[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
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WESTELL TECHNOLOGIES REPORTS SECOND QUARTER RESULTS
COMPANY POSTS ITS TENTH CONSECUTIVE PROFITABLE QUARTER
AURORA, IL, OCTOBER 19, 2004 - -Westell Technologies, Inc. (NASDAQ: WSTL), a
leading provider of broadband access solutions and conferencing services, today
announced the results for its quarter ended September 30, 2004.
Total revenues for the September quarter increased to $61.4 million from
$58.4 million in the same quarter of last fiscal year and from $56.2 million in
the quarter ended June 30, 2004.
Westell reported net income for the September quarter of $4.4 million, or
$0.06 per diluted share, which includes tax expense of $2.6 million, or $0.04
per diluted share. Excluding the tax expense, non-GAAP net income in the
September quarter increased to $6.9 million, or $0.10 per diluted share,
compared to $4.9 million, or $0.07 per diluted share in the September quarter of
last year. A reconciliation of non-GAAP results to GAAP results is provided as
part of this press release.
"We are quite pleased with our second quarter results. Westell anticipated
a stronger second half of this fiscal year and our September quarter indicates
that this improvement has begun earlier than we thought", said Van Cullens,
Westell President and CEO.
"Ten consecutive quarters of profitability is another significant milestone
for Westell. The combined efforts of our customers, employees, partners and
suppliers all contributed to this achievement." Cullens added.
Cullens continued, "Westell made several key announcements during the
quarter that validates our product development and diversification strategy.
First and foremost were the announcements of Verizon's selection of
VersaLink(TM), our new wireless DSL gateway line, and the extension of our base
DSL modem contract with Verizon through 2005. We are particularly happy with the
VersaLink(TM) product launch. The market response to this product has been very
encouraging."
"Westell also announced our partnership with Mitel to develop an advanced
multimedia access device incorporating voice, video and data for which we have
already received a significant customer contract award. Elsewhere, the Company's
remote management software product, EnVoy TM, continues to gain traction in
North America as well as Europe, and we are continuing our work on next
generation VoIP products," Cullens said.
OUTLOOK
Westell provided guidance for the third fiscal quarter ending December 31,
2004. The Company expects revenue to be in a range of $65 to $67 million.
Westell expects EPS to be in a range of $0.04 to $0.05 (including a provision
for income tax expense in a range of $ 2.0 to $2.5 million) and non-GAAP EPS in
a range of $0.7 to $0.09 per share, excluding the provision for tax expense.
NEW EFFECTIVE TAX RATE FOR FISCAL YEAR 2005 INCOME STATEMENTS
Due to the Company's strong performance in fiscal 2004 and projected future
ability to generate taxable income, the Company is required under GAAP to record
tax expense in fiscal 2005. The Company's expected effective tax rate for the
fiscal year approximates 40%. Westell does not expect to incur any significant
cash tax payments for the foreseeable future as a result of the anticipated
utilization of net operating loss carryforwards to reduce its cash tax
liabilities.
RECONCILIATION OF NON-GAAP TO GAAP RESULTS
A detailed calculation of non-GAAP net income and net income per share is
included in the attached statement of operations, which also includes equivalent
GAAP net income and GAAP net income per share
CONFERENCE CALL INFORMATION
- ---------------------------
Westell will host its earnings call on Wednesday October 20th at 9:30AM
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.
To participate in the voice portion:
1. All participants must pre-register by dialing 1-800-299-5919, International
1-402-220-4796.
2. Leave your name and the company whom you represent.
3. To participate in the call on the 20th, please dial ConferencePlus at
1-800-446-1671 no later than 9:15 AM, Eastern Time and ask for the "Westell
Technologies Analyst Call". International participants may dial 847-413-3362.
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 10089758#.
ABOUT WESTELL
Westell Technologies, Inc. (NASDAQ: WSTL) headquartered in Aurora, Illinois
is a Tier-1 provider of intelligent, carrier-class broadband access products,
manufactured using a TL9000 registered quality management system. Westell offers
high-speed broadband/DSL and VoIP technology products for carriers, service
providers and business enterprises around the world. Additional information can
be obtained by visiting Westell's Web site at http://www.westell.com.
ABOUT CONFERENCEPLUS
Conference Plus, Inc., (ConferencePlus(TM)) a leading global provider of audio,
web and videoconferencing services is dedicated to the workplace of the future -
now. ConferencePlus is transforming the way work is done through its
market-leading multimedia conferencing solutions that combine innovation, proven
technology and exceptional customer service. Headquartered in Schaumburg,
Illinois with an international headquarters in Dublin, Ireland, ConferencePlus
is a subsidiary of Westell Technologies, Inc. (NASDAQ: WSTL). Additional
information about ConferencePlus can be obtained by visiting
http://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," " on track, "
"anticipate," "committed" "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, 2004 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 Sept. 30, % Six Months ended Sept. 30, %
2004 2003 Change 2004 2003 Change
---- ---- ------ ---- ---- ------
Revenues
NSA $ 11,277 $ 15,037 -25% $ 24,394 (1) $ 28,584 -15%
CNE 39,305 31,884 23% 71,108 62,044 15%
Services 10,817 11,455 -6% 22,069 23,035 -4%
--------- --------- -- --------- -- --------- --
Total revenues 61,399 58,376 5% 117,571 113,663 3%
--------- --------- -- --------- -- --------- --
Gross profit
Equipment 13,618 (2) 14,353 26,900 (1)(2) 29,798
Services 5,661 4,672 10,925 9,498
--------- --------- -- --------- -- --------- --
Total gross profit 19,279 19,025 1% 37,825 39,296 -4%
--------- --------- -- --------- -- --------- --
Gross margin
Equipment 26.9% 30.6% 28.2% (1) 32.9%
Services 52.3% 40.8% 49.5% 41.2%
--------- --------- -- --------- -- --------- --
Total gross margin 31.4% 32.6% 32.2% 34.6%
--------- --------- -- --------- -- --------- --
Operating expenses
Sales & marketing 5,530 (2) 4,783 16% 10,882 (2) 10,210 7%
Expense to revenue 9.0% 8.2% 9.3% 9.0%
General & administrative 4,762 (2) 4,335 10% 8,776 (2) 9,469 -7%
Expense to revenue 7.8% 7.4% 7.5% 8.3%
Research & development 3,528 (2) 4,321 -18% 7,102 (2) 8,757 -19%
Expense to revenue 5.7% 7.4% 6.0% 7.7%
Restructuring (452) (4) -- (452)(4) --
Expense to revenue -0.7% 0.0% -0.4% 0.0%
Intangibles amortization (5) 324 364 688 727
Expense to revenue 0.5% 0.6% 0.6% 0.6%
--------- --------- -- --------- -- --------- --
Total operating expenses 13,692 (2) 13,803 -1% 26,996 (2) 29,163 -7%
--------- --------- -- --------- -- --------- --
Expense to revenue 22.3% 23.6% 23.0% 25.7%
Gain on sale of assets 1,453 (3) -- 1,453 (3) --
Operating income 7,040 5,222 35% 12,282 10,133 21%
Other income 32 35 393 191
Interest expense (15) (197) -92% (51) (556) -91%
--------- --------- -- --------- -- --------- --
Income before minority interest and taxes 7,057 5,060 39% 12,624 9,768 29%
--------- --------- -- --------- -- --------- --
Income taxes 2,567 -- (6) 4,750 -- (6)
Minority interest 120 121 217 232
Net income $ 4,370 $ 4,939 $ 7,657 $ 9,536
========= ========= ======== ========
Income per common share:
Basic 0.06 0.07 0.11 0.14
--------- --------- -- --------- -- --------- --
Diluted 0.06 0.07 0.11 0.14
--------- --------- -- --------- -- --------- --
Average number of common
shares outstanding:
Basic 68,379 66,840 68,336 66,167
Diluted 70,420 70,879 70,805 70,345
NON-GAAP RESULTS AND RECONCILIATION TO GAAP
GAAP net income $ 4,370 $ 4,939 $ 7,657 $ 9,536
Income tax expense 2,567 -- 4,750 --
--------- --------- -- --------- -- --------- --
Non-GAAP net income (7) $ 6,937 $ 4,939 $ 12,407 $ 9,536
========= ========= ======== ========
GAAP Income per basic share 0.06 0.07 0.11 0.14
Basic per share income tax expense 0.04 -- 0.07 --
--------- --------- -- --------- -- --------- --
Non-GAAP income per basic share (7) 0.10 0.07 0.18 0.14
========= ========= ======== ========
GAAP Income per diluted share 0.06 0.07 0.11 0.14
Diluted per share income tax expense 0.04 -- 0.07 --
--------- --------- -- --------- -- --------- --
Non-GAAP income per diluted share (7) 0.10 0.07 0.18 0.14
========= ========= ======== ========
FOOTNOTES:
(1) The Company earned $883,000 in the three months ended June 30, 2004
for a contractual settlement.
(2) The Company recorded $0 and $1.4 million of bonus expense in the
three months ended June 30, 2004 and September 30, 2004,
respectively. Due to second quarter performance and improved
forecasts for the balance of fiscal 2005, the Company now anticipates
meeting bonus thresholds for the entire fiscal year.
(3) Includes a $1.5 million gain from the sale of NSA assets.
(4) Reversal of restructuring charge resulting from an early lease
termination at the Company's Conference Plus subsidiary.
(5) Teltrend product technology intangible amortization.
(6) Valuation allowances were utilized for taxable income.
(7) Non-GAAP net income and net income per share excludes the impact of
tax expense.
WESTELL TECHNOLOGIES, INC.
FINANCIAL RESULTS (CONTINUED)
(Dollars in thousands)
SEPT. 30, MAR. 31,
2004 2004
---- ----
Cash and Short term Investments 17,206 11,241
Receivables 29,119 23,807
Inventory 23,744 16,075
Total current assets 76,899 62,117
Goodwill and intangibles 13,747 13,944
Total assets 141,307 129,781
Total current liabilities 35,881 34,492
Bank and Solectron notes payable -- 2,631
Total liabilities and minority interest 39,717 38,016
Shareholders' Equity 101,590 91,765
Days Sales Outstanding 41 35