[WESTELL LOGO]
Westell News Release
News Release: FOR IMMEDIATE RELEASE
For Additional Information, contact:
SENIOR VICE PRESIDENT & CFO: TRADE/BUSINESS PRESS:
NICHOLAS C. HINDMAN, SR. KEN TRANTOWSKI
WESTELL TECHNOLOGIES INC. KGT COMMUNICATIONS GROUP
630.375.4136 630.469.8765
nhind@westell.com kennethg_trantowski@msn.com
WESTELL TECHNOLOGIES REPORTS 3RD QUARTER FISCAL 2004 RESULTS
REVENUE FROM NETWORKING EQUIPMENT INCREASES 36% YEAR OVER YEAR
CONSOLIDATED NET INCOME INCREASES 155%
AURORA, IL, JANUARY 21, 2004 - - Westell Technologies, Inc. (NASDAQ: WSTL), a
leading provider of broadband access solutions, today announced the results for
its fiscal 2004 third quarter ending December 31, 2003.
Net income for the quarter was $5.8 million or $0.08 per diluted share, compared
with net income of $2.3 million or $0.03 per diluted share for the comparable
quarter last year, an increase of 155%. Total revenues for the quarter increased
22% to $60.0 million from $49.2 million in the third quarter of last year.
Customer Networking Equipment revenue grew to $35.8 million compared to $26.4
million in the comparable quarter of last year, a 36% increase.
"Our revenue growth was once again primarily attributable to increased demand
for our Customer Networking Equipment products. Our service provider customers
continue to aggressively pursue the consumer broadband market place," said Van
Cullens, President and CEO. " However, both ConferencePlus and our Network
Service Access equipment businesses also contributed to our growth, both showing
improved revenue from the comparable quarter of last year, " Cullens said.
Gross margins on equipment sales expanded to 32.6% from 28.0% in the comparable
quarter of last year due primarily to product cost reductions. Margins at
ConferencePlus declined to 28.6% from 34.8 % in the comparable quarter of last
year due to a previously announced one-time charge taken during the quarter
related to the early termination of a long distance contract. Margins at
ConferencePlus are expected to return to historical levels in the Company's
fourth quarter.
Net cash provided by operating activities totaled $ 9.2 million for the quarter
ended December 31, 2003 compared to $8.7 million in the September quarter.
During the quarter total debt decreased to $ 6.4 million from $15.2 million.
This reduction of debt was funded by cash generated from operations and cash
received from the exercise of stock options. "We expect to be debt free and have
more than adequate cash on the balance sheet by the end of the June 2004
quarter," Nicholas Hindman, Westell's Senior Vice President and CFO, said. " We
are developing the flexibility to make more strategic investments such as the
recent acquisition of VoIP technology (voice over internet protocol) from Hughes
Electronics Corporation," he added.
OUTLOOK
- -------
Mr. Cullens continued, "We are very encouraged by the continued growth and
market acceptance of broadband over DSL. It is now very clear that our service
provider customers are dedicated to leadership in the delivery of broadband
service in both the near and long terms. Their growth will be fueled by
technology advancements in home networking, WiFi, VoIP and FTTP
(fiber-to-the-premise) and the delivery of ancillary services. We believe
Westell is building a solid foundation of solutions to help equip our customers
to successfully compete in these emerging opportunities. Our new products
announced yesterday; UltraLine(TM), VersaLink(TM) and EnVoy(TM), address home
networking, WiFi, FTTP and service management. We believe these new products,
and those to come, will maintain Westell's traditional position as a technology
leader in the DSL broadband space," Cullens added.
Westell provided guidance for the fourth fiscal quarter, ending March 31, 2004.
The Company expects revenue to be in the range of $60 - $61 million and EPS to
be $0.09 per share.
Westell will host its earnings call on Thursday, January 22nd, at 9:30 AM
Eastern Time for analysts, shareholders, investors and the public.
The live earnings call will be available to the public. Participants can join
for the voice portion of the call by following the instructions below.
Participants must separately register for the call.
1. All participants must pre-register by dialing 1-888-690-4420,
International 1-402-220-3749.
2 Leave your name and the company whom you represent.
3. To participate in the call on the 22nd, please dial ConferencePlus
at 1-800-559-1203 no later that 9:15 AM, Eastern Time and ask for
the "Westell Technologies Analyst Call". International participants
may dial 630-691-2762.
The Company's earnings press release and any related earnings information to be
discussed on the earnings call will be posted on the Investor Relations section
of the Company's web site at http://www.westell.com. Digital Audio Replay of
this call will be available one hour following the conclusion of the call by
dialing 1-888-843-8996 or 630-652-3044 and entering 8246022#.
ABOUT WESTELL
- -------------
Westell Technologies, Inc., headquartered in Aurora, Illinois, is a Tier-1
provider of intelligent, carrier-class broadband access equipment, manufactured
using a TL 9000 registered quality management system. Westell offers high-speed
broadband/DSL technology products for carriers, service providers and business
enterprises around the world. Additional information can be obtained by visiting
Westell's Web site at www.westell.com.
ABOUT CONFERENCEPLUS
- --------------------
ConferencePlus, a Westell Technologies, Inc. (NASDAQ: WSTL) subsidiary, is a
leading global provider of audio, web, video and IP conferencing services.
ConferencePlus is dedicated to providing high quality, innovative conferencing
solutions to its domestic and international clients and telecommunications
resellers. ConferencePlus is recognized for outstanding customer service and
support to help clients meet their business objectives. The company is
headquartered in Schaumburg, Illinois with an international headquarters in
Dublin, Ireland. Additional information can be obtained by visiting the
ConferencePlus web site at www.conferenceplus.com.
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT 1995:
- --------------------------------------------------------------------------------
Certain statements contained herein including, without limitation, statements
containing the words "believe," "goal," "predict," "on track," "appears,"
"anticipate," "committed" "expectation," "expect," "estimate", "await,"
"continue," "intend," "may," "will," "should," and similar expressions are
forward looking statements that involve risks and uncertainties. These risks
include, but are not limited to, product demand and market acceptance risks,
need for financing, the economic downturn in the U.S. economy and telecom
market, the impact of competitive products or technologies, 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), the effect of Westell's accounting policies, the
need for additional capital, 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 Westell's Annual Report on Form 10-K for the
fiscal year ended March 31, 2003 under the section "Risk Factors". Westell
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.
Financial Tables to Follow:
Westell Technologies, Inc.
Financial Results
(Dollars in thousands except per share amounts)
Three Months ended Nine Months ended
Dec. 31, % Dec. 31, %
2003 2002 Change 2003 2002 Change
-------- -------- ------ -------- -------- ------
Revenues
NSA $13,442 $12,771 5% $42,025 $44,588 -6%
CNE 35,761 26,350 36% 97,805 79,798 (1) 23%
Services 10,775 10,082 7% 33,810 30,793 10%
-------- -------- -------- --------
Total revenues 59,978 49,203 22% 173,640 155,179 12%
-------- -------- -------- --------
Gross profit
Equipment 16,036 10,940 45,834 (2) 34,531 (3)
Services 3,082(4) 3,505 12,579 (4) 10,394
-------- -------- -------- --------
Total gross
profit 19,118 14,445 32% 58,413 44,925 30%
-------- -------- -------- --------
Gross margin
Equipment 32.6% 28.0% 32.8% (2) 27.8% (3)
Services 28.6%(4) 34.8% 37.2% (4) 33.8%
-------- -------- -------- --------
Total gross
margin 31.9% 29.4% 33.6% 29.0%
-------- -------- -------- --------
Operating expenses
Sales &
marketing 4,647 3,535 31% 14,857 12,483 19%
Expense to
revenue 7.7% 7.2% 8.6% 8.0%
General & admin-
istrative 4,545 3,486 30% 14,014 12,263 14%
Expense to
revenue 7.6% 7.1% 8.1% 7.9%
Research &
development 3,874 4,097 -5% 12,630 11,721 8%
Expense to
revenue 6.5% 8.3% 7.3% 7.6%
Restructuring - 180(5) - 1,922 (5)
Expense to
revenue 0.0% 0.4% 0.0% 1.2%
Intangibles
amortization(6) 364 389 1,091 1,167
Expense to
revenue 0.6% 0.8% 0.6% 0.8%
-------- -------- -------- --------
Total operating
expenses 13,430 11,687 15% 42,592 39,556 8%
-------- -------- -------- --------
Expense to
revenue 22.4% 23.8% 24.5% 25.5%
Operating
income 5,688 2,758 106% 15,821 5,369 195%
Other income
(expense) 189 17 1012% 147 128
Interest expense 127 517 -75% 683 1,984 -66%
-------- -------- -------- --------
Income before
taxes 5,750 2,258 155% 15,285 3,513 335%
-------- -------- -------- --------
Income taxes (7) - - - -
Effective
tax rate 0.0% 0.0% 0.0% 0.0%
Net income $5,750 $2,258 $15,285 $3,513
======== ======== ======== ========
Income per common
share:
Basic 0.09 0.03 0.23 0.05
-------- -------- -------- --------
Diluted 0.08 0.03 0.22 0.05
-------- -------- -------- --------
Average number of
common shares
outstanding:
Basic 67,373 64,921 66,569 64,921
Diluted 70,897 64,979 70,502 64,972
Footnotes:
(1) The Company earned $1.7 million in the three months ended June
30, 2002 from customer for product royalties.
(2) Includes $1.2 million to settle a customer contract obligation
which arose in the quarter ended September 30, 2003.
(3) The Company reversed approximately $2 million of reserves in
the quarter ended September 30, 2002 primarily related to
excess and obsolete modem inventory.
(4) Includes a $775,000 one time early contract termination
penalty of a long distance contract at the Company's
Conference Plus, Inc. subsidiary.
(5) Restructuring charge primarily for the Company's Conference
Plus, Inc. subsidiary.
(6) Teltrend product technology intangible amortization.
(7) Valuation allowances were utilized to reduce taxable income.
Westell Technologies, Inc.
Financial Results (continued)
(Dollars in thousands)
Dec. 31, Sept. 30,
2003 2003
------------- ----------
Cash and Short term Investments 10,678 10,722
Receivables 22,351 23,594
Inventory 12,437 11,345
Total current assets 50,521 49,512
Goodwill and intangibles 14,308 14,671
Total assets 105,974 105,677
Total current liabilities 35,761 36,441
Revolving Promissory note payable - 6,000
Other notes payable 6,391 9,213
Total liabilities 40,358 47,089
Shareholders' Equity 65,616 58,588
Days Sales Outstanding 34 36