[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 4TH QUARTER AND FISCAL 2005 RESULTS
AURORA, IL, MAY 12, 2005 - -Westell Technologies, Inc. (NASDAQ: WSTL), a leading
provider of broadband access solutions and conferencing services, today
announced the results for its fourth quarter and fiscal year 2005, ending March
31, 2005.
Total revenues for the quarter increased 26% to $78.2 million from $62.1
million in the fourth quarter of last fiscal year. Total revenues for fiscal
year 2005 increased 15% to $ 270.3 million from $235.7 million for fiscal 2004.
Van Cullens, Westell's President and CEO, commented, " Revenues for the quarter
exceeded our expectations primarily due to the successful net subscriber adds
our customers achieved through their strong promotional activity. While we
continue to expect a healthy order flow from our customers, we do anticipate
orders to return to more normalized levels going forward."
Westell reported net income for the fourth quarter of $28.4 million, or
$0.40 per diluted share, which includes a net tax benefit of $20.1 million, or
$0.28 per diluted share, from the release of deferred tax valuation allowance.
During the same period last year, the Company recorded net income of $19.6
million, or $0.28 per diluted share including a tax benefit of $12.9 million.
Net income for the year was $39.7 million, or $0.56 per diluted share, including
the net tax benefit of $12.8 million, compared to net income of $34.9 million or
$0.49 per diluted in the prior fiscal year including the tax benefit of $12.9
million.
Excluding the tax benefit, non-GAAP net income in the fourth quarter
increased 26% to $ 8.3 million, or $0.12 per diluted share, compared to $6.5
million, or $0.09 per diluted share in the fourth quarter of last year. Non-GAAP
net income, excluding the tax benefit for the year was $26.9 million, or $0.38
per diluted share, compared with $21.8 million, or $0.31 per diluted share for
last year. A reconciliation of non-GAAP results to GAAP results is provided as
part of this press release.
"We accomplished our Fiscal 2005 goals of growth in revenue, increased
profitability and product diversification," Cullens said. "We also introduced a
number of new products including VersaLink(TM), our wireless gateway platform,
which has become the most successful product launch in Company history."
"Westell generated cash from operating activities of over $20 million for
the fiscal year," said Nicholas Hindman, Westell Senior Vice President and CFO.
"Our balance sheet significantly improved and our near debt-free position
provides us great flexibility to take advantage of any strategic partnering
opportunities should they arise."
OUTLOOK
- -------
"In Fiscal 2006 we expect to see significant market activity in the areas
of VoIP, video applications, home networking and wireline-wireless convergence",
Cullens continued. "We believe that our VersaLink(TM), UltraLine(TM) and
TriLink(TM) product families are well positioned to help our customers meet such
demands in an effective and timely manner. We also anticipate Verizon One(TM),
and derivative products, to enter the market in a meaningful way over the next
few quarters," Cullens concluded.
Westell provided guidance for the first fiscal quarter ending June 30,
2005. The Company expects revenue to be in a range of $73 to $76 million.
Westell expects non-GAAP net income per diluted share in a range of $0.10 to
$0.12 (excluding a provision for income tax expense in a range of $2.7 million
to $3.3 million) and net income per diluted share in a range of $0.06 to $0.07
on a GAAP basis including the provision for tax expense.
RECONCILIATION OF NON-GAAP TO GAAP RESULTS AND GAAP OUTLOOK
- -----------------------------------------------------------
The Company provides non-GAAP operating results as a supplement to its GAAP
financial results. The Company's non-GAAP results exclude the income benefit
from the release of valuation allowance from the Company's statements of
operations. The Company believes its non-GAAP operating results provide help in
understanding its operating performance.
A detailed calculation of non-GAAP net income and non-GAAP 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 Friday May 13th, 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 1-888-690-4420
International 1-402-220-3749.
2. Leave your name and the company whom you represent.
3. To participate in the call on the 13th, 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 11575841#.
ABOUT WESTELL
- -------------
Westell Technologies, Inc., headquartered in Aurora, Illinois, is a holding
company for Westell, Inc. and ConferencePlus, Inc. Westell, Inc. manufactures
broadband telecommunications access products. ConferencePlus, Inc. is a
collaborative Application Service Provider that manages and hosts voice, video,
IP applications and back-office services. Additional information can be obtained
by visiting Westell's Web site at www.westell.com. ---------------
ABOUT CONFERENCEPLUS
- --------------------
ConferencePlus, a Westell Technologies, Inc. (NASDAQ: WSTL - News)
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," "on track, " "anticipate,"
"focus," "should," "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 (CONTINUED)
(Dollars in thousands)
MAR. 31, DEC. 31,
2005 2004
--------- ---------
Cash and Short term Investments 26,960 21,659
Receivables 30,167 28,477
Inventory 26,419 28,083
Total current assets 91,492 85,380
Goodwill and intangibles 13,883 13,930
Total assets 180,090 148,461
Total current liabilities 35,812 39,130
Total liabilities and minority 40,432 43,107
interest
Shareholders' Equity 139,657 105,354
Days Sales Outstanding 35 34
WESTELL TECHNOLOGIES, INC.
FINANCIAL RESULTS
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
Three Months ended Mar. 31, % Twelve months ended Mar. 31, %
2005 2004 Change 2005 2004 Change
---------- ---------- ------ -------- ---------- ------
Revenues
NSA $ 8,997 $ 12,710 (2) -29% $ 42,481 (1) $ 54,736 (2) -22%
CNE 57,792 37,899 52% 183,384 135,704 35%
Services 11,452 11,489 0% 44,398 45,299 -2%
---------- ---------- --------- ----------
Total revenues 78,241 62,098 26% 270,263 235,739 15%
---------- ---------- --------- ----------
Gross profit
Equipment 16,553 15,193 (2) 58,543 (1) 61,027 (2)(3)
Services 6,264 6,134 22,657 18,714 (4)
---------- ---------- --------- ----------
Total gross profit 22,817 21,327 7% 81,200 79,741 2%
---------- ---------- --------- ----------
Gross margin
Equipment 24.8% 30.0% (2) 25.9% (1) 32.0% (2)(3)
Services 54.7% 53.4% 51.0% 41.3% (4)
---------- ---------- --------- ----------
Total gross margin 29.2% 34.3% 30.0% 33.8%
---------- ---------- --------- ----------
Operating expenses
Sales & marketing 5,590 5,385 4% 22,211 20,242 10%
Expense to revenue 7.1% 8.7% 8.2% 8.6%
General & administrative 4,146 3,492 19% 17,368 17,506 -1%
Expense to revenue 5.3% 5.6% 6.4% 7.4%
Research & development 4,756 4,754 0% 15,911 17,385 -8%
Expense to revenue 6.1% 7.7% 5.9% 7.4%
Restructuring (341) (8) 698 (5) (793) (7)(8) 698 (5)
Expense to revenue -0.4% 1.1% -0.3% 0.3%
Intangibles amortization (6) 324 364 1,335 1,455
Expense to revenue 0.4% 0.6% 0.5% 0.6%
---------- ---------- --------- ----------
Total operating expenses 14,475 14,693 -1% 56,032 57,286 -2%
---------- ---------- --------- ----------
Expense to revenue 18.5% 23.7% 20.7% 24.3%
Gain on sale of assets - - 1,453 (9) -
Operating income 8,342 6,634 26% 26,621 22,455 19%
Other income 109 212 896 615
Interest expense (3) (60) -95% (60) (743) -92%
---------- ---------- --------- ----------
Income before minority interest and taxes 8,448 6,786 24% 27,457 22,327 23%
---------- ---------- --------- ----------
Income taxes (10) (20,122) (12,923) (12,757) (12,923)
Minority interest 196 118 520 373
Net income $ 28,374 $ 19,591 $ 39,694 $ 34,877
========== ========== ========= ==========
Income per common share:
Basic 0.41 0.29 0.58 0.52
---------- ---------- --------- ----------
Diluted 0.40 0.28 0.56 0.49
---------- ---------- --------- ----------
Average number of common
shares outstanding:
Basic 68,801 67,726 68,473 66,858
Diluted 71,593 71,149 71,042 70,667
NON-GAAP RESULTS AND RECONCILIATION TO GAAP
GAAP net income $ 28,374 $ 19,591 $ 39,694 $ 34,877
Income tax expense (20,122) (13,055) (12,757) (13,055)
---------- ---------- --------- ----------
Non-GAAP net income (11) $ 8,252 $ 6,536 $ 26,937 $ 21,822
========== ========== ========= ==========
GAAP Income per basic share 0.41 0.29 0.58 0.52
Basic per share income tax expense (0.29) (0.19) (0.19) (0.20)
---------- ---------- --------- ----------
Non-GAAP income per basic share (11) 0.12 0.10 0.39 0.33
========== ========== ========= ==========
GAAP Income per diluted share 0.40 0.28 0.56 0.49
Diluted per share income tax expense (0.28) (0.18) (0.18) (0.18)
---------- ---------- --------- ----------
Non-GAAP income per diluted share (11) 0.12 0.09 0.38 0.31
========== ========== ========= ==========
FOOTNOTES:
(1) The Company earned $883,000 in the three months ended June 30, 2004 for a contractual settlement.
(2) The Company earned $875,000 in the three months ended March 31, 2004 for a contractual settlement.
(3) Includes $1.2 million to settle a customer contract obligation which arose in the quarter ended September 30, 2003.
(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 Westell Limited subsidiary.
(6) Teltrend product technology intangible amortization.
(7) Reversal of restructuring charge resulting from an early lease termination at the Company's Conference Plus subsidiary.
(8) Reversal of restructuring charge resulting from the Company's Westell Limited subsidiary.
(9) Includes a $1.5 million gain from the sale of NSA assets.
(10) The Company recorded a tax benefit from the release of valuation allowances against net operating loss carryforwards.
(11) Non-GAAP net income and net income per share excludes the impact of tax expense.