SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2000

[ ] 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 N. 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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

Class A Common Stock, $0.01 Par Value - 42,445,235 shares at February 9, 2001
Class B Common Stock, $0.01 Par Value - 19,019,369 shares at February 9, 2001

WESTELL TECHNOLOGIES, INC. AND SUBSIDIARIES
FORM 10-Q
INDEX

PART I FINANCIAL INFORMATION: Page No.
--------

Item 1. Financial Statements

Condensed Consolidated Balance Sheets 3
- As of March 31, 2000 and December 31, 2000 (unaudited)

Condensed Consolidated Statements of Operations (unaudited) 4
- Three months ended December 31, 1999 and 2000
- Nine months ended December 31, 1999 and 2000

Condensed Consolidated Statements of Cash Flows (unaudited) 5
- Nine months ended December 31, 1999 and 2000

Notes to the Condensed Consolidated Financial Statements
(unaudited) 6

Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 10

Item 3. Quantitative and Qualitative disclosures about market risks 15

PART II OTHER INFORMATION

Item 1. Legal Proceedings 15

Item 4. Submission of matters to vote of security holders 16

Item 5. Other events 16

Item 6. Exhibits and Reports on Form 8-K 16

SAFE HARBOR STATEMENT
Certain statements contained in this Form 10-Q, which are not historical facts
are forward looking statements that involve risks and uncertainties, including,
without limitation, statements containing the words "anticipate," "believe,"
"expect," "intend" and statements relating to margin increases of DSL CPE
products and DSL Transport products and other statements set forth on Note 8 to
the unaudited financial statements contained in the Form 10-Q. These risks
include, but are not limited to, product demand and market acceptance risks
(including the future commercial acceptance of the Company's DSL systems by
telephone companies and other customers), the impact of Westell's merger with
Teltrend, the impact of competitive products and technologies (such as cable
modems and fiber optic cable), competitive pricing pressures, product
development, excess and obsolete inventory due to new product development,
commercialization and technological delays or difficulties (including delays or
difficulties in developing, producing, testing and selling new products and
technologies, such as DSL systems), the effect of the Company's accounting
policies, the effect of economic conditions and trade, legal, social, and
economic risks (such as import, licensing and trade restrictions) and other
risks more fully described in the Company's Annual Report on Form 10-K for the
fiscal year ended March 31, 2000 under the section "Risk Factors". The Company
undertakes no obligation to release publicly the result of any revisions to
these forward looking statements that may be made to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.

WESTELL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

ASSETS
March 31, December 31,
2000 2000
---------------- ---------------
(unaudited)
(in thousands)

Current assets:
Cash and cash equivalents.............................................. $27,258 $20,346
Short term investments................................................. 1,951 -
Accounts receivable (net of allowance of $855,000 and
$1,372,000, respectively)............................................ 42,025 57,505
Inventories............................................................ 30,741 94,489
Prepaid expenses and other current assets.............................. 2,200 4,034
Refundable income taxes................................................ 6,222 6,035
Deferred income tax asset.............................................. 3,319 3,319
Land and building held for sale........................................ 3,309 3,309
---------------- ---------------
Total current assets............................................... 117,025 189,037
---------------- ---------------
Property and equipment:
Machinery and equipment................................................ 34,686 41,495
Office, computer and research equipment................................ 18,682 28,677
Leasehold improvements................................................. 3,436 4,324
---------------- ---------------
56,804 74,496
Less accumulated depreciation and amortization......................... 30,435 38,888
---------------- ---------------
Property and equipment, net........................................... 26,369 35,608
Goodwill and intangibles, net............................................ 175,482 151,329
Deferred income tax asset and other assets............................... 23,694 22,725
--------------- ---------------
Total assets....................................................... $342,570 $398,699
================ ===============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable....................................................... $21,528 $73,469
Accrued expenses....................................................... 22,591 13,193
Accrued compensation................................................... 6,938 7,483
Current portion of long-term debt...................................... 1,633 44,598
---------------- ----------------
Total current liabilities............................................. 52,690 138,743
---------------- ----------------
Long-term debt........................................................... 1,117 -
Other long-term liabilities.............................................. 2,489 2,993
Commitments and contingencies
Convertible debt (net of debt discount of $669,000)...................... 6,611 -
Stockholders' equity:
Class A common stock, par $0.01.......................................... 402 424
Authorized - 85,000,000 shares
Issued and outstanding - 40,179,110 shares at March 31, 2000 and 42,441,535
shares at December 31, 2000
Class B common stock, par $0.01.......................................... 190 190
Authorized - 25,000,000 shares
Issued and outstanding - 19,051,369 shares at March 31, 2000 and 19,019,369
shares at December 31, 2000
Preferred stock, par $0.01............................................... - -
Authorized - 1,000,000 shares
Issued and outstanding - none
Deferred compensation.................................................... 840 939
Additional paid-in capital............................................... 345,485 356,682
Accumulated other comprehensive income (loss)............................ 184 (23)
Accumulated deficit...................................................... (67,438) (102,106)
---------------- ----------------
Total stockholders' equity......................................... 279,663 256,963
---------------- ----------------
Total liabilities and stockholders' equity....................... $342,570 $398,699
================ ================

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

WESTELL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended Nine Months Ended
December 31, December 31,
---------------------------- ----------------------------
1999 2000 1999 2000
------------ ------------ ------------ ------------
(unaudited)
(in thousands, except per share data)

Equipment sales............................... $ 21,964 $ 68,695 $ 56,478 $ 260,730
Services...................................... 7,673 10,406 21,525 29,756
------------ ------------ ------------ ------------
Total revenues.............................. 29,637 79,101 78,003 290,486

Cost of equipment sales....................... 16,755 61,137 43,002 218,379
Cost of services.............................. 4,618 6,321 13,606 18,101
------------ ------------ ------------ ------------
Total cost of goods sold.................... 21,373 67,458 56,608 236,480
------------ ------------ ------------ ------------

Gross margin............................... 8,264 11,643 21,395 54,006
Operating expenses:
Sales and marketing......................... 3,854 8,111 10,966 21,712
Research and development.................... 2,967 8,655 8,183 23,602
General and administrative.................. 2,902 5,928 9,519 18,131
Amortization of intangibles................. - 7,958 - 23,875
------------ ------------ ------------ ------------
Total operating expenses.................. 9,723 30,652 28,668 87,320
------------ ------------ ------------ ------------
Operating loss................................ (1,459) (19,009) (7,273) (33,314)

Other (income) expense, net................... (854) (104) (905) (169)
Interest expense.............................. 690 1,073 1,418 1,523
------------ ------------ ------------ ------------
Loss before taxes............................. (1,295) (19,978) (7,786) (34,668)
Benefit for income taxes...................... -- -- -- --
------------ ------------ ------------ ------------
Net loss...................................... $ (1,295) $ (19,978) $ (7,786) $ (34,668)
============ ============ ============ ============

Net loss per basic and diluted common share... $ (0.04) $ (0.33) $ (0.21) $ (0.57)
============ ============ ============ ============
Average number of basic and diluted
common shares outstanding................... 36,643 61,427 36,561 60,697
============ ============ ============ ============

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

WESTELL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended
December 31,
-----------------------------------------
1999 2000
----------------- -----------------

(unaudited)
(in thousands)

Cash flows from operating activities:
Net loss........................................................... $ (7,786) $(34,668)
Reconciliation of net loss to net cash provided by
(used in) operating activities:
Depreciation and amortization.................................... 5,480 33,101
Deferred compensation............................................ -- 99
Non-cash interest on debentures.................................. -- 135
Foreign currency gain on liquidation of Westell Europe, Ltd...... (426) --
Changes in assets and liabilities:
Increase in accounts receivable.................................. (4,707) (15,584)
Increase in inventory............................................ (3,536) (63,823)
Increase in prepaid expenses and deposits........................ (666) (1,833)
Decrease in refundable income taxes............................. 5 187
Increase in accounts payable and accrued expenses................ 1,993 43,047
(Decrease) increase in accrued compensation...................... (263) 545
----------------- -----------------
Net cash used in operating activities......................... (9,906) (38,794)
----------------- -----------------

Cash flows from investing activities:
Purchases of property and equipment.............................. (4,980) (18,015)
Proceeds from sale of equipment.................................. 432 (172)
Decrease in other assets......................................... 32 439
Decrease in short term investments............................... - 1,951
----------------- -----------------
Net cash used in investing activities......................... (4,516) (15,797)
----------------- -----------------

Cash flows from financing activities:
(Repayment) borrowing of long-term debt and leases payable....... (1,645) 44,598
Proceeds from issuance of convertible debt....................... 18,542 (2,750)
Proceeds from the issuance of common stock....................... 1,428 5,860
----------------- -----------------
Net cash provided by financing activities..................... 18,325 47,708
----------------- -----------------

Effect of exchange rate changes on cash............................ 3 (29)
Net (decrease) increase in cash............................... 3,906 (6,912)
Cash and cash equivalents, beginning of period..................... 6,715 27,258
----------------- -----------------
Cash and cash equivalents, end of period........................... $ 10,621 $20,346
================= =================

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

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

NOTE 1. BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. It is suggested that these condensed
consolidated financial statements be read in conjunction with the consolidated
financial statements and notes thereto included in the Company's Annual Report
on Form 10-K for the year ended March 31, 2000.

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 consolidated
financial position and the results of operations and cash flows at December 31,
2000, and for all periods presented. The results of operations for the three and
nine month periods ended December 31, 2000 are not necessarily indicative of the
results that may be expected for the fiscal year ending March 31, 2001.

NOTE 2. COMPUTATION OF NET LOSS PER SHARE

The Company follows the provisions of SFAS No. 128, which requires
companies to present basic and diluted earnings per share. The computation of
basic earnings per share is computed using the weighted average number of common
shares outstanding during the period. Diluted earnings per share includes the
number of additional common shares that would have been outstanding if the
dilutive potential common shares had been issued. The effect of this computation
on the number of outstanding shares is antidilutive for the periods ended
December 31, 1999, and 2000, and therefore the net loss per basic and diluted
earnings per share are the same.

NOTE 3. RESTRUCTURING CHARGE

The Company recognized a restructuring charge of $550,000 in the three
months ended March 31, 2000. This charge was for personnel, legal, and other
related cost to eliminate redundant employees due to the acquisition of Teltrend
Inc. The restructuring plan was to combine and streamline the operations of the
two companies and to achieve synergies related to the manufacture and
distribution of common product lines. The Company estimates that the costs of
these activities will be $2.9 million. Approximately $2.4 million of the total
cost has been capitalized as part of the purchase price of Teltrend Inc.,
primarily related to Teltrend Inc. employees terminated. The remaining cost of
$550,000 was charged to operations and relates to Westell employees terminated
and other costs. As of December 31, 2000, the Company has paid approximately
$1.4 million of these costs.

The restructuring charges and their utilization are summarized as follows:

Utilized
Balance through Balance
(in thousands) March 31, December 31, December 31,
2000 2000 2000
---------------------------------------------------------------------------------------

Employee Costs........... $ 2,604 $ 1,323 $ 1,281
Legal & Other Costs...... 300 55 245
---------------------------------------------------------------------------------------
Total.................... $ 2,904 $ 1,378 $ 1,526
=======================================================================================

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

NOTE 4. INTERIM SEGMENT INFORMATION

Westell's reportable segments are strategic business units that offer
different products and services. They are managed separately because each
business requires different technology and market strategy. They consist of:
1) A telecommunications equipment manufacturer of local loop access
products, and
2) A multi-point telecommunications service bureau specializing in
audio teleconferencing, multi-point video conferencing,
broadcast fax and multimedia teleconference services.

Performance of these segments is evaluated utilizing, revenue,
operating income and total asset measurements. The accounting policies of the
segments are the same as those for Westell Technologies, Inc. Segment
information for the three and nine month periods ended December 31, 1999 and
2000, are as follows:

Telecom Telecom
Equipment Services Total
------------ ------------ ---------

Three months ended December 31, 1999
Revenues.......................... $ 21,964 $ 7,673 $ 29,637
Operating income (loss)........... (2,907) 1,448 (1,459)
Depreciation and amortization..... 1,308 610 1,918
Total assets...................... 59,477 18,447 77,924

Three months ended December 31, 2000
Revenues.......................... $ 68,695 $ 10,406 79,101
Operating income (loss)........... (20,926) 1,917 (19,009)
Depreciation and amortization..... 10,846 905 11,751
Total assets...................... 377,489 21,210 398,699

Nine months ended December 31, 1999
Revenues.......................... $ 56,478 $ 21,525 $ 78,003
Operating income (loss)........... (10,556) 3,283 (7,273)
Depreciation and amortization..... 3,777 1,703 5,480
Total assets...................... 59,477 18,447 77,924

Nine months ended December 31, 2000
Revenues.......................... $ 260,730 $ 29,756 $ 290,486
Operating income (loss)........... (38,721) 5,407 (33,314)
Depreciation and amortization..... 30,633 2,468 33,101
Total assets...................... 377,489 21,210 398,699

Reconciliation of Operating loss from continuing operations for the reportable
segments to Loss from continuing operations before income taxes:

Three months ended Nine months ended
December 31, December 31,
1999 2000 1999 2000
---------- ---------- ---------- ----------

Operating loss ........................................ $ (1,459) $ (19,009) $ (7,273) $ (33,314)
Other (income) expense, net............................ (854) (104) (905) (169)
Interest expense....................................... 690 1,073 1,418 1,523
--------- ----------- ------------ ---------
Loss before income taxes............................... $ (1,295) $ (19,978) $ (7,786) $ (34,668)
======= ======== ======= ========

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

NOTE 5. NEW ACCOUNTING PRONOUNCEMENTS:

In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivation
Instruments and Hedging Activities", which addresses the accounting for
derivative instruments. SFAS No. 133 is effective for quarterly financial
statements for the Company's fiscal year ended March 31, 2002. The Company does
not expect that SFAS No. 133 will have a significant effect on its current
financial reporting.

NOTE 6. COMPREHENSIVE INCOME:

The disclosure of comprehensive loss, which encompasses net loss and foreign
currency translation adjustments, is as follows:

Three months ended Nine months ended December
December 31, 31,
----------------------------- -----------------------------
(in thousands) 1999 2000 1999 2000
------------ ------------ ------------ ------------

Net loss...................................... $(1,295) $(19,978) $(7,786) $(34,668)
Other comprehensive loss
Foreign currency translation adjustment.. 625 45 377 207
------------ ------------ ------------ ------------
Comprehensive loss........................... $(1,920) $(20,023) $(7,409) $(34,461)

NOTE 7. BUSINESS ACQUISITION:

On March 17, 2000, the Company acquired 100% of the outstanding shares
of Teltrend Inc., a designer, manufacturer and marketer of transmission products
used by telephone companies to provide voice and data service over the telephone
network.

The acquisition was accounted for as a purchase and, accordingly, the
acquired assets and assumed liabilities have been recorded at their estimated
fair market values at the date of the acquisition. The results of operations
have been included in the consolidated financial statements since the date of
acquisition. The estimated fair market values of certain assets are based upon
preliminary appraisal reports. The purchase price of approximately $238,241,873
exceeded the fair market value of net assets acquired, resulting in goodwill of
$64,207,801 and synergistic goodwill of $57,000,000 which will be amortized on a
straight-line basis over an average of approximately ten years.

The following unaudited pro forma consolidated results of operations
data assumes the business acquisition described above occurred on April 1, 1999.
The pro forma results below are based on historical results of operations
including adjustments for interest, depreciation and amortization and do not
necessarily reflect actual results that would have occurred.

(in thousands, except per share data) Three months ended Nine months ended
December 31, 1999 December 31, 1999
------------------------ ------------------------

Revenue....................................... $ 45,441 $ 131,570
Net loss...................................... (7,066) (23,663)
Net loss per basic and diluted common share... (0.12) (0.42)

WESTELL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 8. GOING CONCERN:

The Company has been advised by its Independent accountants that if the
matters noted below are not resolved prior to the completion of their audit of
the Company's financial statements for the year ended March 31, 2001, their
auditors report on those statements may be modified for the outcome of these
matters.

a) The need to obtain additional financing
b) The need to increase volume and margins on both new and some existing
products and
c) The need to complete the integration of the Teltrend, Inc. acquisition.

To resolve the financing issue, the Company is exploring various
alternatives including: an increased line of credit from its current bank group
and a larger line of credit from new asset based lenders replacing the current
bank credit line. Under the amendment and waiver to the Company's credit
facility that was made effective as of December 31, 2001, the Company agreed to
raise $25 million in equity financings. To increase volume, the Company expects
to add key new customer(s) during the quarter ending March 31, 2001. New higher
margin DSL CPE products have been recently introduced and margins in the DSL
Transport product group are expected to increase due to a new generation of
products which will begin to be produced in the March 31, 2001 quarter. Margins
in the Telco Access Product group are expected to increase as the integration of
the Teltrend, Inc. acquisition is completed gradually over the quarters ending
March 31, 2001 through June 30, 2001.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
-----------------------------------------------------------------------
OF OPERATION
------------

OVERVIEW
Westell Technologies, Inc. ("Westell" or the "Company") derives most of
its equipment revenue from the sale of telecommunications equipment that enables
telecommunications services over copper telephone wires. The Company offers a
broad range of products that facilitate the transmission of high-speed digital
and analog data between a telephone company's central office and its end-user
customers. These products can be categorized into three business units presented
below.

o TELCO ACCESS PRODUCTS ("TAP"): Products that maintain, repair and monitor
special service circuits used over copper telephone wires in the portion of
the telephone companies' network connecting the central office with the
customers' locations (the "Local Loop"). Products include all of Westell's
analog products and products that support digital T-1 transmission such as
its Network Interface Units ("NIU") products.
o TRANSPORT SYSTEMS: DSL products that contain components that are located in
the telephone companies' central offices. Products include Westell's
Supervision, a system comprised of central office shelves and electronics
that enable high-speed transmission over copper telephone lines.
o CUSTOMER PREMISE EQUIPMENT ("CPE"): High-speed DSL modems and routers that
are located at the customers' premises. These products include Westell's
WireSpeed(TM) modems that are designed to provide high-speed access through
personal computers.

The Company's service revenues are derived from audio, multi port video
and multi media teleconferencing services from the Company's Conference Plus,
Inc. subsidiary.

Below is a table that compares equipment and service revenues for the
three and nine month periods ended December 31, 1999 with the three and nine
month periods ended December 31, 2000 by product groupings:

Three months ended: Nine months ended:
---------------------------------- -------------------------------------
December 31, December 31, December 31, December 31,
(in thousands) 1999 2000 1999 2000
---------------- ------------------------------------ -----------------

TAP............................. $11,865 $30,885 $38,369 $90,981
Transport Systems............... 3,748 13,601 8,573 35,296
CPE............................. 6,351 24,209 9,536 134,453
---------------- ---------------- ------------------ -----------------
Total equipment................. 21,964 68,695 56,478 260,730
---------------- ---------------- ------------------ -----------------

Services........................ 7,673 10,406 21,525 29,756
---------------- ---------------- ------------------ -----------------
Total revenues.................. $29,637 $79,101 $78,003 $290,486
================ ================ ================== =================

Westell's net revenues increased 167% and 272% in the three and nine
month periods ended December 31, 2000, respectively, when compared to the
comparable prior year periods. The increased revenue was due to increases in
both equipment revenue and service revenue for the three and six month periods.
The growth in equipment revenue was primarily due to the increased sales of the
Company's CPE and Transport Systems products along with increased sales of TAP
products due to the Teltrend Inc. acquisition. The increased service revenue is
a result of increased teleconference call minutes.

The Company expects to continue to evaluate new product opportunities
and engage in extensive research and development activities. This will require
the Company to continue to invest heavily in research and development and sales
and marketing, which could adversely affect short-term results of operations.
The Company believes that its future revenue growth and profitability will
principally depend on its success in increasing sales of DSL products and
developing new and enhanced TAP and other DSL products. In view of the Company's
reliance on the emerging DSL market for growth and the unpredictability of
orders and subsequent revenues, the Company believes that period to period
comparisons of its financial results are not necessarily meaningful and should
not be relied upon as an indication of future performance. Revenues from TAP
products such as NIU's have declined in recent years as telcos continue to move
to networks that deliver higher speed digital transmission services. Failure to
increase revenues from new products, whether due to lack of market acceptance,
competition, technological change or otherwise, would have a material adverse
effect on the Company's business and results of operations.

RESULTS OF OPERATIONS - Periods ended December 31, 2000 compared to periods
ended December 31, 1999

Revenues. The Company's revenues increased 167% from $29.6 million in the three
months ended December 31, 1999 to $79.1 million in the three months ended
December 31, 2000. This revenue increase was primarily due to increased
equipment revenue from the Company's CPE business unit of $17.9 million when
compared with the same period of the prior year. Equipment revenue from the
Company's TAP and Transport Systems business units also increased by $19.0
million and $9.9 million, respectively, when compared with the same three month
period of the prior year. The increased CPE and Transport Systems equipment
revenue was due to overall unit volume increases offset in part by lower unit
selling prices. The increased revenue from the TAP business unit was primarily a
result of the acquisition of Teltrend Inc., which occurred in March 2000.
Service revenue increased in the three month period by $2.7 million when
compared with the same period of the prior year due to increased revenue from
the Company's Conference Plus, Inc. subsidiary. The increased teleconference
service revenue reflects an increase in call minutes.

The Company's revenues increased 272% from $78.0 million in the nine months
ended December 31, 1999 to $290.5 million in the nine months ended December 31,
2000. The revenue increase in the nine-month period was primarily due to
increased equipment revenue from the Company's CPE business unit of $124.9
million when compared with the same period of the prior year. Equipment revenue
from the Company's TAP and Transport systems business units also increased by
$52.6 million and $26.7 million, respectively, when compared with the same nine
month period of the prior year. The increased CPE and Transport Systems
equipment revenue was due to overall unit volume increases offset in part by
lower unit selling prices. The increase in the TAP business unit was primarily a
result of the acquisition of Teltrend Inc., which occurred in March 2000.
Service revenue increased in the nine month period by $8.2 million when compared
with the same period of the prior year due to increased revenue from the
Company's Conference Plus, Inc. subsidiary. The increased teleconference service
revenue reflects an increase in call minutes.

Gross Margin. Gross margin as a percentage of revenue decreased from 27.9% in
the three months ended December 31, 1999 to 14.7% in the three months ended
December 31, 2000 and decreased from 27.4% in the nine months ended December 31,
1999 to 18.6% in the nine months ended December 31, 2000. The decreased margin
in the three and nine month periods ended December 31, 2000 was primarily due to
lower margins on DSL products which made up a higher proportion of the total
revenue for the period. The low DSL margins were due to high material cost
resulting from increased demand for semiconductor components used in DSL
products. Margins were also affected by the down time and manufacturing
inefficiencies caused by the consolidation of the St. Charles, Illinois
manufacturing facility, which was acquired in the Teltrend acquisition, into the
Aurora manufacturing facility. Although the consolidation was completed in
September 2000, the manufacturing facility experienced inefficiencies related to
learning a new system at the Aurora facility. These decreases were off-set in
part by product mix changes and cost integration in the TAP and Transport
Systems business units and to a lesser extent increased service revenue which
historically earns a higher margin.

Sales and Marketing. Sales and marketing expenses increased 110.4%, or $4.3
million, to $8.1 million in the three months ended December 31, 2000 and
increased 98.0%, or $10.7 million, to $21.7 million in the nine months ended
December 31, 2000 when compared to the same period last year. Sales and
marketing expenses decreased as a percentage of revenues from 12.8% in the three
months ended December 31, 1999 to 10.2% in the three months ended December 31,
2000 and decreased as a percentage of revenues from 13.8% in the nine months
ended December 31, 1999 to 7.4% in the nine months ended December 31, 2000. The
increase in sales and marketing expenses during the three and nine month periods
was primarily due to the acquisition of Teltrend Inc., increased marketing of
the DSL products and increased shipping charges to customers associated with the
increase in sales. The Company believes that continued investment in sales and
marketing will be required to expand its product lines, bring new products to
market and service customers.

RESULTS OF OPERATIONS - continued
Research and Development. Research and development expenses increased 191.7%, or
$5.7 million, to $8.7 million in the three months ended December 31, 2000 and
increased 188.4%, or $15.4 million, to $23.6 million in the nine months ended
December 31, 2000 when compared to the same period last year. Research and
development expenses increased as a percentage of revenues from 9.9% in the
three months ended December 31, 1999 to 10.9% in the three months ended December
31, 2000 and decreased as a percentage of revenues from 10.3% in the nine months
ended December 31, 1999 to 8.1% in the nine months ended December 31, 2000. This
increase in research and development expenses was primarily reflective of the
Company's acquisition of Teltrend Inc., which occurred in March 2000.
Additionally, the Company received $1.5 million and $4.6 million during the
three and nine month periods ended December 31, 1999, respectively, from
customers to fund engineering projects, which was offset against research and
development expenses. The Company believes that a continued commitment to
research and development will be required for the Company to remain competitive.

General and Administrative. General and administrative expenses increased
104.3%, from $2.9 million in the three months ended December 31, 1999 to $5.9
million in the three months ended December 31, 2000 and increased 90.5%, from
$9.5 million in the nine months ended December 31, 1999 to $18.1 million in the
nine months ended December 31, 2000. General and administrative expenses
decreased as a percentage of revenues from 9.7% in the three months ended
December 31, 1999 to 7.5% in the three months ended December 31, 2000 and
decreased as a percentage of revenues from 12.0% in the nine months ended
December 31, 1999 to 6.2% in the nine months ended December 31, 2000. The
general and administrative expense increase was primarily due to the Company's
acquisition of Teltrend Inc., which occurred in March 2000.

Goodwill Amortization. Intangible assets include goodwill, synergistic goodwill
and product technology related to the Teltrend acquisition. The purchase price
of approximately $238,241,873 exceeded the fair market value of net assets
acquired, resulting in goodwill of $64,207,801 and synergistic goodwill of
$57,000,000 which will be amortized on a straight-line basis over an average of
approximately ten years.

Other (income) expense, net. Other (income) expense, net decreased from income
of $854,000 in the three months ended December 31, 1999 to income of $104,000 in
the three months ended December 31, 2000 and increased from income of $905,000
in the nine months ended December 31, 1999 to income of $169,000 in the nine
months ended December 31, 2000. Other income is primarily comprised of interest
income earned on temporary cash investments, the elimination of minority
interest and unrealized gains of losses on intercompany balances denominated in
foreign currency.

Interest expense. Interest expense increased from $690,000 in the three months
ended December 31, 1999 to $1.1 million in the three months ended December 31,
2000 and increased from $1.4 million in the nine months ended December 31, 1999
to $1.5million in the nine months ended December 31, 2000. Interest expense
during the current period is a result of interest incurred on the Company's
subordinated secured convertible debentures, Warrants to purchase Class A Common
Stock and net obligations outstanding during the period under promissory notes
and equipment borrowings.

Income taxes. There was no Benefit for income taxes recorded for either the
three or the nine month periods ended December 31, 1999 and 2000. The Company
provided valuation reserves for the entire benefit generated during the three
and nine month periods ended December 31, 2000 of $4.0 million and $10.6
million, respectively, since the resulting gross deferred tax asset would have
exceeded the value of tax planning strategies available to the Company. The
Company will evaluate on a quarterly basis it's ability to record a benefit for
income taxes in relation to the value of tax planning strategies available in
relation to the resulting gross deferred asset.

LIQUIDITY AND CAPITAL RESOURCES

At December 31, 2000, the Company had $20.3 million in cash. As of
December 31, 2000, the Company had $44.6 million outstanding under its secured
revolving credit facility. As of December 31, 2000, the Company had
approximately $400,000 available under its secured revolving credit facility.

The secured revolving credit facility requires, among other things, the
maintenance of a minimum interest coverage ratio, a minimum net worth, a maximum
capital expenditures and target EBITDA. The Company's failure to meet these
quarterly financial covenants would allow the lenders to demand repayment of all
amounts outstanding under the credit facility. The Company was not in compliance
with target EBITDA and the interest coverage ratio at December 31, 2000. The
Company and its lenders have entered in an amendment and waiver under which the
covenant violations discussed above were waived. The amendment and waiver amends
covenants regarding EBITDA, capital expenditures and reporting time periods, and
increases the interest rate under the credit facility from prime to prime plus
1% and from LIBOR plus 1.75% to LIBOR plus 3.0%. In addition, the amendment and
waiver requires the Company to raise $25 million in equity financing by April
15, 2001 and pay such amounts to the lenders. The amounts paid to the lenders
will be available for reborrowing under the credit facility subject to the
Company's borrowing base. Failure to raise such funds constitutes an event of
default and allows the lenders to demand repayment of all amounts outstanding
under the credit facility. There can be no assurance that the Company will be
able to comply with the amended financial covenants in the amendment and waiver
or raise the equity financing required by the amendment and waiver. As a result
of the new covenants and other requirements made in the amendment and waiver,
outstanding borrowings under the credit facility have been classified as a
current liability.

The Company's operating activities used cash of approximately $38.8
million in the nine months ended December 31, 2000. This primarily resulted from
a net loss from operations along with increases in accounts receivable,
inventory, offset by an increase in accounts payable and accrued expenses.

Capital expenditures for the nine month period ended December 31, 2000
were approximately $18.0 million. Capital expenditures in the nine months ended
December 31, 2000 included computer hardware and software, machinery and
equipment and teleconferencing bridges. The Company expects to spend
approximately $5.0 million for the remainder of fiscal year 2001 related to
capital equipment expenditures.

At December 31, 2000, the Company's principle sources of liquidity were
$20.3 million of cash and approximately $9 million of income tax refunds. The
Company's credit facility has a $45.0 million available line of credit, which
was fully utilized on December 31, 2000. To meet the Company's cash needs for
the fourth quarter of fiscal year 2001 and fiscal year 2002 the Company is
exploring various alternatives including; an increased line of credit from its
current bank group, a larger line of credit from new asset based lenders
replacing the current bank credit line, and some type of equity or subordinated
debt offering. Cash in excess of operating requirements will be invested on a
short term basis in federal government agency instruments and the highest rated
grade commercial paper.

The Company had a deferred tax asset of approximately $53.8 million at
December 31, 2000. This deferred tax asset relates to (i) tax credit
carryforwards of approximately $4.9 million, (ii) a net operating loss
carryforward tax benefit of approximately $39.9 million and (iii) temporary
differences between the amount of assets and liabilities for financial reporting
purposes and such amounts measured by tax laws. Of such tax credit
carryforwards, the first $243,000 of credits expire in 2008 and $722,000 of
credits may be carried forward indefinitely. The net operating loss carryforward
begins to expire in 2012. 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.

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. Although realization of the deferred tax asset is not
assured as the Company has incurred operating losses for the 1998, 1999 and 2000
fiscal years, management believes that it is more likely than not that it will
generate taxable income sufficient to realize the majority of the tax benefit. A
majority of these deferred tax assets are expected to be utilized, prior to
their expiration, through a tax planning strategy available to the Company.
Management will continue to periodically assess whether it remains more likely
than not that the deferred tax asset will be realized. If the tax planning
strategy is not sufficient to generate taxable income to recover the deferred

tax benefit recorded, an increase in the valuation allowance will be required
through a charge to the income tax provision. However, if the Company achieves
sufficient profitability or has available additional tax planning strategies to
utilize a greater portion of the deferred tax asset, an income tax benefit would
be recorded to decrease the valuation allowance.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS.
- ---------------------------------------------------------------------

Westell is subject to certain market risks, including foreign currency
and interest rates. The Company has foreign subsidiaries in the United Kingdom
and Ireland that develop and sell products and services in those respective
countries. The Company is exposed to potential gains and losses from foreign
currency fluctuations affecting net investments and earnings denominated in
foreign currencies. The Company's future primary exposure is to changes in
exchange rates for the U.S. dollar versus the Great British pound and the Irish
pound. The Company also has a sales order and accounts receivable denominated in
Great British pounds. The Company at times uses foreign currency hedging to
manage the exposure to changes in the exchange rate on accounts receivable.

As of December 31, 2000, the net change in the cumulative foreign
currency translation adjustment account, which is a component of stockholders'
equity, was an unrealized loss of $23,000.

The Company does not have significant exposure to interest rate risk
related to its debt obligations, which are primarily U.S. Dollar denominated.
The Company's market risk is the potential loss arising from adverse changes in
interest rates. As further described in Note 1 of the Company's 10-K for the
period ended March 31, 2000, the Company's debt consists primarily of a
floating-rate bank line-of credit. Market risk is estimated as the potential
decrease in pretax earnings resulting from a hypothetical increase in interest
rates of 10% (i.e. from approximately 9.5% to approximately 19.5%) average
interest rate on the Company's debt. If such an increase occurred, the Company
would incur approximately $2.5 million per annum in additional interest expense
based on the average debt borrowed during the twelve months ended December 31,
2000. The Company does not feel such additional expense is significant.

The Company does not currently use any derivative financial instruments
relating to the risk associated with changes in interest rates.

PART II. OTHER INFORMATION
- --------------------------

ITEM 1. LITIGATION
- ------------------

Westell Technologies, Inc. and certain of its officers and directors have been
named in the following class actions:

1. Schumaster v. Westell Technologies, Inc., et al., No. 00C7991 (filed
December 26, 2000);

2. Barton v. Westell Technologies, Inc., et al., No. 00C7765 (filed December
12, 2000);

3. Hoffman v. Westell Technologies, Inc., et al., No. 00C7624 (filed December
4, 2000);

4. PAS Mgmt. & Consulting Serv., Inc.v. Westell Technologies, Inc., et al.,
No. 00C7605 (filed December 4, 2000);

5. Abdelnour v. Westell Technologies, Inc., et al., No. 00C7308 (filed
November 20, 2000);

6. Feinstein v. Westell Technologies, Inc., et al., No. 00C7247 (filed
November 16, 2000);

7. Lefkowitz v. Westell Technologies, Inc., et al., No. 00 C 6881 (filed
November 2, 2000);

8. Greif v. Westell Technologies, Inc., et al., No. 00 C 7046 (filed November
8, 2000);

9. Seplow v. Westell Technologies, Inc., et al., No. 00 C 7019 (filed November
7, 2000);

10. Llanes v. Westell Technologies, Inc., et al., No. 00 C 6780 (filed October
30, 2000); and

11. Bergh v. Westell Technologies, Inc., et al., No. 00 C 6735 (filed October
27, 2000).

Each of these cases was filed in the United States District Court for the
Northern District of Illinois and alleges generally that the defendants violated
the antifraud provisions of the federal securities laws by allegedly issuing
material false and misleading statements and/or allegedly omitting material
facts necessary to make the statements made not misleading thereby allegedly
inflating the price of Westell stock for certain time periods. Each of these
cases allegedly arises from the same set of operative facts and seeks the same
relief -- damages allegedly sustained by plaintiffs and the class by reason of
the acts and transactions alleged in the complaints as well as interest on any
damage award, reasonable attorneys' fees, expert fees, and other costs.

On January 11, 2001 Judge George W. Lindbergh of the federal district court for
the Northern District of Illinois consolidated these cases into one lawsuit,
captioned In re Westell Technologies, Inc., No 00 C 6735 (filed February 1,
2001).

Certain of its Westell Technologies, Inc.'s officers and directors have been
named in the following derivative actions:

1. Vukovich v. Zionts, et al., No. 18647 (filed January 26, 2001); and

2. Dollens v. Zionts, et al., No. 18533 NC (filed December 4, 2000).

Each of these cases was filed in the Court of Chancery for the State of
Delaware, New Castle County. Each case alleges generally that the defendants
issued material false and misleading statements and/or allegedly omitting
material facts necessary to make the statements made not misleading thereby
allegedly inflating the price of Westell stock for certain time periods, engaged
in insider trading, misappropriated corporate information, and beached their
fiduciary duties to Westell Technology, Inc.'s shareholders. Each case allegedly
arises from the same set of operative facts and seeks the same relief -- damages
allegedly sustained by Westell by reason of the acts and transactions alleged in
the complaints, a constructive trust for the amount of profits the individual
defendants made on insider sales, reasonable attorneys' fees, expert fees, and
other costs.

In the opinion of the Company, although the outcome of any legal proceedings
cannot be predicted with certainty, the liability of the Company in connection
with its legal proceedings will not have a material effect on the Company's
financial position.

ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
- ---------------------------------------------------------

On December 13, 2000 the Company held its annual shareholders meeting. Matters
put before vote of the security holders were the election of directors. The
results were as follows based upon total votes cast of 75,721,878:

For Withheld
--- --------
Thomas A. Reynolds, III 106,336,905 687,808
Melvin J. Simon 104,709,804 2,314,909
Paul A. Dwyer 106,407,939 616,774
Robert C. Penny 105,033,674 1,991,039
John W. Seazholtz 105,020,761 2,003,952
Howard L. Kirby, Jr. 106,442,980 581,733
Bernard F. Sergesketter 106,483,932 540,781
Marc J. Zionts 106,224,082 706,471
J.W. Nelson 106,300,104 724,609

ITEM 5. OTHER EVENTS
- --------------------

None

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- ----------------------------------------

a) The following documents are furnished as an exhibit and numbered pursuant
to Item 601 of regulation S-K:

Exhibit 10.1 Amendment to Amended and Restated Loan and Security
Agreement

b) The registrant was not required to file any reports on Form 8-K for the
quarter.

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: February 14, 2001
By: MARC J. ZIONTS
---------------
MARC J. ZIONTS
Chief Executive Officer

By: NICHOLAS C. HINDMAN
---------------------
NICHOLAS C. HINDMAN
Chief Financial Officer