and outstanding – 13,937,151 shares at both September 30, 2016, and March 31, 2016
139
 139
Class A common stock, par $0.01, Authorized – 109,000,000 shares
Outstanding – 12,080,445 and 12,015,043
(1)
shares at September 30, 2017, and March 31, 2017, respectively
121
 120
(1 
) 
Class B common stock, par $0.01, Authorized – 25,000,000 shares
Issued and outstanding – 3,484,287
(1) shares at September 30, 2017, and March 31, 2017
35
 35
(1 
) 
Preferred stock, par $0.01, Authorized – 1,000,000 shares
Issued and outstanding – none

 

 
 
Additional paid-in capital415,460
 414,374
417,093
 416,422
(1 
) 
Treasury stock at cost – 17,726,934 and 17,560,758 shares at September 30, 2016, and March 31, 2016, respectively(35,313) (35,174)
Treasury stock at cost – 4,593,368 and 4,440,600(1) shares at September 30, 2017, and March 31, 2017, respectively
(35,790) (35,335) 
Cumulative translation adjustment608
 608

 608
 
Accumulated deficit(327,313) (313,735)(329,528) (329,676) 
Total stockholders’ equity54,058
 66,684
51,931
 52,174
 
Total liabilities and stockholders’ equity$69,766
 $86,031
$61,680
 $65,541
 

(1) All common stock (except authorized shares), equity share, and per share amounts have been retroactively adjusted to reflect a one-for-four reverse stock split, which was effective June 7, 2017.

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

WESTELL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
 Three months ended September 30, 
Six months ended
 September 30,
 2016 2015 2016 2015
Revenue$17,780
 $25,514
 $32,596
 $47,084
Cost of revenue (1)
11,413
 15,283
 21,664
 28,424
Gross profit6,367
 10,231
 10,932
 18,660
Operating expenses:       
Research and development3,327
 4,625
 7,604
 9,711
Sales and marketing2,896
 4,113
 6,277
 7,309
General and administrative2,218
 2,493
 4,563
 5,462
Intangible amortization1,201
 1,432
 2,401
 2,831
Restructuring2,601
 
 2,565
 17
Long-lived assets impairment
 
 1,181
 
Total operating expenses12,243
 12,663
 24,591
 25,330
Operating profit (loss)(5,876) (2,432) (13,659) (6,670)
Other income (expense), net74
 (61) 91
 (23)
Income (loss) before income taxes and discontinued operations(5,802) (2,493) (13,568) (6,693)
Income tax benefit (expense)(8) 20
 (10) 82
Net income (loss) from continuing operations(5,810) (2,473) (13,578) (6,611)
Discontinued Operations:       
Income from discontinued operations, net of income tax of $172 for the six months ended September 30, 2015
 
 
 272
Net income (loss) (2)
$(5,810) $(2,473) $(13,578) $(6,339)
Basic net income (loss) per share:       
Basic net income (loss) from continuing operations$(0.09) $(0.04) $(0.22) $(0.11)
Basic net income (loss) from discontinued operations
 
 
 
Basic net income (loss) (3)
$(0.09) $(0.04) $(0.22) $(0.10)
Diluted net income (loss) per share:       
Diluted net income (loss) from continuing operations$(0.09) $(0.04) $(0.22) $(0.11)
Diluted net income (loss) from discontinued operations
 
 
 
Diluted net income (loss) (3)
$(0.09) $(0.04) $(0.22) $(0.10)
Weighted-average number of common shares outstanding:       
Basic61,199
 60,783
 61,108
 60,743
Effect of dilutive securities: restricted stock, restricted stock units, performance stock units and stock options (4)

 
 
 
Diluted61,199
 60,783
 61,108
 60,743
 Three months ended September 30, 
Six months ended
 September 30,
 
 2017 2016 2017 2016 
Revenue        
    Products$16,097
 $15,881
 $31,642
 $29,494
 
    Services1,135
 1,899
 2,164
 3,102
 
Total revenue17,232
 17,780
 33,806
 32,596
 
Cost of revenue        
    Products9,522
 10,380
(1) 
18,946
 19,981
(1) 
    Services435
 1,033
 818
 1,683
 
Total cost of revenue9,957
 11,413
(1) 
19,764
 21,664
(1) 
Gross profit7,275
 6,367
(1) 
14,042
 10,932
(1) 
Operating expenses        
Research and development2,205
 3,327
 4,481
 7,604
 
Sales and marketing1,992
 2,896
 4,328
 6,277
 
General and administrative1,809
 2,218
 3,520
 4,563
 
Intangible amortization1,048
 1,201
 2,095
 2,401
 
Restructuring165
 2,601
 165
 2,565
 
Long-lived assets impairment
 
 
 1,181
 
          Total operating expenses7,219
 12,243
 14,589
 24,591
 
Operating profit (loss)56
 (5,876) (547) (13,659) 
Other income, net677
(2) 
74
 720
(2) 
91
 
Income (loss) before income taxes733
 (5,802) 173
 (13,568) 
Income tax expense(13) (8) (25) (10) 
Net income (loss)$720
 $(5,810) $148
 $(13,578) 
Net income (loss) per share:        
Basic$0.05
 $(0.38)
(3) 
$0.01
 $(0.89)
(3) 
Diluted$0.05
 $(0.38)
(3) 
$0.01
 $(0.89)
(3) 
Weighted-average number of common shares outstanding:        
Basic15,461
 15,299
(3) 
15,471
 15,277
(3) 
Effect of dilutive securities: restricted stock, restricted stock units, performance stock units and stock options (4)
211
 
 167
 
 
Diluted15,672
 15,299
(3) 
15,638
 15,277
(3) 

(1) The three and six months ended September 30, 2016, includes $0.2 million and $1.6 million of E&O expense for ClearLink DAS inventory and pipeline inventory. See Note 2.
(2) Net income (loss) and comprehensive income (loss) areDuring the same forquarter ended September 30, 2017, the periods reported.Company dissolved the NoranTel legal entity, which triggered a one-time foreign currency gain with the reversal of a cumulative translation adjustment. See Note 1.
(3) Totals may not sum dueAll common stock (except authorized shares), equity share, and per share amounts have been retroactively adjusted to rounding.reflect a one-for-four reverse stock split, which was effective June 7, 2017.
(4) The Company had 5.30.4 million and 5.70.5 million shares represented by common stock equivalents for the three and six months ended September 30, 2016,2017, and 3.71.3 million and 3.51.4 million shares represented by common stock equivalents for the three and six months ended September 30, 2015,2016, which were not included in the computation of average dilutive shares outstanding because they were anti-dilutive. In periods with a net loss from continuing operations, the basic loss per share equals the diluted loss per share as all common stock equivalents are excluded from the per share calculation.
The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.


WESTELL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)
(Unaudited)


 Three months ended September 30, Six months ended September 30,
 2017 2016 2017 2016
Net income (loss)$720
 $(5,810) $148
 $(13,578)
Other comprehensive income (loss):       
Foreign currency translation adjustment (1)
(608) 
 (608) 
Total comprehensive income (loss)$112
 $(5,810) $(460) $(13,578)

(1) During the quarter ended September 30, 2017, the Company dissolved the NoranTel legal entity, which triggered a one-time foreign currency gain with the reversal of a cumulative translation adjustment. See Note 1.

WESTELL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands)
(Unaudited)
 
Common
Stock
Class A
 
Common
Stock
Class B
 
Additional
Paid-in
Capital
 
Treasury
Stock
 
Cumulative
Translation
Adjustment
 
Accumulated
Deficit
 
Total
Stockholders’
Equity
Balance, March 31, 2017 (1)
$120
 $35
 $416,422
 $(35,335) $608
 $(329,676) $52,174
Net income (loss)
 
 
 
 
 148
 148
Translation adjustment (2)

 
 
 
 (608) 
 (608)
Common stock issued2
 
 (1) 
 
 
 1
Purchase of treasury stock(1) 
 
 (455) 
 
 (456)
Stock-based compensation
 
 672
 
 
 
 672
Balance, September 30, 2017$121
 $35
 $417,093
 $(35,790) $
 $(329,528) $51,931

(1) All common stock (except authorized shares), equity share, and per share amounts have been retroactively adjusted to reflect a one-for-four reverse stock split, which was effective June 7, 2017.
(2) During the quarter ended September 30, 2017, the Company dissolved the NoranTel legal entity, which triggered a one-time foreign currency gain with the reversal of a cumulative translation adjustment. See Note 1.

The accompanying notes are an integral part of these Consolidated Financial Statements.


WESTELL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited) 
Six months ended September 30,Six months ended September 30,
2016 20152017 2016
Cash flows from operating activities:      
Net income (loss)$(13,578) $(6,339)$148
 $(13,578)
Reconciliation of net loss to net cash used in operating activities:      
Depreciation and amortization3,230
 3,495
2,526
 3,230
Long-lived assets impairment1,181
 

 1,181
Stock-based compensation1,093
 710
672
 1,093
Loss on sale of fixed assets11
 
8
 11
Restructuring2,565
 17
165
 2,565
Deferred taxes14
 57

 14
Gain on disposal of foreign operations(608) 
Exchange rate loss (gain)
 60
(6) 
Changes in assets and liabilities:      
Accounts receivable2,722
 (5,342)1,025
 2,722
Inventories820
 4,009
2,528
 820
Prepaid expenses and other current assets(23) 815
375
 (23)
Other assets15
 118
73
 15
Deferred revenue(131) (845)(1,477) (131)
Accounts payable and accrued expenses(4,800) 2,151
(2,082) (4,800)
Accrued compensation(1,109) 1,325
(224) (1,109)
Net cash provided by (used in) operating activities(7,990) 231
3,123
 (7,990)
Cash flows from investing activities:      
Maturities of held-to-maturity short-term debt securities12,621
 16,625

 12,621
Maturities of other short-term investments
 5,586
Purchases of held-to-maturity short-term debt securities(2,066) (1,781)
 (2,066)
Proceeds from sale of land
 264
Purchases of other short-term investments(5,011) 
Purchases of property and equipment(498) (1,530)(254) (498)
Net cash provided by (used in) investing activities10,057
 19,164
(5,265) 10,057
Cash flows from financing activities:      
Purchases of treasury stock(141) (85)(456) (141)
Payment of contingent consideration(175) (455)
 (175)
Net cash provided by (used in) financing activities(316) (540)(456) (316)
Gain (loss) of exchange rate changes on cash(3) (3)20
 (3)
Net increase (decrease) in cash and cash equivalents1,748
 18,852
(2,578) 1,748
Cash and cash equivalents, beginning of period19,169
 14,026
21,778
 19,169
Cash and cash equivalents, end of period(1)$20,917
 $32,878
$19,200
 $20,917

(1) As of September 30, 2017, the Company has $5.0 million of short-term investments in addition to cash and cash equivalents. See Note 10.

The accompanying notes are an integral part of these Condensed Consolidated Financial Statements.

WESTELL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


Note 1. Basis of Presentation

Reverse Stock Split

All common stock, equity, share and per share amounts in the financial statements and notes have been retroactively adjusted to reflect a one-for-four reverse stock split, which was effective June 7, 2017.
Description of Business
Westell Technologies, Inc. (the Company) is a holding company. Its wholly owned subsidiary, Westell, Inc., designs and distributes telecommunications products, which are sold primarily to major telephone companies. During the second quarter ended September 30, 2017, the Company dissolved Noran Tel, Inc. is(NoranTel) a wholly owned subsidiary of Westell, Inc. Noran Tel'sNoranTel's operations focushave been fully incorporated into Westell, Inc. As a result of the wind-up of NoranTel, the Company recognized a one-time $0.6 million foreign currency translation gain, which is presented in Other income, net on power distribution product development.the Condensed Consolidated Statements of Operations.
Basis of Presentation and Reporting
The accompanying Condensed Consolidated Financial Statements include the accounts of the Company and its wholly-owned subsidiaries. The Condensed Consolidated Financial Statements have been prepared using generally accepted accounting principles (GAAP) in the United States for interim financial reporting, and consistent with the instructions of Form 10-Q and Article 10 of Regulation S-X and, accordingly, they do not include all of the information and footnotes required in the annual consolidated financial statements and accompanying footnotes. The Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended March 31, 20162017. All intercompany accounts and transactions have been eliminated in consolidation.
In the opinion of management, the unaudited interim financial statements included herein reflect all adjustments, consisting of normal recurring adjustments, necessary to present fairly the Company’s condensed consolidated financial position and the results of operations, comprehensive income (loss) and cash flows at September 30, 20162017, and for all periods presented. The results of operations for the periods presented are not necessarily indicative of the results that may be expected for fiscal year 2017.2018.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and that affect revenue and expenses during the periods reported. Estimates are used when accounting for the allowance for uncollectible accounts receivable, net realizable value of inventory, product warranty accrued, relative selling prices, stock-based compensation, intangible assets fair value, depreciation, income taxes, and contingencies, among other things. Actual results could differ from those estimates.
Recently Adopted Accounting Pronouncements
In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory (ASU 2015-11). The core principle of the guidance is that an entity should measure inventory at the "lower of cost and net realizable value" and options that currently exist for "market value" will be eliminated. The ASU defines net realizable value as the "estimated selling prices in the ordinary course of business, less reasonably predictable cost of completion, disposal, and transportation." The Company adopted ASU 2015-11 on April 1, 2017. The adoption of this ASU did not have a material impact to the Company's Consolidated Financial Statements or related disclosures.
In the fourth quarter of fiscal year 2017, the Company adopted ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (ASU 2014-15). ASU 2014-15 provides guidance on management’s responsibility in evaluating whether there is substantial doubt about a company’s ability to continue as a going concern and to provide related footnote disclosures. For each annual and interim reporting period, management is required to evaluate whether there are conditions or events that raise substantial doubt about a company’s ability to continue as a going concern within one year from

the date the financial statements are issued. The adoption of ASU 2014-15 had no significant effect on its Consolidated Financial Statements or related disclosures as of September 30, 2017.
Recently Issued Accounting Pronouncements Not Yet Adopted

In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting (ASU 2017-09). ASU 2017-09 clarifies which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The standard is effective for interim and annual reporting periods beginning after December 15, 2017, with early adoption permitted. The Company is currently evaluating the potential impact ASU 2017-09 will have on the Company's Consolidated Financial Statements.

In October 2016, the FASB issued ASU 2016-16, Income Taxes: Intra-Entity Transfers of Assets Other Than Inventory (ASU 2016-16). ASU 2016-16 requires the recognition of current and deferred income taxes for intra-entity asset transfers when the transaction occurs. ASU 2016-16 is effective for interim and annual reporting periods beginning after December 15, 2017. Early adoption is permitted. ASU 2016-16 is effective for the Company in the first quarter of fiscal 2019, and the Company is currently in the process of evaluating the potential impact of adoption of this updated authoritative guidance on the Company's Consolidated Financial Statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flow (Topic 230) (ASU 2016-15). This update is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. The update provides new guidance regarding the classification of debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies,
distributions received from equity method investments, beneficial interests in securitized transactions, and separately identifiable cash flows and application of the predominance principle. This standard will be effective for financial statements issued by public companies for the annual and interim periods beginning after December 15, 2017. Early adoption of the standard is permitted. The standard will be applied in a retrospective approach for each period presented. The Company is currently evaluating the potential impact ASU 2016-15 will have on the Company's Consolidated Financial Statements and related disclosures.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13). ASU 2016-13 requires entities to establish an allowance for credit losses for most financial assets. Prior GAAP was based on an incurred loss methodology for recognizing credit losses on financial assets measured at amortized cost and available-for sale debt securities. The update is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 31, 2018. The Company does not expect that adoption will have a significant impact on the Company's Consolidated Financial Statements or related disclosures.
In February 2016, the FASB issued ASU 2016-02, Leases (ASU 2016-02). In September 2017, the FASB issued ASU 2017-13, Revenue Recognition (Topic 605), Revenue from Contracts with Customers (Topic 606), Leases (Topic 840), and Leases (Topic 842) (ASU 2017-13), which provides additional implementation guidance on the previously issued ASU 2016-02. ASU 2016-02 establishes a comprehensive new lease accounting model. The new standard clarifies the definition of a lease and causesrequires lessees to recognize leases on the

balance sheet as a lease liability with a corresponding right-of-use asset for leases with a lease term of more than one year. ASU 2016-02 is effective for financial statements issued for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The new standard requires a modified retrospective transition for capital or operating leases existing at or entered into after the beginning of the earliest comparative period presented in the financial statements, but it does not require transition accounting for leases that expire prior to the date of initial application. The Company is currently evaluating the impact that ASU 2016-02 will have on the Company's Consolidated Financial Statements and related disclosures.
In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory (ASU 2015-11). The core principle of the guidance is that an entity should measure inventory at the "lower of cost and net realizable value" and options that currently exist for "market value" will be eliminated. The ASU defines net realizable value as the "estimated selling prices in the ordinary course of business, less reasonably predictable cost of completion, disposal, and transportation." The standard is effective for the Company's financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted. The Company does not expect the adoption of ASU 2015-11 to have a material impact on its Consolidated Financial Statements or related disclosures.
In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (ASU 2014-15), to provide guidance on management’s responsibility in evaluating whether there is substantial doubt about a company’s ability to continue as a going concern and to provide related footnote disclosures. The amendments in this update are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company does not expect the adoption of ASU 2014-15 to have a significant impact on its Consolidated Financial Statements or related disclosures.
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (ASU 2014-09), that outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. ASU 2014-09 is based on the principle that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to fulfill a contract. Entities have the option of using either a full retrospective or a modified retrospective approach for the adoption of the new standard. ASU 2014-09 becomesis initially scheduled to become effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period; early adoption is not permitted. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606) — Deferral of the Effective Date (ASU 2015-14), which defers the effective date of ASU 2014-09 for one year and permits early adoption as early as the original effective date of ASU 2014-09. The new revenue standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption. In 2016, the FASB issued additional guidance to clarify the implementation guidance (ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations; ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing; and ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical ExpedientsExpedients:)andASU 2016-20 (Topic 606) Technical Corrections and Improvements to Topic 606, Revenue from Contracts with

Customers. In September 2017, the FASB issued ASU 2017-13. These amendments provide additional clarification and implementation guidance on the previously issued ASU 2014-09.
The Company commenced the assessment of ASU 2014-09 during the first quarter of fiscal year 2018 and developed a project plan to guide the implementation. This project plan includes analyzing the standard’s impact on the Company’s contract portfolio, comparing historical accounting policies and practices to the requirements of the new standard and identifying potential differences from applying the requirements of the new standard to its contracts. The Company will draft an updated accounting policy, evaluate new disclosure requirements and identify and implement appropriate changes to business processes, systems and controls to support recognition and disclosure under the new standard. The Company expects to adopt this new standard using the modified retrospective method that will result in a cumulative effect adjustment as of the date of adoption. The Company is in the process ofcurrently evaluating the available transition methodsthis guidance and the impact the guidanceit will have on the Company's Consolidated Financial Statements and related disclosures.
Other accounting standards and recent pronouncements that are not anticipated to have an impact on or are unrelated to the Company’s financial condition, results of operations, cash flows or disclosures are not discussed herein.
Reclassifications
Certain amounts in the Condensed Consolidated Statement of Operations for the three and six months ended September 30, 2015, have been reclassified to conform to the current period presentation. These reclassifications had no impact on previously reported amounts for total stockholders' equity or net income (loss).
Note 2. Restructuring Charges
In the fourth quarter of fiscal year 2015, the Company approved a plan to restructure its business, including reduction of headcountthree and consolidation of office space within the Aurora headquarters facility, with the intent to optimize operations. The restructuring was substantially completed during the fourth quarter of fiscal year 2015. The Company recognized a restructuring expense of $3.2 million in the three months ended March 31, 2015, inclusive of a non-cash charge of $2.7 million related to a loss on a lease, net of sublease income (the 2015 restructuring). The Company recognized a restructuring expense of $17,000 in the six months ended September 30, 2015.

In the fourth quarter of fiscal year 2016,2017, the Company approved a plan to restructure its business, including reduction of headcount and lease termination costs related to closing the design center in Canada, to bring operating costs and expenses in-line with anticipated business volumes (the 2016 restructuring). The 2016 restructuring was completed during the fourth quarter of fiscal year 2016, during which the Company recognizedrecorded a restructuring expense of $0.7 million. All of these$0.2 million related to employee termination costs have been paid as of September 30, 2016.that spanned all three segments (the 2018 restructuring).
In the firstsecond quarter of fiscal year 2017, the Company approved a restructuring plan (the 2017 restructuring), includingincluding discontinuing development of the ClearLink Distributed Antenna System (DAS), a general reduction of headcount that spanned all three segments, and consolidation of facilities in Manchester, NH and Aurora, IL. The Company recognized a restructuring expense of $2.6 million in the three and six months ended September 30, 2016,2016. The 2017 restructuring costs totaled $3.2 million in the twelve months ended March 31, 2017, inclusive of non-cash charges of approximately $1.0$1.2 million related to losses on leased facilities, $0.9$1.3 million of employee termination costs, and $0.7 million of other associated costs. In addition to the restructuring expense,six months ended September 30, 2016, a $1.2 million impairment charge of fixed assets and $1.6 million of E&O expense for ClearLink DAS inventory and pipeline inventory, whichassociated with the IBW segment was recorded in the six months ended September 30, 2016. The Company expects to incur further restructuring costs of approximately $0.4 million for the remainder of the 2017 restructuring plan.recognized. The planned restructuring is scheduled to bewas substantially completed by March 31, 2017.
As of September 30, 2016, $3.02017, $0.4 million of the restructuring costs, related to employee termination costs from the 2018 restructuring and the office space from the 2017 restructuring, are unpaid and accrued on the Condensed Consolidated Balance Sheets presented in Accrued restructuring. As of March 31, 2017, $1.2 million and $0.2 million$63,000 of the restructuring costs, primarily related to the office space from the 2015 restructuring and 2017 restructuring, are unpaid and accrued on the Condensed Consolidated Balance Sheets presented in accruedAccrued restructuring and accrued restructuring non-current, respectively. As of March 31, 2016, $1.5 million and $0.6 million of the restructuring costs, primarily related to the office space from the 2015 restructuring, are unpaid and accrued on the Condensed Consolidated Balance Sheets presented in accrued restructuring and accruedAccrued restructuring non-current, respectively. The restructuring costs are expected to be paid in full by the first quarter of fiscal year 2019 concurrent with the termination date of the contractual lease.lease in Manchester, NH.
Total liability for restructuring charges and their utilization for the six months ended September 30, 20162017, and 2015, are summarized as follows: 
Six months ended September 30, 2016 Six months ended September 30, 2015Six months ended September 30, 2017
(in thousands)Employee-related Other costs Total Employee-related Other costs TotalEmployee-related Other costs Total
Liability at beginning of period$441
 $1,646
 $2,087
 $15
 $2,788
 $2,803
$
 $1,234
 $1,234
Charged869
 1,696
 2,565
 17
 
 17
165
 
 165
Paid(891) (618) (1,509) (32) (597) (629)(19) (965) (984)
Liability at end of period$419
 $2,724
 $3,143
 $
 $2,191
 $2,191
$146
 $269
 $415
Note 3. 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, 2016.2017.

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 repeatersenable cellular coverage in stadiums, arenas, malls, buildings, and bi-directional amplifiers (BDAs), and system components and antennas, all used by wireless service providers and neutral-host operators to fine tune radio frequency (RF) signals that helps extend coverage toother indoor areas not served well or at all by traditional cell sites.the existing "macro" outdoor cellular network. For commercial service, the IBW segment solutions include distributed antenna systems (DAS) conditioners and digital repeaters. For the public safety market, the IBW segment solutions include half-watt and two-watt repeaters and a battery backup unit. The Company’s IBW segment also offers ancillary products that consist of passive system components and antennas for both the commercial and public safety markets.
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 monitoring and control devicesunits which when combined with the Company's Optima management software system, provide comprehensive machine-to-machine (M2M) communications that enable operators to remotely monitor, manage, and control site infrastructure and support systems.
• Service offerings include Remote units can be and often are combined with the Company’s Optima management software system. The Company also offers support agreements and deployment services. While the Company currently provides technical supportagreement services (i.e., maintenance) and deployment services primarily for the ISM solution.(i.e., installation).
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, which are sold to wireline and wireless service providers as well as industrial network operators, include a broad range of outdoor network infrastructure offerings includingconsisting of integrated cabinets, power distribution products, copper and fiber network connectivity panels, and synchronous optical networks/time division multiplexing (SONET/TDM)T1 network interface units.
• Cell Site Optimization (CSO) solutions includeunits (NIUs), and tower mounted amplifiers (TMAs), small outdoor-hardened units mounted next to antennas 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 six months ended September 30, 2016,2017, and 2015,2016, is set forth below: 
 Three months ended September 30, 2016  Three months ended September 30, 2017 
(in thousands) IBW ISMS CNS Total  IBW ISMS CNS Total 
Revenue $6,644
 $5,109
 $6,027
 $17,780
  $7,919
 $4,730
 $4,583
 $17,232
 
Cost of revenue 4,411
(1) 
2,702
 4,300
 11,413
  4,269

2,511
 3,177
 9,957
 
Gross profit 2,233
 2,407
 1,727
 6,367
  3,650
 2,219
 1,406
 7,275
 
Gross margin 33.6% 47.1% 28.7% 35.8%  46.1% 46.9% 30.7% 42.2% 
Research and development 1,594
 1,237
 496
 3,327
  1,443
 523
 239
 2,205
 
Segment profit (loss) $639
 $1,170
 $1,231
 3,040
 
Segment profit $2,207
 $1,696
 $1,167
 5,070
 
Operating expenses:                  
Sales and marketing       2,896
        1,992
 
General and administrative       2,218
        1,809
 
Intangible amortization       1,201
        1,048
 
Restructuring       2,601
        165
 
Long-lived assets impairment       
 
Operating profit (loss)       (5,876)        56
 
Other income (expense), net       74
 
Income tax benefit (expense)       (8) 
Net income (loss) from continuing operations       $(5,810) 
Other income, net       677
 
Income tax expense       (13) 
Net income (loss)       $720
 
                  
 Three months ended September 30, 2015  Three months ended September 30, 2016 
(in thousands) IBW ISMS CNS Total  IBW ISMS CNS Total 
Revenue $10,819
 $5,886
 $8,809
 $25,514
  $6,644
 $5,109
 $6,027
 $17,780
 
Cost of revenue 6,272
 2,722
 6,289
 15,283
  4,411
(1) 
2,702
 4,300
 11,413
(1) 
Gross profit 4,547
 3,164
 2,520
 10,231
  2,233
(1) 
2,407
 1,727
 6,367
(1) 
Gross margin 42.0% 53.8% 28.6% 40.1%  33.6%
(1) 
47.1% 28.7% 35.8%
(1) 
Research and development 2,775
 1,302
 548
 4,625
  1,594
 1,237
 496
 3,327
 
Segment profit (loss) $1,772
 $1,862
 $1,972
 5,606
 
Segment profit $639
 $1,170
 $1,231
 3,040
 
Operating expenses:                  
Sales and marketing       4,113
        2,896
 
General and administrative       2,493
        2,218
 
Intangible amortization       1,432
        1,201
 
Restructuring       2,601
 
Long-lived assets impairment       
 
Operating profit (loss)       (2,432)        (5,876) 
Other income (expense), net       (61) 
Income tax benefit (expense)       20
 
Net income (loss) from continuing operations       $(2,473) 
         
Other income, net       74
 
Income tax expense       (8) 
Net income (loss)       $(5,810) 
(1) The three and six months ended September 30, 2016, includes E&O expense for ClearLink DAS inventory and pipeline inventory. See Note 2, Restructuring Charges.
(1) The three and six months ended September 30, 2016, includes E&O expense for ClearLink DAS inventory and pipeline inventory. See Note 2, Restructuring Charges.

         
 Six months ended September 30, 2017 
(in thousands) IBW ISMS CNS Total 
Revenue $14,875
 $8,860
 $10,071
 $33,806
 
Cost of revenue 8,211

4,515
 7,038
 19,764
 
Gross profit 6,664
 4,345
 3,033
 14,042
 
Gross margin 44.8% 49.0% 30.1% 41.5% 
Research and development 2,906
 1,088
 487
 4,481
 
Segment profit $3,758
 $3,257
 $2,546
 9,561
 
Operating expenses:         
Sales and marketing       4,328
 
General and administrative       3,520
 
Intangible amortization       2,095
 
Restructuring       165
 
Long-lived assets impairment       
 
Operating profit (loss)       (547) 
Other income, net       720
 
Income tax expense       (25) 
Net income (loss)       $148
 
         
                  
 Six months ended September 30, 2016  Six months ended September 30, 2016 
(in thousands) IBW ISMS CNS Total  IBW ISMS CNS Total 
Revenue $12,765
 $9,248
 $10,583
 $32,596
  $12,765
 $9,248
 $10,583
 $32,596
 
Cost of revenue 9,538
(1) 
4,822
 7,304
 21,664
(1) 
 9,538
(1) 
4,822
 7,304
 21,664
(1) 
Gross profit 3,227
 4,426
 3,279
 10,932
  3,227
(1) 
4,426
 3,279
 10,932
(1) 
Gross margin 25.3% 47.9% 31.0% 33.5%  25.3%
(1) 
47.9% 31.0% 33.5%
(1) 
Research and development 3,958
 2,531
 1,115
 7,604
  3,958
 2,531
 1,115
 7,604
 
Segment profit (loss) $(731) $1,895
 $2,164
 3,328
  $(731) $1,895
 $2,164
 3,328
 
Operating expenses:                  
Sales and marketing       6,277
        6,277
 
General and administrative       4,563
        4,563
 
Intangible amortization       2,401
        2,401
 
Restructuring       2,565
        2,565
 
Long-lived assets impairment       1,181
        1,181
 
Operating profit (loss)       (13,659)        (13,659) 
Other income (expense), net       91
 
Income tax benefit (expense)       (10) 
Net income (loss) from continuing operations       $(13,578) 
         
         
 Six months ended September 30, 2015 
(in thousands) IBW ISMS CNS Total 
Revenue $19,889
 $10,391
 $16,804
 $47,084
 
Cost of revenue 11,341
 5,016
 12,067
 28,424
 
Gross profit 8,548
 5,375
 4,737
 18,660
 
Gross margin 43.0%
51.7% 28.2% 39.6% 
Research and development 5,937
 2,583
 1,191
 9,711
 
Segment profit (loss) $2,611
 $2,792
 $3,546
 8,949
 
Operating expenses:         
Sales and marketing       7,309
 
General and administrative       5,462
 
Intangible amortization       2,831
 
Restructuring       17
 
Operating profit (loss)       (6,670) 
Other income (expense), net       (23) 
Income tax benefit (expense)       82
 
Net income (loss) from continuing operations       $(6,611) 
Other income, net       91
 
Income tax expense       (10) 
Net income (loss)       $(13,578) 

(1) The three and six months ended September 30, 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.

Note 4. Inventories
Inventories are stated at the lower of first-in, first-out cost or market value. The components of inventories are as follows: 
(in thousands)September 30, 2016 March 31, 2016September 30, 2017 March 31, 2017
Raw materials$3,659
 $6,174
$3,634
 $3,871
Work-in-process210
 237

 
Finished goods8,809
 7,087
6,349
 8,640
Total inventories$12,678
 $13,498
$9,983
 $12,511
Note 5. Stock-Based Compensation
The Westell Technologies, Inc. 2015 Omnibus Incentive Compensation Plan (the 2015 Plan) was approved at the annual meeting of stockholders on September 16, 2015. The 2015 Plan replaced the Westell Technologies, Inc. 2004 Stock Incentive Plan (the 2004 Plan). If any award granted under the 2015 Plan or the 2004 Plan is canceled, terminates, expires, or lapses for any reason, any Shares subject to such award shall again be available for the grant of an award under the 2015 Plan. Shares subject to an award shall not again be made available for issuance under the Plan if such Shares are: (a) shares delivered to or withheld by the Company to pay the grant or purchase price of an award, or (b) shares delivered to or withheld by the Company to pay the withholding taxes related to an award. Any awards or portions thereof that are settled in cash and not in Shares shall not be counted against the foregoing Share limit. The stock options, restricted stock awards, and restricted stock units (RSUs) awarded under the 2015 Plan vest in equal annual installments over 3 years for employees and 1 year for independent directors. The stock options, restricted stock awards, and RSUs awarded under the 2004 Plan vest in equal annual installments over 4 years. Performance stock units (PSUs) earned vest over the performance period, as described below.period. Certain awards provide for accelerated vesting if there is a change in control (as defined in the 2015 Plan), or when provided within individual employment contracts. The Company recorded incremental stock-based compensation expense of approximately $0.4 million during the three and six months ended September 30, 2016, as a result of accelerated vesting. The Company accounts for forfeitures as they occur. The Company issues new shares for stock awards under the 2015 Plan.
The following table is a summary of total stock-based compensation expense resulting from stock options, restricted stock, RSUs and PSUs, during the three and six months ended September 30, 20162017, and 20152016: 
Three months ended September 30, Six months ended September 30,Three months ended September 30, Six months ended September 30,
(in thousands)2016 2015 2016 20152017 2016 2017 2016
Stock-based compensation expense$687
 $253
 $1,093
 $710
$342
 $687
 $672
 $1,093
Income tax benefit
 
 
 

 
 
 
Total stock-based compensation expense, after taxes$687
 $253
 $1,093
 $710
$342
 $687
 $672
 $1,093
Stock Options
Stock option activity for the six months ended September 30, 20162017, is as follows:
Shares 
Weighted-Average
Exercise Price Per
Share
 
Weighted-Average
Remaining
Contractual Term
(in years)
 
Aggregate
Intrinsic Value (1) (in
thousands)
Shares 
Weighted-Average
Exercise Price Per
Share
 
Weighted-Average
Remaining
Contractual Term
(in years)
 
Aggregate
Intrinsic Value (1) (in
thousands)
Outstanding on March 31, 20161,847,500
 $1.42
 5.6 $9
Outstanding on March 31, 2017362,396
 $4.89
 5.4 $39
Granted1,459,750
 1.08
 
 
100,000
 3.06
 
 
Exercised
 
 
 

 
 
 
Forfeited(1,136,875) 1.19
 
 
(97,399) 4.38
 
 
Expired(80,667) 2.22
 
 
(30,501) 6.83
 
 
Outstanding on September 30, 20162,089,708
 $1.27
 4.8 $0
Outstanding on September 30, 2017334,496
 $4.32
 5.1 $12
 
(1) 
The intrinsic value for the stock options is calculated based on the difference between the exercise price of the underlying awards and the Westell Technologies’ closing stock price as of the respective reporting date.
The weighted-average grant date fair value of stock options granted during the six months ended September 30, 2016, was $0.43 per share.

Restricted Stock
The following table sets forth restricted stock activity for the six months ended September 30, 20162017: 
Shares 
Weighted-Average
Grant Date Fair
Value
Shares 
Weighted-Average
Grant Date Fair
Value
Non-vested as of March 31, 2016217,500
 $2.07
Non-vested as of March 31, 201734,375
 $4.11
Granted60,000
 0.50
104,636
 3.01
Vested(162,500) 1.71
(66,250) 3.30
Forfeited
 

 
Non-vested as of September 30, 2016115,000
 $1.77
Non-vested as of September 30, 201772,761
 $3.26
RSUs
The following table sets forth the RSU activity for the six months ended September 30, 20162017: 
Shares 
Weighted-Average
Grant Date Fair
Value
Shares 
Weighted-Average
Grant Date Fair
Value
Non-vested as of March 31, 20161,843,375
 $1.59
Non-vested as of March 31, 2017373,886
 $4.48
Granted1,737,250
 1.02
527,000
 2.84
Vested(633,956) 1.64
(111,954) 5.27
Forfeited(1,082,375) 1.29
(189,609) 3.79
Non-vested as of September 30, 20161,864,294
 $1.21
Non-vested as of September 30, 2017599,323
 $3.10
PSUs
The PSUs vest in annual increments based on the achievement of pre-established Company performance goals and continued employment. The number of PSUs earned, if any, can range from 0% to 200% of the target amount, depending on actual performance for four fiscal years following the grant date. Upon vesting, the PSUs convert into shares of Class A Common Stock on a one-for-one basis.
The following table sets forth the PSU activity for the six months ended September 30, 20162017: 
Shares Weighted-Average Grant Date Fair ValueShares Weighted-Average Grant Date Fair Value
Non-vested as of March 31, 2016 (at target)64,075
 $3.29
Non-vested as of March 31, 2017 (at target)76,053
 $3.56
Granted, at target
 
40,000
 2.63
Vested(11,713) 2.53
(2,343) 10.22
Forfeited(10,472) 3.43
(18,864) 2.17
Non-vested as of September 30, 2016 (at target)41,890
 $3.46
Non-vested as of September 30, 2017 (at target)94,846
 $3.29
Note 6. Product Warranties
The Company’s products carry a limited warranty ranging from one to five years for the products within the IBW segment, and typically one year for products within the ISMS segment, and one to seven years for products within the CNS segment. The specific terms and conditions of those warranties vary depending upon the customer and the products sold. Factors that affect the estimate of the Company’s warranty reserve include: the number of units shipped, anticipated rates of warranty claims, and cost per claim. The Company periodically assesses the adequacy of its recorded warranty liability and adjusts the reserve as necessary. The current portions of the warranty reserve are $228,000164,000 and $229,000163,000 as of September 30, 20162017, and March 31, 20162017, respectively, and are presented on the Condensed Consolidated Balance Sheets in Accrued expenses. The non-current portions of the warranty reserves are $232,000282,000 and $207,000232,000 as of September 30, 20162017, and March 31, 20162017, respectively, and are presented on the Condensed Consolidated Balance Sheets in Other non-current liabilities.

The following table presents the changes in the Company’s product warranty reserve:
Three months ended September 30, Six months ended September 30,Three months ended September 30, Six months ended September 30,
(in thousands)2016 2015 2016 20152017 2016 2017 2016
Total product warranty reserve at the beginning of the period$439
 $548
 $436
 $505
$385
 $439
 $395
 $436
Warranty expense to cost of revenue33
 56
 67
 153
105
 33
 118
 67
Utilization(12) (84) (43) (138)(44) (12) (67) (43)
Total product warranty reserve at the end of the period$460
 $520
 $460
 $520
$446
 $460
 $446
 $460
Note 7. Variable Interest Entity and Guarantee
The Company has a 50% equity ownership in AccessTel Kentrox Australia PTY LTD (AKA). AKA distributes network management solutions provided by the Company and the other 50% owner to one customer. The Company holds equal voting control with the other owner. All actions of AKA are decided at the board level by majority vote. The Company evaluated ASC 810, Consolidations, and concluded that AKA is a variable interest entity (VIE). and the Company has a variable interest in the VIE. The Company has concluded that it is not the primary beneficiary of AKA and, therefore, consolidation is not required. As of September 30, 2016,2017, and March 31, 2016,2017, the carrying amount of the Company's investment in AKA was approximately $0.1 million,$56,000 and $111,000, respectively, which is presented on the Condensed Consolidated Balance Sheets within Other non-current assets. The Company received a cash dividend payment of $59,000 from AKA during the three months ended September 30, 2017.
The Company's revenue from sales to AKA for the three months ended September 30, 2017, and 2016, and 2015, was $0.6$0.9 million and $0.9$0.6 million, respectively. The Company's revenue from sales to AKA for both the six months ended September 30, 2016,2017 and 2015,2016, was $1.7 million and $1.4 million, respectively.million. Accounts receivable from AKA was $0.5$0.2 million and $0.6$0.5 million as of September 30, 2016,2017, and March 31, 2016,2017, respectively. Deferred revenue, which primarily relates to AKA maintenance contracts, was $2.0$1.7 million and $1.7$2.8 million as of September 30, 2016,2017, and March 31, 2016,2017, respectively. The Company also has provided an unlimited guarantee for the performance of the other 50% owner in AKA, which primarily provides support and engineering services to the customer. This guarantee was put in place at the request of the AKA customer. The guarantee, which is estimated to have a maximum potential future payment of $0.7 million, will stay in place as long as the contract between AKA and the customer is in place. The Company would have recourse against the other 50% owner in AKA in the event the guarantee is triggered. The Company determined that it could perform on the obligation it guaranteed at a positive rate of return and, therefore, did not assign value to the guarantee. The Company's exposure to loss as a result of its involvement with AKA, exclusive of lost profits, is limited to the items noted above.
Note 8. Income Taxes
At the end of each interim period, the Company makes its best estimate of the effective tax rate expected to be applicable for the full fiscal year and uses that rate to provide for income taxes on a current year-to-date basis before discrete items. If a reliable estimate cannot be made, the Company may make a reasonable estimate of the annual effective tax rate, including use of the actual effective rate for the year-to-date. The impact of discrete items is recorded in the quarter in which they occur. The Company utilizes the liability method of accounting for income taxes and deferred taxes, which are determined based on the differences between the financial statements and tax basis of assets and liabilities given the enacted tax laws. The Company evaluates the need for valuation allowances on the net deferred tax assets under the rules of ASC 740, Income Taxes. In assessing the realizability of the Company's deferred tax assets, the Company consideredconsiders whether it is more likely than not that some or all of the deferred tax assets will be realized through the generation of future taxable income. In making this determination, the Company assessed all of the evidence available at the time, including recent earnings, forecasted income projections and historical performance. The Company determined that the negative evidence outweighed the objectively verifiable positive evidence and previously recorded a full valuation allowance against deferred tax assets. The Company will continue to reassess realizability going forward.
The Company recorded $13,000 and $25,000 of income tax expense in the three and six months ended September 30, 2017, respectively, using an effective income tax rate of (1.07)% plus discrete items. The Company recorded $8,000 and $10,000 of income tax expense in the three and six months ended September 30, 2016, using an effective income tax rate of (0.10)% plus discrete items. The Company recorded $20,000 and $82,000 of income tax benefit in the three and six months ended September 30, 2015,respectively, using an effective rate of 1.20%(0.10)% plus discrete items. The effective rate is impacted by the intraperiod allocation as a result of loss from continuing operations and income from discontinued operations, loss in a foreign jurisdiction with no valuation allowance, and states whichthat base tax on gross margin and not pretax income.

Note 9. Commitments and Contingencies
Obligations
Future obligations and commitments, which are comprised of future minimum lease payments, inventory purchase obligations, and contingent consideration, were $9.9 million and $11.8 million at September 30, 2016, and March 31, 2016, respectively.
Purchase obligations relate to inventory that arises in the normal course of business operations. Future obligations and commitments as of September 30, 2016, consisted of the following:
 Payments due within
(in thousands)Year 1 Year 2 Year 3 Year 4 Year 5 Thereafter Total
Purchase obligations (1)
$7,306
 $
 $
 $
 $
 $
 $7,306
Future minimum operating lease
 payments
2,058
 373
 116
 
 
 
 2,547
Future obligations and
commitments
$9,364
 $373
 $116
 $
 $
 $
 $9,853
(1) A reserve for a net loss on firm purchase commitments of $452,000 and $388,000 is recorded on the balance sheet as of September 30, 2016, and March 31, 2016, respectively.
Litigation and Contingency Reserves
The Company and its subsidiaries are involved in various assertions, claims, proceedings and requests for indemnification concerning intellectual property, including patent infringement suits involving technologies that may be incorporated in the Company’s products, which are being handled and defended in the ordinary course of business. These matters are in various stages of investigation and litigation, and they are being vigorously defended. Although the Company does not expect that the outcome in any of these matters, individually or collectively, will have a material adverse effect on its financial condition or results of operations, litigation is inherently unpredictable. Therefore, judgments could be rendered, or settlements entered, that could adversely affect the Company’s operating results or cash flows in a particular period. The Company routinely assesses all of its litigation and threatened litigation as to the probability of ultimately incurring a liability, and it records its best estimate of the ultimate loss in situations where it assesses the likelihood of loss as probable. As of September 30, 20162017, and March 31, 2016,2017, the Company has not recorded any contingent liability attributable to existing litigation.

AsIn the ordinary course of March 31, 2015,operations, the Company had total contingency reservesreceives claims where the Company believes an unfavorable outcome is possible and/or for which is probable and no estimate of $0.4 million relatedpossible losses can currently be made.  A significant customer was a defendant in patent infringement claims and is asserting possible indemnity rights under contracts with the Company.  The customer has settled one matter, which has been dismissed, and won summary judgment of all claims in the other. The customer has informed the Company that the customer intends to the discontinued operations of ConferencePlus, which was sold in fiscal year 2012. In the six months ended September 30, 2015, a pre-tax gain of $0.4 million resultedseek to recover from the expirationCompany a share of an indemnity periodthe settlement and releasedefense costs.  The Company has not been involved in any settlement discussions nor informed by the customer of any settlement details and therefore management is currently unable to estimate a contingency reserve related to the salerange of ConferencePluspotential loss associated with this claim with any degree of certainty, and was recorded in discontinued operations.
Additionally, the Company had a contingent cash consideration payable relatedis not yet able to an acquisition. As of March 31, 2016,calculate the fair value of the contingent consideration liability after offsetting a working capital adjustment and an indemnificationexposure to this claim, for warranty obligations was $311,000. As of September 30, 2016, the contingent liability was paid in full. The contingent consideration was basedwhich will vary depending upon the profitability ofsettlement reached by the acquired products for post-closing periods through June 30, 2016,customer and was offset by working capital adjustments and other indemnification claims. The maximum earn-out that could have been paid before offsets was $3.5 million. The final calculation performed during the quarter ended June 30, 2016, determined the actual cash payment for the contingent consideration to be $2.1 million.Company's contribution ratio.
Note 10. Short-term Investments
As of March 31, 2016,September 30, 2017, the Company had short-term investmentsowned Certificates of $10.6 million.Deposit amounting to $5.0 million held at cost There were no short-term investments as of September 30, 2016, as they were all converted to cash equivalents. The Company did not sell any of the investments held as of March 31, 2016, prior to maturity. The fair value of short-term investments approximates their carrying amounts due to the short-term nature of these financial assets and, therefore, there are no unrecognized gains or losses.2017.
Note 11.11. Fair Value Measurements
Fair value is defined by ASC 820, Fair Value Measurements and Disclosures (ASC 820), as the price that would be received upon selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

Level 1 – Quoted prices in active markets for identical assets and liabilities.
Level 2 – Quoted prices in active markets for similar assets and liabilities, or other inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets and liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.
The Company’s money market funds are measured using Level 1 inputs. The contingent consideration described in Note 9 was measured using Level 3 inputs.
The following table presents available-for saleavailable-for-sale securities and non-financial liabilities measured at fair value on a recurring basis as of September 30, 20162017:
(in thousands)Total Fair Value
of Asset or
Liability
 Quoted Prices in
Active Markets
for Identical Assets
(Level 1)
 Significant Other
Observable Inputs
(Level 2)
 Significant
Unobservable
Inputs
(Level 3)
 Balance Sheet
Classification
Total Fair Value
of Asset or
Liability
 Quoted Prices in
Active Markets
for Identical Assets
(Level 1)
 Significant Other
Observable Inputs
(Level 2)
 Significant
Unobservable
Inputs
(Level 3)
 Balance Sheet
Classification
Assets:                
Money market funds$17,129
 $17,129
 
 
 Cash and cash
equivalents
$11,960
 $11,960
 
 
 Cash and cash
equivalents

The following table presents available-for saleavailable-for-sale securities and non-financial liabilities measured at fair value on a recurring basis as of March 31, 20162017:
(in thousands)Total Fair Value
of Asset or
Liability
 Quoted Prices in
Active Markets
for Identical Assets
(Level 1)
 Significant Other
Observable Inputs
(Level 2)
 Significant
Unobservable
Inputs
(Level 3)
 Balance Sheet
Classification
Total Fair Value
of Asset or
Liability
 Quoted Prices in
Active Markets
for Identical Assets
(Level 1)
 Significant Other
Observable Inputs
(Level 2)
 Significant
Unobservable
Inputs
(Level 3)
 Balance Sheet
Classification
Assets:                
Money market funds$10,043
 $10,043
 
 
 Cash and cash
equivalents
$17,162
 $17,162
 
 
 Cash and cash
equivalents
Liabilities:        
Contingent consideration, current$311
 
 
 $311
 Contingent consideration payable
The fair value of the money market funds approximates their carrying amounts due to the short-term nature of these financial assets.
In connection with an acquisition in the quarter ended June 30, 2012, payment of a portion of the purchase price was contingent upon the profitability of the acquired products for post-closing periods through June 30, 2016, and was offset by working capital adjustments and other indemnification claims. The Company estimated the fair value of contingent consideration as the present value of the expected payments over the term of the arrangement based on financial forecasts of future profitability of the acquired products, and reaching the forecast. The final calculation performed during the quarter ended June 30, 2016, determined the actual cash payment for the contingent consideration to be $2.1 million, which was paid in full as of September 30, 2016.
The fair value measurement of contingent consideration as of March 31, 2016, encompasses the following significant unobservable inputs:
($ in thousands)Unobservable Inputs
 March 31, 2016
Estimated earn-out contingent consideration$2,968
Working capital and other adjustment$(444)
Indemnification related to warranty claims$(303)
Discount rate%
Approximate timing of cash flows0.4 years

The following table summarizes contingent consideration activity:
(in thousands) 
Balance as of March 31, 2016$311
Contingent consideration – payments(175)
Contingent consideration – change in fair value in General and Administrative expense(136)
Balance as of September 30, 2016$
Note 12. Share Repurchases
In August 2011,May 2017, the Board of Directors authorized a new share repurchase program whereby the Company may repurchase up to an aggregate of $20.0$2.0 million of its outstanding Class A Common Stock (the 2017 authorization). The 2017 authorization is in addition to the $0.1 million that was remaining from the August 2011 $20.0 million authorization (the 2011 authorization). There were 113,484 shares repurchased under the 2011 and 2017 authorizations during the six months ended September 30, 2017 at a weighted average purchase price of $2.99 per share. There were no shares repurchased under thisthe 2011 authorization during the six months ended September 30, 2016, or September 30, 2015. 2016. There was approximately $0.1$1.8 million remaining for additional share repurchases under this programthe 2017 authorization as of September 30, 20162017.
Additionally, in the six months ended September 30, 2016,2017, and September 30, 2015,2016, the Company repurchased 166,17639,269 and 73,76541,544 shares of Class A Common Stock, respectively, from certain employees that were surrendered to satisfy the minimum statutory tax withholding obligations on the vesting of restricted stock, RSUs and PSUs. These repurchases arewere not included in the authorized share repurchase programprograms and had a weighted-average purchase price of $0.85$2.91 and $1.153.40 per share, respectively.
Note 13. Intangible and Long-Lived Assets
Intangible Assets

Intangible assets include customer relationships, trade names, developed technology and other intangibles. Intangible assets with determinable lives are amortized over their estimated useful lives. Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition. If the carrying amount of an asset exceeds its estimated future undiscounted cash flows, an impairment loss is recorded for the excess of the asset’s carrying amount over its fair value. Intangible asset impairment charges are presented in Intangible amortization on the Condensed Consolidated Statements of Operations.

During fiscal year 2017, the Company experienced triggering events in the first and second quarters that resulted in the Company testing itsThere was no intangible assets for impairment.  As a result of the Company reorganizing its reporting structure in the first quarter of fiscal year 2017, the Company reassigned assets and liabilities to reporting units. In evaluating whether it is more likely than not that the fair value of the Company's reporting units were less than their carrying value, the Company assessed all relevant events and circumstances and determined that, due to the overall financial performance of the Company and recent change in reporting structure, indicators of impairment were present. The Company performed an evaluation to test IBW, ISMS and CNS intangible assets for recoverability and concluded there was noasset impairment during the six months ended September 30, 2017, or September 30, 2016, in any offor the IBW, ISMS and CNS reporting units.
Note 14. Accrued Expenses
The components of accrued expenses are as follows:
(in thousands)September 30, 2017 March 31, 2017
Accrued compensation$1,032
 $1,256
Accrued contractual obligation1,445
 1,445
Other accrued expenses1,346
 1,572
Total accrued expenses$3,823
 $4,273

Long-lived Assets
Note 15. Land, Property, and Equipment

Long-lived assets consist of property and equipment. Long-lived assets that are held and used should be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the long-lived assets might not be recoverable. Due to a significant adverse change in the business climate connected to the ClearLink DAS development project, the Company determined indicators of impairment were present as of June 30, 2016. The Company determined that equipment related to development and manufacturing of this product werewas fully impaired and recorded an impairment charge of $1.2 million.million in the six months ended September 30, 2016. Long-lived asset impairment charges are presented in long-lived assetLong-lived assets impairment on the Condensed Consolidated Statements of Operations. See Note 2 Restructuring Charges.

There was no long-lived asset impairment during the six months ended September 30, 2017, or the three months ended September 30, 2016.

The components of fixed assets are as follows:
(in thousands)September 30, 2017 March 31, 2017
Land$672
 $672
Machinery and equipment1,603
 1,698
Office, computer and research equipment5,522
 6,012
Leasehold improvements1,268
 7,680
Land, property and equipment, gross$9,065
 $16,062
Less accumulated depreciation and amortization(7,267) (14,078)
Land, property and equipment, net$1,798
 $1,984

The significant decrease in the gross fixed assets and accumulated depreciation is primarily related to the disposals of fully depreciated leasehold improvements associated with a building operating lease that ended on September 30, 2017.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
The following discussion should be read together with the Condensed Consolidated Financial Statements and the related Notes thereto and other financial information appearing elsewhere in this Form 10-Q. All references herein to the term “fiscal year” shall mean a year ended March 31 of the year specified.

Westell Technologies, Inc., (the Company) is a leading provider of in-buildinghigh-performance wireless intelligent site management, cell site optimization, and outside plantinfrastructure solutions focused on innovation and differentiation at the edge of telecommunicationcommunication networks where end users connect. The Company’s comprehensive setportfolio of products and solutions are designed to advance network performance for carriers, integrators,enable service providers and other network operators allowing them to improve performance and reduce operating costs and improve network performance.expenses. With millions of products successfully deployed worldwide, the CompanyWestell is a trusted partner for transforming networks into high performance, reliable systems.
In the first quarter of fiscal 2017, the Company re-aligned the business and revised its segments intoThe Company’s three reportable operating segments which are: In-Building Wireless, Intelligent Site Management and Services, and Communications Network Solutions.are as follows:
In-Building Wireless (IBW) Segment
The IBW segment solutions include distributed antenna systems (DAS) conditioners, high-performance digital repeatersenable cellular coverage in stadiums, arenas, malls, buildings, and bi-directional amplifiers (BDAs), and system components and antennas, all used by wireless service providers and neutral-host operators to fine tune radio frequency (RF) signals that helps extend coverage toother indoor areas not served well or at all by traditional cell sites.the existing "macro" outdoor cellular network. For commercial service, the IBW segment solutions include distributed antenna systems (DAS) conditioners and digital repeaters. For the public safety market, the IBW segment solutions include half-watt and two-watt repeaters and a battery backup unit. The Company’s IBW segment also offers ancillary products that consist of passive system components and antennas for both the commercial and public safety markets.
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 monitoring and control devicesunits which when combined with the Company's Optima management software system, provide comprehensive machine-to-machine (M2M) communications that enable operators to remotely monitor, manage, and control site infrastructure and support systems.
• Service offerings include Remote units can be and often are combined with the Company’s Optima management software system. The Company also offers support agreements and deployment services. While the Company currently provides technical supportagreement services (i.e., maintenance) and deployment services primarily for the ISM solution.(i.e., installation).

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, which are sold to wireline and wireless service providers as well as industrial network operators, include a broad range of outdoor network infrastructure offerings includingconsisting of integrated cabinets, power distribution products, copper and fiber network connectivity panels, and synchronous optical networks/time division multiplexing (SONET/TDM)T1 network interface units.
• Cell Site Optimization (CSO) solutions includeunits (NIUs), and tower mounted amplifiers (TMAs), small outdoor-hardened units mounted next to antennas on cell towers, enabling wireless service providers to improve the overall performance of a cell site, including increasing data throughput and reducing dropped connections..
Customers
The Company’s customer base for its products is highly concentrated and includes telecommunicationscommunications service providers, systems integrators, cell towerneutral-host operators, and distributors. Telecommunication service providers include wireless and wireline service providers, multiple systems operators (MSOs), and Internet Service Providers (ISPs). Due to the stringent customer quality specifications and the regulated environmentenvironments in which customers operate, the Company must undergo lengthy approval and procurement processes prior to selling most of its products. Accordingly, the Company must make significant up-front investments in product and market development prior to actual commencement of sales of new products. The prices for the Company's products vary based upon volume, customer specifications, and other criteria, and they are subject to change for a variety of reasons, including cost and competitive factors.
To remain competitive, the Company must continue to invest in new product development and in targeted sales and marketing efforts to launch new product features and lines. Failure to increase revenues from new products, whether due to lack of market acceptance, competition, technological change, purchasing decisions, meeting technical specifications or otherwise, could have a material adverse effect on the Company's business and results of operations. The Company expects to continue to evaluate new product opportunities and invest in product research and development activities.
In view of the Company’s reliance on the telecommunicationscommunications infrastructure market for revenues, the project nature of the business, the unpredictability of orders, and pricing pressures, the Company believes that period-to-period comparisons of its financial results should not be relied upon as an indication of future performance. The Company has experienced quarterly fluctuations in customer ordering and purchasing activity due primarily to the project-based nature of the business and to budgeting and procurement patterns toward the end of the calendar year or the beginning of a new calendar year. While these factors can result in the

greatest fluctuations in the Company's third and fourth fiscal quarters, this is not always consistent and may not always correlate to financial results.
On September 27, 2016,Other Matters
During the fourth quarter of fiscal year 2017, the Company announcedexecuted a new three-year lease beginning in October 2017 for approximately 83,000 square feet, a portion of our current Aurora, Illinois headquarters facility. The reduced footprint is more suitable to our current operation and is expected to generate cash savings of approximately $2.0 million annually compared to the lease which expired on September 30, 2017.

On May 17, 2017, the Company issued a press release announcing that the Company’s Board of Directors has appointed Kirk R. Brannock as Interim President and Chief Executive Officer. The Company also announced that Dennis O. Harris,approved a Directorshare repurchase program of up to $2.0 million of its Class A common stock.

Effective June 7, 2017, the Company since January 2010, haseffected a reverse stock split of its outstanding Class A and Class B Common Stock at a ratio of one-for-four. The reverse stock split is intended to increase the per share trading price of Westell’s common stock to satisfy the $1.00 minimum bid price requirement for continued listing on the NASDAQ Capital Market. All common stock, equity, share and per share amounts in the financial statements and notes have been appointed interim Chairman ofretroactively adjusted to reflect the Board. Along with these management changes, the Company is executing a plan to reduce its operating cost structure to more quickly return to profitability and generate stockholder value, while focusing on sales and product development initiatives.reverse stock split.
Results of Operations
Below is a table that compares revenue for the three and six months ended September 30, 2016,2017, and 2015,2016, by segment.
Revenue
Three months ended September 30, Six months ended September 30,Three months ended September 30, Six months ended September 30,
(in thousands)2016 2015 Change 2016 2015 Change2017 2016 Change 2017 2016 Change
IBW$6,644
 $10,819
 $(4,175) $12,765
 $19,889
 $(7,124)$7,919
 $6,644
 $1,275
 $14,875
 $12,765
 $2,110
ISMS5,109
 5,886
 (777) 9,248
 10,391
 (1,143)4,730
 5,109
 (379) 8,860
 9,248
 (388)
CNS6,027
 8,809
 (2,782) 10,583
 16,804
 (6,221)4,583
 6,027
 (1,444) 10,071
 10,583
 (512)
Consolidated revenue$17,780
 $25,514
 $(7,734) $32,596
 $47,084
 $(14,488)$17,232
 $17,780
 $(548) $33,806
 $32,596
 $1,210
IBW revenue was $6.6$7.9 million and $12.8$14.9 million in the three and six months ended September 30, 2016,2017, compared to $10.8$6.6 million and $19.9$12.8 million in the same periods in the prior year. The decreaseincreases in revenue infor both the three and six month periods was duewere primarily to decreasesdriven by increases in sales of the Company’s Universal DAS conditionersInterface Tray (UDIT), public safety repeaters, and passive system components. These increases were partly offset in part by increaseda decrease in sales of repeater products.commercial repeaters. While the market for UDIT, a stand-alone active DAS conditioner, has remained strong, the market is expected to shift to where the primary function of

stand-alone conditioners, attenuating the RF signal, is integrated into larger network elements, such as the DAS head-end. It is also expected that the market for commercial repeaters will either remain flat or continue to decline, as customers continue to shift to other forms of commercial in-building coverage, such as small cells. The IBW public safety market is expected to grow as local municipalities pass and enforce ordinances that define in-building cellular communication coverage for public safety in buildings.
ISMS revenue was $5.1$4.7 million and $9.2$8.9 million in the three and six months ended September 30, 2016,2017, compared to $5.9$5.1 million and $10.4$9.2 million in the same periods in the prior year. The decreasedecreases in revenue infor both the three and six month periods was duewere primarily todriven by lower deployment services revenue, for ISM remotes and tower mounted amplifiers.predominately from one large North American service provider. Due to the fact that our ISMS business is project-based, it’s difficult to make a determination on future trends.
CNS revenue was $6.0$4.6 million and $10.6$10.1 million in the three and six months ended September 30, 2016,2017, compared to $8.8$6.0 million and $16.8$10.6 million in the same periods in the prior year. The decreases in revenue for both periods were primarily driven by lower sales of T1 NIUs and Tower Mounted Amplifiers (TMAs), partly offset by increases in sales of the Integrated Cabinets. We expect sales of Integrated Cabinets, which are heavily project-based, to remain uneven, while sales of Power Distribution panels are expected to remain steady. We expect T1 NIU and TMA revenue to decrease over time as these products are in the three months ended September 30, 2016, compared to the same period in the prior year was primarily due to lower carrier spend in TMAs and Sonet/TDM. The decrease in the six months ended September 30, 2016, compared to the same period in the prior year was primarily due to significantly lower carrier spending in TMAs and lower spending overall in OSP.declining markets.
Gross Margin
Three months ended September 30, Six months ended September 30,Three months ended September 30, Six months ended September 30,
2016 2015 Change 2016 2015 Change2017 2016 Change 2017 2016 Change
IBW33.6% 42.0% (8.4)% 25.3% 43.0% (17.7)%46.1% 33.6% 12.5 % 44.8% 25.3% 19.5 %
ISMS47.1% 53.8% (6.7)% 47.9% 51.7% (3.8)%46.9% 47.1% (0.2)% 49.0% 47.9% 1.1 %
CNS28.7% 28.6% 0.1 % 31.0% 28.2% 2.8 %30.7% 28.7% 2.0 % 30.1% 31.0% (0.9)%
Consolidated gross margin35.8% 40.1% (4.3)% 33.5% 39.6% (6.1)%42.2% 35.8% 6.4 % 41.5% 33.5% 8.0 %
Gross margin in the IBW segment was 33.6% and 25.3%
The consolidated gross margins increased in the three and six months ended September 30, 2016,2017 compared to 42.0% and 43.0% in the same periods in the prior year. The lower gross margins inincreases were driven primarily by the six months ended September 30, 2016, is primarily due to higher excess and obsolete inventory expense of $1.2 million in fiscal year 2017. In addition, overall revenue levels contributed to the lower grossIBW segment margin due to the under absorption of fixed costs.
Gross margin in the ISMS segment was 47.1% and 47.9% in the three and six months ended September 30, 2016, compared to 53.8% and 51.7% in the same periods in the prior year. The decrease in gross margin is primarily due to higher costs in deployment services.
Gross margin in the CNS segment was 28.7% and 31.0% in the three and six months ended September 30, 2016, compared to 28.6% and 28.2% in the same periods in the prior year. The increase in gross margin in both the three and six month periods was primarilyincreases, which were largely due to a more favorableone-time charge of $1.4 million for obsolete inventory associated with the Company’s decision to discontinue the ClearLink DAS program in the quarter ended June 30, 2016. The ISMS and CNS segment gross margin changes were attributable to product mix.

revenue mix changes within each of those segments as noted above.
Research and Development
Three months ended September 30, Six months ended September 30,Three months ended September 30, Six months ended September 30,
(in thousands)2016 2015 Change 2016 2015 Change2017 2016 Change 2017 2016 Change
IBW$1,594
 $2,775
 $(1,181) $3,958
 $5,937
 $(1,979)$1,443
 $1,594
 $(151) $2,906
 $3,958
 $(1,052)
ISMS1,237
 1,302
 (65) 2,531
 2,583
 (52)523
 1,237
 (714) 1,088
 2,531
 (1,443)
CNS496
 548
 (52) 1,115
 1,191
 (76)239
 496
 (257) 487
 1,115
 (628)
Consolidated research and
development expense
$3,327
 $4,625
 $(1,298) $7,604
 $9,711
 $(2,107)$2,205
 $3,327
 $(1,122) $4,481
 $7,604
 $(3,123)
Consolidated research and development costsexpenses decreased by $1.3$1.1 million and $2.1$3.1 million in the three and six months ended September 30, 2016,2017, compared to the same periods in the prior year. Research and developmentThe decreases were part of the Company’s resetting of its expense instructure, which included R&D expense reductions across all three segments to a level more suitable to current revenues. In the case of the IBW segment, R&D expense reductions associated with the discontinuation of the ClearLink DAS program announced in July 2016, were partly offset by an increase in R&D expense related to current spending to expand the Company’s product offerings in public safety.
Sales and Marketing
 Three months ended September 30, Six months ended September 30,
(in thousands)2017 2016 Change 2017 2016 Change
Consolidated sales and
marketing expense
$1,992
 $2,896
 $(904) $4,328
 $6,277
 $(1,949)

Sales and marketing expense decreased by $1.2$0.9 million and $2.0$1.9 million in the three and six months ended September 30, 2016,2017, compared to the same periods in the prior year due to $1.1 millionfiscal year. The decrease was part of the Company’s recent resetting of its expense structure, including lower payroll and $1.6 million of decreased manpowerheadcount related expenses in the threeour sales and six months ended September 30, 2016, respectively,marketing organization.
General and $0.4 million of prototype expense in the six months ended September 30, 2016. The decrease in expenses were primarily associated with the ClearLink DAS development project.
Sales and MarketingAdministrative
Three months ended September 30, Six months ended September 30,Three months ended September 30, Six months ended September 30,
(in thousands)2016 2015 Change 2016 2015 Change2017 2016 Change 2017 2016 Change
Consolidated sales and
marketing expense
$2,896
 $4,113
 $(1,217) $6,277
 $7,309
 $(1,032)
Consolidated general and
administrative expense
$1,809
 $2,218
 $(409) $3,520
 $4,563
 $(1,043)
SalesConsolidated general and marketingadministrative expense was $2.9decreased $0.4 million and $6.3$1.0 million in the three and six months ended September 30, 2016, compared to $4.1 million and $7.3 million in same periods in the prior year. The decrease was due primarily to lower payroll and headcount related expenses in our sales organization.
General and Administrative
 Three months ended September 30, Six months ended September 30,
(in thousands)2016 2015 Change 2016 2015 Change
Consolidated general and
administrative expense
$2,218
 $2,493
 $(275) $4,563
 $5,462
 $(899)
Consolidated general and administrative expense decreased $0.3 million and $0.9 million in the three and six months ended September 30, 2016,2017, compared to the same periods in the prior fiscal year primarily toyear. These decreases were part of the Company’s recent resetting of its expense structure, including lower payroll and headcount related expenses.expenses across the various G&A functions, including information technology, accounting and finance, auditing, human resources, and legal.
Intangible amortization
Three months ended September 30, Six months ended September 30,Three months ended September 30, Six months ended September 30,
(in thousands)2016 2015 Change 2016 2015 Change2017 2016 Change 2017 2016 Change
Consolidated intangible
amortization
$1,201
 $1,432
 $(231) $2,401
 $2,831
 $(430)$1,048
 $1,201
 $(153) $2,095
 $2,401
 $(306)
The intangible assets consist of product technology, customer relationships, trade names, and backlog derived from acquisitions. The decrease in the three and six months ended September 30, 2016,2017, compared to the same periods in the prior fiscal year resulted primarily from repeater product and customer related intangibles from the acquisition of HyperEdge and the non-compete from the Kentrox acquisitionCellular Specialties, Inc. becoming fully amortized.
Restructuring
In the three and six months ended September 30, 2017, the Company recorded a restructuring expense of $0.2 million related to employee termination costs that spanned all three segments.
In the firstsecond quarter of fiscal year 2017, the Company approved a restructuring plan (the 2017 restructuring), includingincluding discontinuing development of the ClearLink Distributed Antenna System (DAS), a general reduction of headcount that spanned all three segments, and consolidation of facilities in Manchester, NH and Aurora, IL. The Company recognized a restructuring expense of $2.6 million in the three and six months ended September 30, 2016,2016. The 2017 restructuring costs totaled $3.2 million in the twelve months ended March 31, 2017, inclusive of non-cash charges of approximately $1.0approximately. $1.2 million related to losses on leased facilities, $0.9$1.3 million of employee termination costs, and $0.7 million of other associated costs. The Company expects to incur further restructuring costs of approximately $0.4 million for the remainder of the 2017 restructuring plan. The planned restructuring is scheduled to be substantially completed by March 31, 2017.

Long-lived assets impairment
The Company recorded restructuring expense of $17,000 inThere were no long-lived assets impaired during the six months ended September 30, 2015, related to severance for terminated employees associated with2017 or the CSI acquisition.

Long-lived assets impairment

three months ended September 30, 2016. Due to a significant adverse change in the business climate connected to the ClearLink DAS development project, the Company determined indicators of impairment were present as of June 30, 2016. The Company determined that equipment related to development and manufacturing of this product werewas fully impaired and recorded an impairment charge of $1.2 million during the three months ended June 30, 2016. There were no long-lived assets impaired during the three months ended September 30, 2016, or the six months ended June 30, 2015.

Other income, (expense)net
Three months ended September 30, Six months ended September 30,Three months ended September 30, Six months ended September 30,
(in thousands)2016 2015 Change 2016 2015 Change2017 2016 Change 2017 2016 Change
Consolidated other
income (expense)
$74
 $(61) $135
 $91
 $(23) $114
$677
 $74
 $603
 $720
 $91
 $629
Other income, (expense)net contains interest income earned on short-term investmentscash and cash equivalents and foreign currency gains and losses. During the three and six months ended September 30, 2017, the Company recorded a non-recurring foreign currency gain of $0.6 million related to the wind-down of the NoranTel legal entity. The remaining foreign currency impacts related primarily to the receivables and cash denominated in Australian and Canadian currencies.

Income tax benefit (expense)expense
The Company recorded $13,000 and $25,000 of income tax expense in the three and six months ended September 30, 2017, respectively, using an effective income tax rate of (1.07)% plus discrete items. The Company recorded $8,000 and $10,000 of income tax expense in the three and six months ended September 30, 2016, respectively, using an effective income tax rate of (0.10)% plus discrete items. The Company recorded $20,000 and $82,000 of income tax benefit in the three and six months ended September 30, 2015, using an effective rate of 1.20% plus discrete items. The September 30, 2015, effective ratein both periods is impacted by the intraperiod allocation as a result of loss from continuing operations, and income from discontinued operations, loss in a foreign jurisdiction with no valuation allowance, and states which base tax on gross margin and not pretax income.
Discontinued operations
The fiscal year 2016 income from discontinued operations resulted from the expiration of an indemnity period and release of a contingency reserve related to the sale of ConferencePlus.
Net income (loss)
Net income was $0.7 million and $0.1 million in the three and six months ended September 30, 2017, respectively. Net loss was $5.8 million and $13.6 million in the three and six months ended September 30, 2016, respectively, and $2.5 million and $6.3 million in the three and six months ended September 30, 2015, respectively. The changes were a result of the cumulative effects of the variances identified above.
Liquidity and Capital Resources
Overview
At September 30, 20162017, the Company had $20.919.2 million in cash and cash equivalents consisting of bank deposits and government money market funds.funds that invest only in government securities. As of September 30, 2017, the Company also had $5.0 million in short-term investments which consisted of certificate of deposits.
The Company believes that the existing sources of liquidity and cash from operations will satisfy cash flow requirements for the foreseeable future.
Future obligations and commitments, which are principally comprised of future minimum lease payments and inventory purchase obligations, were $9.9 million and $11.8 million at September 30, 2016, and March 31, 2016, respectively.

Purchase obligations consist of inventory that arises in the normal course of business operations. Future obligations and commitments as of September 30, 2016, consisted of the following:
 Payments due within
(in thousands)1 year 2 years 3 years 4 years 5 years Thereafter Total
Purchase obligations (1)
$7,306
 $
 $
 $
 $
 $
 $7,306
Future minimum operating lease
payments
2,058
 373
 116
 
 
 
 2,547
Contingent consideration
 
 
 
 
 
 
Future obligations and
commitments
$9,364
 $373
 $116
 $
 $
 $
 $9,853
(1) A reserve for a net loss on firm purchase commitments of $452,000 and $388,000 is recorded on the balance sheet as of September 30, 2016, and March 31, 2016, respectively. The increase as of September 30, 2016, is primarily due to ClearLink DAS purchase commitments. See Note 2, Restructuring Charges.
Cash Flows
The Company’s operating activities usedgenerated cash of $8.03.1 million in the six months ended September 30, 20162017, which resulted primarily from a $13.60.1 million in net loss,income, adjusted for non-cash charges of $8.12.8 million of amortization, depreciation, long-lived asset impairments,restructuring, non-recurring foreign currency gain, loss on sale of fixed assets, deferred taxes and stock-based compensation expense and a $2.5$0.2 million increase in generated from net working capital. The Company’s investing activities providedused cash of $10.15.3 million, which resulted primarily from the net maturities ofinvesting in short-term investments of $10.6 million offset in part by $0.5 million ofand capital equipment purchases. In the six months ended September 30, 20162017, the Company’s financing activities used $0.30.5 million of cash resulting primarily from paymentthe purchase of contingent consideration.treasury stock.
As of September 30, 2016,2017, the Company had net deferred tax assets of approximately $46.3$52.8 million before a valuation allowance of $46.4 million, resulting$52.8 million. Illinois enacted an income tax increase on July 6, 2017, however, due to the Company's full valuation allowance position, this rate change is not expected to have a profit or loss impact in athe second quarter or any periods in the foreseeable future. The increase in the Company's net deferred tax liability of $24,000.assets related to the tax rate increase is $0.8 million, and there is a corresponding increase to the Company's valuation allowance. Also, as of September 30, 2016,2017, the Company had a $3.0 million tax contingency reserve related to uncertain tax positions, which is offset against deferred tax assets. The federal net operating loss carryforward begins to expire in fiscal year 2023.  Realization of deferred tax assets associated with the Company’s future deductible temporary differences, net operating loss carryforwards and tax credit carryforwards is dependent upon generating sufficient taxable income prior to their expiration, among other factors. The Company weighed positive and negative evidence to assess the need for a valuation allowance against deferred tax assets and whether a tax benefit should be recorded when taxable losses are incurred. The existence of a valuation allowance does not limit the availability of tax assets to reduce taxes payable when taxable income arises. Management periodically evaluates the recoverability of the deferred tax assets and may adjust the valuation allowance against deferred tax assets accordingly.
Off-Balance Sheet Arrangements
The Company has a 50% equity ownership in AccessTel Kentrox Australia PTY LTD (AKA). AKA distributes network management solutions provided by the Company and the other 50% owner to one customer. The Company holds equal voting control with the other owner. All actions of AKA are decided at the board level by majority vote. The Company also has provided an unlimited guarantee for the performance of the other 50% owner in AKA, which primarily provides support and engineering services to the customer. This guarantee was put in place at the request of the AKA customer. The guarantee, which is estimated to have a maximum potential future payment of $0.7 million, will stay in place as long as the contract between AKA and the customer is in place. The Company would have recourse against the other 50% owner in AKA in the event the guarantee is triggered. The Company determined that it could perform on the obligation it guaranteed at a positive rate of return and, therefore, did not assign value to the guarantee. The Company received a cash dividend payment of $59,000 from AKA during the three months ended September 30, 2017.

Critical Accounting Policies
A complete description of the Company’s significant accounting policies is discussed in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 20162017. There have been no material changes in the Company's critical accounting policies from those disclosed in the Annual Report on Form 10-K for the year ended March 31, 2016.2017.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS.
As of September 30, 2016, there were no material changes
Not applicable to the information provided in Item 7A of the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2016.smaller reporting companies.


ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of the Company’s senior management, including the Company’s chief executive officer and chief financial officer, the Company conducted an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act), as of the end of the period covered by this quarterly report (the Evaluation Date). Based on this evaluation, the Company’s chief executive officer and chief financial officer concluded as of the Evaluation Date that the Company’s disclosure controls and procedures were effective such that the information relating to the Company, including consolidated subsidiaries, required to be disclosed in the Company’s Securities and Exchange Commission (SEC) reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and (ii) is accumulated and communicated to the Company’s management, including the Company’s chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
There have been no changes in the Company’s internal control over financial reporting that occurred during the quarter ended September 30, 20162017, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.



PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is involved in various legal proceedings incidental to the Company’s business and its previously owned operations. In the ordinary course of business,operations, the Company receives claims where the Company believes an unfavorable outcome is possible and/or for which is probable and no estimate of possible losses can currently be made.  A significant customer was a defendant in patent infringement claims and is asserting possible indemnity rights under contracts with the Company.  The customer has settled one matter, which has been dismissed, and won summary judgment of all claims in the other. The customer has informed the Company that the customer intends to seek to recover from the Company a share of the settlement and defense costs.  The Company has not been involved in any settlement discussions nor informed by the customer of any settlement details and therefore management is currently unable to estimate a range of potential loss associated with this claim with any degree of certainty, and the Company is routinely auditednot yet able to calculate the exposure to this claim, which will vary depending upon the settlement reached by the customer and subject to inquiries by governmental and regulatory agencies. Although it is not possible to predict with certainty the outcome of these or other unresolved legal actions or the range of possible loss, management believes that the outcome of such proceedings will not have a material adverse effect on the Company's consolidated operations or financial condition.contribution ratio.
ITEM 1A. RISK FACTORS
See “Risk Factors” in Part 1 – Item 1A of the Company's Annual Report on Form 10-K for the year ended March 31, 20162017, for information about risk factors. There have been no material changes in the Company's risk factors from those disclosed in the Company's Annual Report on Form 10-K for the year ended March 31, 2016, except as follows:

Risks Related to Our Business

We may experience significant delays or other complications in the design, manufacture, launch, and production ramp of new products, which could harm our business, prospects, financial condition, and operating results.

Many of our past sales have resulted from our ability to anticipate changes in technology, industry standards and service provider service offerings, and to develop and introduce new and enhanced products and services. Our continued ability to adapt to such changes will be a significant factor in maintaining or improving our competitive position and our prospects for growth. Additionally, other companies may succeed in developing and marketing products that are more effective and/or less costly than any product we may develop, or that are commercially accepted before any of our products. There can be no assurance that we will successfully introduce new products on a timely basis or achieve sales of new products in the future, particularly as customer demand shifts to new technology or the next generation of products. In addition, there can be no assurance that we will have the financial and product design resources necessary to continue to successfully develop new products or to otherwise successfully respond to changing technology standards and service provider service offerings. If we fail to deploy new products on a timely basis, our product sales will decrease and our competitive position, financial condition and results of operations would be materially and adversely affected. We have experience development delays in the past and may experience significant delays or other complications in bringing to market and ramping production of new products. Recently, we suspended future development of our ClearLink DAS product due to competitive products to ClearLink DAS in the market that have already launched and considerable gross margin depression on the product. The decision to suspend ClearLink DAS or other complications in the development, manufacture, launch, and production ramp of any other future product, could materially damage our business, prospects, financial condition, and operating results.

Risks Related to our Common Stock

Our Class A Common Stock could be delisted from the NASDAQ Global Select Market2017.

NASDAQ has established certain standards for the continued listing of a security on the NASDAQ Global Select Market. The standards for continued listing include, among other things, that the minimum bid price for the listed securities be at least $1.00 per share. Under these rules, a security is considered deficient if it fails to achieve at least a $1.00 closing bid price for a period of 30 consecutive business days. On July 1, 2016, we received a notification (the "Notice") from the Listing Qualifications Department of The NASDAQ Stock Market that the bid price for the Company’s Class A Common Stock has closed below the minimum $1.00 per share for 30 consecutive trading days in conflict with the NASDAQ rules for continued listing.

The Notice indicates we will be provided 180 calendar days, or until December 28, 2016, to regain compliance with the minimum $1.00 per share bid requirement. The Notice further indicates that the Company may regain compliance with the Rule if at any time before December 28, 2016, the bid price of the Company’s common stock closes at $1.00 per share or above for a minimum of 10 consecutive business days. In the event the Company does not regain compliance with the Rule by December 28, 2016, the Company may be eligible for an additional 180 calendar day compliance period if it elects to transfer to The NASDAQ Capital Market to take advantage of the additional compliance period offered on that market. To qualify, the Company would be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The NASDAQ Capital Market, with the exception of the bid price requirement, and would need to provide written notice of its intention to cure the bid price deficiency during the second compliance period.


If the closing bid price of our Class A Common Stock continues to fail to meet NASDAQ's minimum closing bid price requirement, or if we otherwise fail to meet all other applicable NASDAQ requirements, NASDAQ may make a determination to delist our Class A common stock. Any such delisting could adversely affect the market liquidity of our Class A Common Stock and the market price of our Class A Common Stock could decrease. A delisting could adversely affect our ability to obtain financing for our operations and/or result in a loss of confidence by investors, customers, suppliers or employees.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Issuer Purchases of Equity Securities
The following table provides information about the Company’s repurchase activity for its Class A Common Stock during the three months ended September 30, 2016.2017.

Period 
Total Number
of Shares
Purchased (a)
 
Average Price
Paid per Share
 Total Number of Shares  Purchased as Part of Publicly Announced Programs (b) Maximum Number (or Approximate Dollar Value) that May Yet Be Purchased Under the Programs (b)
July 1 - 31, 2016 24,311
 $0.7040
 
 $112,741
August 1 - 31, 2016 
 
 
 112,741
September 1 - 30, 2016 69,347
 0.5767
 
 112,741
Total 93,658
 $0.6097
 
 $112,741
Period 
Total Number
of Shares
Purchased (a)
 
Average Price
Paid per Share
 Total Number of Shares  Purchased as Part of Publicly Announced Programs (b) Maximum Number (or Approximate Dollar Value) that May Yet Be Purchased Under the Programs (b)
July 1 - 31, 2017 5,393
 $3.0594
 
 $1,800,011
August 1 - 31, 2017 8,231
 3.2000
 
 1,800,011
September 1 - 30, 2017 13,707
 2.8765
 9,329
 1,773,056
Total 27,331
 $3.0100
 9,329
 $1,773,056
 
(a)In the three months ended September 30, 2016,2017, the Company repurchased 93,65818,002 shares from employees that were surrendered to satisfy the minimum statutory tax withholding obligations on the vesting of restricted stock, restricted stock units and performance-based restricted stock units. These repurchases were not included in the authorized share repurchase program and had a weighted-average purchase price of $0.61$3.07 per share.
(b)In August 2011,May 2017, the Board of Directors authorized a new share repurchase program whereby the Company may repurchase up to an additional aggregate of $20.0$2.0 million of its outstanding Class A Common Stock. There was approximatelyStock in addition to the $0.1 million remaining from the August 2011 authorization. The August 2011 authorization was exhausted during the first quarter of fiscal year 2018 and there was approximately $1.8 million remaining under this programthe May 2017 authorization as of September 30, 2016.2017.

Items 3, 4 and 5 are not applicable and have been omitted.


ITEM 6. EXHIBITS 
 Exhibit Number Description
    
 Exhibit 10.1Offer Letter for Kirk R. Brannock, dated September 26, 2016 (incorporated by reference to Exhibit 10.1 to the Westell Technologies, Inc. Form 8-K filed on September 28, 2016).
Exhibit 10.2Termination Letter for J. Thomas Gruenwald, dated September 26, 2016 (incorporated by reference to Exhibit 10.2 to the Westell Technologies, Inc. Form 8-K filed on September 28, 2016).
Exhibit 10.3Form of Restricted Stock Unit Award Agreement for award granted to Kirk R. Brannock on October 17, 2016.
Exhibit 10.4Form of Restricted Stock Unit Award Agreement for award granted to the leadership team on November 1, 2016.
   
 Exhibit 31.1 
   
 Exhibit 31.2 
   
 Exhibit 32.1 
   
 Exhibit 101 The following financial information from the Quarterly Report on Form 10-Q for the period ended September 30, 2016,2017, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets; (ii) the Condensed Consolidated Statements of Operations; (iii) the Condensed Consolidated Statements of Comprehensive Income (Loss); (iv) the Condensed Consolidated Statements of Stockholders' Equity (v) the Condensed Consolidated Statements of Cash Flows; and (iv)(vi) the Notes to the Condensed Consolidated Financial Statements.


SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
   WESTELL TECHNOLOGIES, INC.
   (Registrant)
   
DATE:November 4, 20162, 2017 By:/s/ Kirk R. BrannockMatthew B. Brady
    Kirk R. BrannockMatthew B. Brady
    Chief Executive Officer
   
   By:/s/ Thomas P. Minichiello
    Thomas P. Minichiello
    Chief Financial Officer


WESTELL TECHNOLOGIES, INC.
EXHIBIT INDEX
Exhibit NumberDescription
Exhibit 10.1Offer Letter for Kirk R. Brannock, dated September 26, 2016 (incorporated by reference to Exhibit 10.1 to the Westell Technologies, Inc. Form 8-K filed on September 28, 2016).
Exhibit 10.2Termination Letter for J. Thomas Gruenwald, dated September 26, 2016 (incorporated by reference to Exhibit 10.2 to the Westell Technologies, Inc. Form 8-K filed on September 28, 2016).
Exhibit 10.3Form of Restricted Stock Unit Award Agreement for award granted to Kirk R. Brannock on October 17, 2016.
Exhibit 10.4Form of Restricted Stock Unit Award Agreement for award granted to the leadership team on November 1, 2016.
Exhibit 31.1Certification by the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 31.2Certification by the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Exhibit 32.1Certification by the Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Exhibit 101The following financial information from the Quarterly Report on Form 10-Q for the period ended September 30, 2016, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets; (ii) the Condensed Consolidated Statements of Operations; (iii) the Condensed Consolidated Statements of Cash Flows; and (iv) the Notes to the Condensed Consolidated Financial Statements.


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