As filed with the Securities and Exchange Commission on October 18, 2002
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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WESTELL TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 36-3154957
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
750 NORTH COMMONS DRIVE
AURORA, ILLINOIS 60504
(630) 898-2500
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
NICHOLAS HINDMAN
CHIEF FINANCIAL OFFICER
WESTELL TECHNOLOGIES, INC.
750 N. COMMONS DRIVE
AURORA, ILLINOIS 60504
(630) 898-2500
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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COPIES TO:
Neal J. White
Heidi J. Steele
McDermott, Will & Emery
227 West Monroe Street
Chicago, Illinois 60606
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after the effective date of this Registration Statement.
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If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
==================================== ==================== ============================ ======================== ====================
TITLE OF EACH CLASS AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT
OF SECURITIES TO BE TO BE OFFER PRICE AGGREGATE OF
REGISTERED REGISTERED(1) PER SHARE(2) OFFERING PRICE(2) REGISTRATION FEE(2)
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Class A Common Stock 512,820 $1.16 $594,871.20 $54.74
(par value $.01 per share)(3)
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(1) Such number is deemed to include pursuant to Rule 416 under the Securities
Act of 1933 an indeterminate number of shares of the Registrant's Class A Common
Stock as may be issued from time to time pursuant to the terms of the warrants.
(2) Estimated solely for the purpose of calculating the registration fee, based
upon the average high and low prices of Class A Common Stock on October 16,
2002, as reported on the Nasdaq Stock Market. The registration fee has been
calculated in accordance with Rule 457(c) under the Securities Act of 1933.
(3) This registration statement is intended to cover the resale of the shares
acquired by the warrant holder after such warrant holder has exercised warrants
issued by the registrant. The warrants were issued pursuant to a private
placement and are not being separately registered.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
[SIDE LEGEND]
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and is not soliciting an offer to buy these
SUBJECT TO COMPLETION, DATED OCTOBER 18, 2002
PROSPECTUS
WESTELL TECHNOLOGIES, INC.
512,820 SHARES OF CLASS A COMMON STOCK
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This prospectus relates to 512,820 shares of Class A Common Stock of
Westell Technologies, Inc. that may be sold from time to time by the selling
stockholders named herein, or their transferees, pledgees, donees or successors.
The shares are being registered to permit the selling stockholders to
sell the shares in the public market. The shares may be sold through ordinary
brokerage transactions, directly to market makers of our shares, in privately
negotiated transactions or through any other means described in the section
captioned "Plan of Distribution." We do not know if the selling stockholders
will sell all or any of the shares offered hereby.
We will not receive any of the proceeds from the sale of these shares.
We have agreed to pay for the expenses of registering the shares with the
Securities and Exchange Commission. The selling stockholders will pay for the
costs of any commission or selling expenses.
Our class A common stock is quoted on the Nasdaq Stock Market under the
symbol "WSTL."
INVESTING IN THE SHARES INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 2 FOR A DISCUSSION OF CERTAIN FACTORS THAT YOU SHOULD
CONSIDER BEFORE PURCHASING ANY SECURITIES.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is accurate or complete. Any representation to the contrary is a
criminal offense.
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The date of this Prospectus is _______________, 2002.
WHERE YOU CAN FIND MORE INFORMATION............................................1
FORWARD-LOOKING STATEMENTS.....................................................1
WESTELL TECHNOLOGIES, INC......................................................1
RISK FACTORS...................................................................2
USE OF PROCEEDS...............................................................12
SELLING SECURITY HOLDERS......................................................12
PLAN OF DISTRIBUTION..........................................................15
LEGAL OPINIONS................................................................16
EXPERTS.......................................................................16
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy reports, statements or
other information at the SEC's public reference rooms in Washington, D.C. You
can call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms. Our SEC filings are also available to the public from
commercial document retrieval services and at the web site maintained by the SEC
at "http://www.sec.gov."
As noted above, we have filed with the SEC a registration statement on
Form S-3 to register the securities. This prospectus is part of that
registration statement and, as permitted by the SEC's rules, does not contain
all of the information set forth in the registration statement. For further
information you should refer to the registration statement and to the exhibits
and schedules filed as part of the registration statement. You can review and
copy the registration statement and its exhibits and schedules at the public
reference facilities maintained by the SEC as described above. The registration
statement, including its exhibits and schedules, is also available on SEC's web
site.
The SEC allows us to "incorporate by reference" into this prospectus
the information that we and other registrants file with it, which means that we
can disclose important information to you by referring you to those documents.
The information incorporated by reference is considered to be part of this
prospectus, and the information that we file later with the SEC will
automatically update and supersede this information as indicated below. We
incorporate by reference in this prospectus the following:
o our Annual Report on Form 10-K for the year ended March 31, 2002;
o our Quarterly Report on Form 10-Q for the quarter ended June 30,
2002;
o our Schedule 14A for our 2002 annual meeting of shareholders;
o the description of our Class A common stock included in our Form
8-A Registration Statement; and
o any future filings we make with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934, until we
sell all of the securities.
You may request a copy of these filings, at no cost, by writing or
telephoning us at Westell Technologies, Inc., 750 North Commons Drive, Aurora,
Illinois 60504, telephone: (630) 898-2500, Attention: Secretary.
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
anyone else to provide you with different or additional information. You should
not assume that the information in this prospectus or any supplement is accurate
as of any date other than the date on the front of those documents.
FORWARD-LOOKING STATEMENTS
Certain statements contained herein including, without limitation,
statements containing the words "believe," "anticipate," "expect," "estimate",
"await," "continue," "intend" and similar expressions are forward looking
statements that involve risks and uncertainties. These risks include, but are
not limited to, the risks identified in the section captions "Risk Factors"
below and other risks more fully described in Westell's Annual Report on Form
10-K for the fiscal year ended March 31, 2002 under the section captioned "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.
WESTELL TECHNOLOGIES, INC.
The Company designs, manufactures, markets and services a broad range
of digital and analog products used by telephone companies and other
telecommunications service providers to deliver broadband services primarily
over existing copper telephone wires that connect end users to a telephone
company's central office. The copper wires that connect users to these central
offices are part of the telephone companies' networks and are commonly referred
to as the local loop or the local access network. Westell products and solutions
are deployed worldwide, but Westell realizes the majority of its revenues from
the North American market.
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Westell is a provider of broadband and digital subscriber line (DSL)
technology solutions that allow the transport of high-speed data over the local
loop and enable telecommunications companies to provide cost-effective and
high-speed services over existing copper infrastructure. In addition, Westell
also provides DSL products and solutions for businesses and enterprises such as
Internet Service Providers. Westell also designs, develops and sells Telco
Access Products (TAP) that monitor and maintain special service circuits in
telephone companies' local loops. These special service circuits, such as T-1,
are higher speed lines that provide voice and/or data services.
Westell's 88.3% owned service subsidiary, Conference Plus, Inc.
provides audio, video, and web conferencing services. Businesses and individuals
use these services to hold voice, video or web conferences with many people at
the same time. Conference Plus sells its services directly to large customers,
including Fortune 100 companies and serves other customers indirectly through
its private reseller program.
Westell was incorporated in 1980 under the laws of the State of
Delaware and has its principal executive offices at 750 North Commons Drive,
Aurora, Illinois 60504 (telephone number: (630) 898-2500). Internet users can
obtain information about Westell at http://www.westell.com although the contents
of this website are not a part of this prospectus.
RISK FACTORS
You should carefully consider the risks described below in addition to the other
information contained and incorporated by reference in this prospectus before
purchasing our securities. If any of the following risks occurs, our business,
operating results or financial condition would likely suffer, and the market
price for our securities could decline and you could lose your investment.
WE HAVE INCURRED AND MAY CONTINUE TO INCUR LOSSES.
Due to our significant ongoing investment in DSL and HDSL (high bit rate digital
subscriber line) technology, which can be used by telephone companies and other
service providers to increase the transmission speed and capacity of copper
telephone wires, we have incurred losses through fiscal 2002. To date, we have
incurred operating losses, net losses and negative cash flow on both an annual
and quarterly basis. For the year ended March 31, 2002, we had net losses of
$93.9 million.
We believe that our future revenue growth and profitability will depend on:
o creating sustainable DSL and HDSL sales opportunities;
o lowering our DSL and HDSL product costs through design and
manufacturing enhancements and volume reductions;
o developing new and enhanced T-1 products; and
o developing other niche products for both DSL and T-1 markets
In addition, we expect to continue to evaluate new product
opportunities. As a result, we will continue to invest heavily in research and
development and sales and marketing, which could adversely affect our short-term
operating results. We can offer no assurances that we will achieve profitability
in the future.
OUR STOCK PRICE IS VOLATILE AND COULD DROP UNEXPECTEDLY.
Like many technology stocks, our stock has demonstrated and likely will continue
to demonstrate extreme volatility as valuations, trading volume and prices move
significantly. This volatility may result in a material decline in the market
price of our securities, and may have little relationship to our financial
results or prospects.
Our class A common stock price has experienced substantial volatility in the
past and is likely to remain volatile in the future due to factors such as:
o our actual and anticipated quarterly and annual operating results;
o variations between our actual results and analyst and investor
expectations;
o announcements by us or others on developments affecting our
business;
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o investor and analyst perceptions of our company and comparable
public companies;
o future sales of debt or equity securities;
o the activities of short sellers and risk arbitrageurs regardless of
our performance; and
o conditions and trends in the data communications and
Internet-related industries.
Many of the factors listed above are not within our control. In the past,
companies that have experienced volatility in the market price of their stock
have been the subject of securities class litigation. If we were involved in
securities class litigation, we could incur substantial costs and our
management's attention could be diverted.
WE FACE SECURITIES CLASS LITIGATION WHICH COULD SIGNIFICANTLY HARM OUR BUSINESS.
In fiscal 2000, Westell Technologies, Inc. and certain of its officers and
directors were named in consolidated class actions. The cases allege 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. The cases seek 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. We cannot predict what the outcome of these lawsuits will be. It is
possible that we may be required to pay substantial damages or settlement costs
in excess of our insurance coverage, which could have a material adverse effect
on our financial condition and results of operation. Any verdict against us
could harm our business. Even if we are meritorious in such litigation, we have
incurred and could incur in the future substantial legal costs and management's
attention and resources could be diverted from our business which could cause
our business to suffer.
WE MAY NEED ADDITIONAL FINANCING.
We must continue to enhance and expand our product and service offerings in
order to maintain our competitive position and to increase our market share. As
a result and due to our net losses, the continuing operations of our business
may require substantial capital infusions. Whether or when we can achieve cash
flow levels sufficient to support our operations cannot be accurately predicted.
Unless such cash flow levels are achieved, we may require additional borrowings
or the sale of debt or equity securities, sale of non-strategic assets, or some
combination thereof, to provide funding for our operations. In addition, if we
are unable to generate sufficient working capital or obtain alternative
financing, we may not be able to repay our debt under our existing credit
facilities when it becomes due. If we cannot generate sufficient cash flow from
our operations, or are unable to borrow or otherwise obtain additional funds to
finance our operations when needed, our financial condition and operating
results would be materially adversely affected and we would not be able to
operate our business.
WE HAVE AN ESTIMATED $67 MILLION OF TOTAL INDEBTEDNESS AT JUNE 27, 2002, WHICH
COULD HURT OUR ABILITY TO BORROW AND UTILIZE CASH FLOW AS NECESSARY AND RESTRICT
OUR OPERATIONS.
The degree to which we are leveraged could have important consequences,
including the following:
o our ability to borrow may be limited and additional amounts for
working capital and capital expenditures may not be available;
o a substantial portion of our cash flows must be used to pay our
interest expense and repay our debt, which reduces the funds that
would otherwise be available for our operations or product
development;
o we may be more vulnerable to economic downturns and competitive
pressures and may have reduced flexibility in responding to
changing business, regulatory and economic conditions; and
o fluctuations in market interest rates will affect the cost of our
borrowings.
In addition, our credit facilities contain numerous covenants imposing financial
and operating restrictions on our business. These restrictions may affect our
ability to operate our business and may limit our ability to take advantage of
potential business opportunities as they arise. Our ability to meet the
financial ratios and tests and other provisions contained in our credit
facilities could be affected by changes in economic or business conditions or
other events beyond our control. Any failure to comply with the obligations in
our credit facilities could result in an event of default under our facilities,
which, if not cured or waived, could permit acceleration of our indebtedness
which could have a material adverse effect on us. In addition, our credit
facilities expire on June 30, 2003. If we do not obtain alternative financing or
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generate sufficient working capital, our ability to refinance this debt could be
materially adversely affected.
DUE TO THE RAPID TECHNOLOGICAL CHANGES IN OUR INDUSTRY, OUR PRODUCTS MAY BECOME
OBSOLETE BEFORE WE CAN REALIZE SIGNIFICANT REVENUES FOR OUR PRODUCTS, WHICH
COULD CAUSE US TO INCUR CHARGES FOR EXCESS AND OBSOLETE INVENTORY AND MATERIALLY
HARM OUR BUSINESS.
The telecommunications industry is subject to rapid technological change and
volatile customer demands, which results in a short product commercial life
before a product becomes obsolete. As a result, we have in the past and may in
the future devote disproportionate resources to a product that has an unexpected
short commercial life and/or have to write off excess and obsolete inventory,
each of which would harm our operating results and financial condition and harm
our business. From time to time, we may need to write off inventory as excess or
obsolete. In the past, we have experienced such write-offs. For example, we
recognized an inventory adjustment to net realizable value and charges for
excess and obsolete inventory of $13.9 million during fiscal year 2002. If we
incur substantial inventory expenses that we are not able to recover because of
changing market conditions, it could have a material adverse effect on our
business, financial condition and results of operations.
PRICING PRESSURES ON OUR DSL AND HDSL PRODUCTS MAY AFFECT OUR ABILITY TO BECOME
PROFITABLE.
We have and may in the future offer DSL and HDSL products based upon forward
pricing. Forward pricing will cause us to incur low margins on DSL and HDSL
product sales unless we can reduce manufacturing costs. We believe that
manufacturing costs may decrease if:
o more cost-effective transceiver technologies become available,
o product design efficiencies and component integration are obtained,
and
o we achieve economies of scale related to increased volume.
There is no guaranty that we will be able to secure significant additional DSL
and HDSL orders and reduce per unit manufacturing costs that we have factored
into our forward pricing of DSL and HDSL products. As a result, we could incur
low margins in connection with sales of DSL and HDSL products even if our unit
volume increases. Low margins from our sales of DSL and HDSL products could
result in fluctuations in our quarterly operating results and would materially
and adversely affect our ability to achieve profitability and implement our
business goals.
OUR PRODUCTS FACE COMPETITION FROM OTHER EXISTING PRODUCTS, PRODUCTS UNDER
DEVELOPMENT AND CHANGING TECHNOLOGY, AND IF WE DO NOT REMAIN COMPETITIVE, OUR
BUSINESS WILL SUFFER AND WE WILL NOT BECOME PROFITABLE.
The markets for our products are characterized by:
o intense competition within the DSL and HDSL market and from other
industries such as cable and wireless industries;
o rapid technological advances;
o evolving industry standards;
o changes in end-user requirements;
o frequent new product introductions and enhancements; and
o evolving customer requirements and service offerings.
New products introductions or changes in services offered by telephone companies
or over the Internet could render our existing products and products under
development obsolete and unmarketable. Further, we believe that the domestic
market for many of our traditional T-1 products is decreasing, and will likely
continue to decrease, as high capacity digital transmission becomes less
expensive and more widely deployed. Our future success will largely depend upon
our ability to continue to enhance and upgrade our existing products, such as
T-1 and DSL, and to successfully develop and market new products, such a HDSL,
on a cost-effective and timely basis.
In addition, our current product offerings primarily enable telephone companies
to deliver digital communications over copper telephone wires in the local
access network. Telephone companies also face competition in the delivery of
digital communications from cable operators, new telephone companies, and
wireless service providers. If end users obtain their high-speed data
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transmission services from these alternative providers, then the overall demand
for DSL products will decline.
To remain competitive we must develop new products to meet the demands of these
emerging transmission media and new local access network providers. Our business
would be severely harmed if our products become obsolete or fail to gain
widespread commercial acceptance due to competing products and technologies.
EVOLVING INDUSTRY STANDARDS MAY ADVERSELY AFFECT OUR ABILITY TO SELL OUR
PRODUCTS AND CONSEQUENTLY HARM OUR BUSINESS.
Industry wide standardization organizations such as the American National
Standards Institute and the European Telecommunications Standards Institute are
responsible for setting transceiver technology standards for DSL and HDSL
products. We are dependent on transceiver technologies from third parties to
manufacture our products. If transceiver technologies needed for standards-based
products are not available to us in a timely manner and under reasonable terms,
then our revenues would significantly decrease and our business and operating
results would suffer significantly.
In addition, the introduction of competing standards or implementation
specifications could result in confusion in the market and delay decisions
regarding deployment of our products. Delay in the announcement of standards
would materially and adversely impact our product sales and would severely harm
our business.
ANY UNEXPECTED INCREASE IN DEMAND FOR DSL AND HDSL PRODUCTS COULD ADVERSELY
IMPACT OUR ABILITY TO MANUFACTURE SUFFICIENT QUANTITIES OF DSL AND HDSL
PRODUCTS, WHICH WOULD AFFECT OUR ABILITY TO ATTRACT AND RETAIN CUSTOMERS.
Any unexpected increase in demand for DSL and HDSL products could adversely
impact our ability to supply DSL and HDSL products in a timely manner, which
would harm our business. Without proper lead times, we may not have the ability
to, or may have to pay a premium to, acquire and develop the necessary
capabilities to satisfy an unexpected increase in demand for our products. We
may become dependent upon subcontractors to manufacture a portion of our DSL
products and expect that our reliance on these subcontractors will increase if
demand for our DSL products increases. Reliance on subcontractors involves
several risks, including the potential lack of adequate capacity and reduced
control over product quality, delivery schedules, manufacturing yields and
costs. The use of subcontractors could result in material delays or interruption
of supply as a consequence of required re-tooling, retraining and other
activities related to establishing and developing subcontractor relationships.
Any manufacturing disruption would impair our ability to fulfill orders, and if
this occurs, our revenues and customer relationships would be materially
adversely affected. Any material delays or difficulties in connection with
increased manufacturing production or the use of subcontractors could severely
harm our business. Our failure to effectively manage any increase in demand for
our products would harm our business.
WE ARE DEPENDENT ON THIRD PARTY TECHNOLOGY, THE LOSS OF WHICH WOULD HARM OUR
BUSINESS.
We rely on third parties to gain access to technologies that are used in our
current products and in products under development. For example, our ability to
produce DSL products is dependent upon third party transceiver technologies. Our
licenses for DSL transceiver technology are nonexclusive and the transceiver
technologies have been licensed to numerous other manufacturers. If our DSL
transceiver licensors fail to deliver commercially ready or standards compliant
transceiver solutions to us and other alternative sources of DSL transceiver
technologies are not available to us at commercially acceptable terms, then our
business and operating results would be significantly harmed.
Any impairment in our relationships with the licensors of technologies used in
our products would force us to find other developers on a timely basis or
develop our own technology. There is no guaranty that we will be able to obtain
the third-party technology necessary to continue to develop and introduce new
and enhanced products, that we will obtain third-party technology on
commercially reasonable terms or that we will be able to replace third-party
technology in the event such technology becomes unavailable, obsolete or
incompatible with future versions of our products. We would have severe
difficulty competing if we cannot obtain or replace much of the third-party
technology used in our products. Any absence or delay would materially adversely
affect our business and operating results.
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WE ARE DEPENDENT ON SOLE OR LIMITED SOURCE SUPPLIERS, THE LOSS OF WHICH WOULD
HARM OUR BUSINESS.
Integrated circuits and other electronic components used in our products are
currently available from only one source or a limited number of suppliers. Our
inability to obtain sufficient key components or to develop alternative sources
for key components as required, could result in delays or reductions in product
deliveries, and consequently severely harm our customer relationships and our
business. Furthermore, additional sole-source components may be incorporated
into our future products, thereby increasing our supplier risks. If any of our
sole-source suppliers delay or halt production of any of their components, or
fail to supply their components on commercially reasonable terms, then our
business and operating results would be harmed.
In the past we have experienced delays in the receipt of key components which
have resulted in delays in related product deliveries. There is no guaranty that
we will be able to continue to obtain sufficient quantities of key components as
required, or that such components, if obtained, will be available to us on
commercially reasonable terms.
WE HAVE NO LONG TERM CONTRACTS OR ARRANGEMENT WITH SUPPLIERS WHICH COULD
ADVERSELY AFFECT OUR ABILITY TO PURCHASE COMPONENTS AND TECHNOLOGIES USED IN OUR
PRODUCTS.
We have no long-term contracts or arrangements with any of our suppliers. We may
not be able to obtain components at competitive prices, in sufficient quantities
or under other commercially reasonable terms. If we enter into a high-volume or
long-term supply arrangement and subsequently decide that we cannot use the
products or services provided for in the supply arrangement, then our business
would also be harmed.
WE WILL NOT BE ABLE TO SUCCESSFULLY COMPETE, DEVELOP AND SELL NEW PRODUCTS IF WE
FAIL TO RETAIN KEY PERSONNEL AND HIRE ADDITIONAL KEY PERSONNEL.
Because of our need to continually evolve our business with new product
developments and strategies, our success is dependent on our ability to attract
and retain qualified technical, marketing, sales and management personnel. To
remain competitive we must maintain top management talent, employees who are
involved in product development and testing and employees who have developed
strong customer relationships. Because of the high demand to these types of
employees, it is difficult to retain existing key employees and attract new key
employees. Our inability to attract and retain additional key employees could
harm our ability to successfully sell existing products and develop new products
and implement our business goals.
OUR QUARTERLY OPERATING RESULTS ARE LIKELY TO FLUCTUATE SIGNIFICANTLY AND SHOULD
NOT BE RELIED UPON AS INDICATIONS OF FUTURE PERFORMANCE.
We may experience significant fluctuations in quarterly operating results. Due
to the risks identified below and elsewhere in "Risk Factors," sales to our
largest customers have fluctuated and could fluctuate significantly between
quarters. Sales to our customers typically involve large purchase commitments,
and customers purchasing our products may generally reschedule without penalty.
As a result, our quarterly operating results have fluctuated significantly in
the past. Other factors that have had and may continue to influence our
quarterly operating results include:
o the impact of changes in the DSL customer mix or product mix sold;
o timing of product introductions or enhancements by us or our
competitors;
o changes in operating expenses which can occur because of product
development costs, timing of customer reimbursements for research
and development, pricing pressures;
o availability and pricing of key components;
o write-offs for obsolete inventory; and
o the other risks that are contained in this "Risk Factors" section.
Due to our fluctuations in quarterly results, we believe that period-to-period
comparisons of our quarterly operating results are not necessarily meaningful.
Our quarterly fluctuations make it more difficult to forecast our revenues. It
is possible that in some future quarters our operating results will be below the
expectations of securities analysts and investors, which may adversely affect
our stock price. As long as we continue to depend on DSL products and new
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products, there is substantial risk of widely varying quarterly results,
including the so-called "missed quarter" relative to investor expectations.
WE MAY EXPERIENCE DELAYS IN THE DEPLOYMENT OF NEW PRODUCTS.
Our past sales have resulted from our ability to anticipate changes in
technology, industry standards and telephone company 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. Factors
resulting in delays in product development include:
o rapid technological changes in the telecommunications industry;
o our customers' lengthy product approval and purchase processes; and
o our reliance on third-party technology for the development of new
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. In addition, there
can be no assurance that we will have the financial and manufacturing resources
necessary to continue to successfully develop new products or to otherwise
successfully respond to changing technology standards and telephone company
service offerings. If we fail to deploy new products on a timely basis, then our
product sales will decrease, our quarterly operating results could fluctuate,
and our competitive position and financial condition would be materially and
adversely affected.
THE TELECOMMUNICATIONS INDUSTRY IS A HIGHLY COMPETITIVE MARKET AND THIS
COMPETITION MAY RESULT IN OPERATING LOSSES, A DECREASE IN OUR MARKET SHARE AND
FLUCTUATIONS IN OUR REVENUE.
We expect competition to increase in the future especially as the DSL market
develops. Because we are significantly smaller than most of our competitors, we
may lack the financial resources needed to increase our market share. Many of
our competitors are much larger than us and can offer a wider array of different
products and services required for a telephone company's business than we do.
We expect continued aggressive tactics from many of our competitors such as:
o forward pricing of products;
o early announcements of competing products;
o bids that bundle DSL products with other product offerings; and
o intellectual property disputes.
OUR LACK OF BACKLOG MAY AFFECT OUR ABILITY TO ADJUST TO AN UNEXPECTED SHORTFALL
IN ORDERS.
Because we generally ship products within a short period after receipt of an
order, we typically do not have a material backlog (or known quantity) of
unfilled orders, and our revenues in any quarter are substantially dependent on
orders booked in that quarter. Our expense levels are based on anticipated
future revenues and are relatively fixed in the short-term. Therefore, we may be
unable to adjust spending in a timely manner to compensate for any unexpected
shortfall of orders. Accordingly, any significant shortfall of demand in
relation to our expectations or any material delay of customer orders would have
an immediate adverse impact on our business and operating results.
INDUSTRY CONSOLIDATION COULD MAKE COMPETING MORE DIFFICULT.
Consolidation of companies offering high-speed telecommunications products is
occurring through acquisitions, joint ventures and licensing arrangements
involving our competitors, our customers and our customers' competitors. We
cannot provide any assurances that we will be able to compete successfully in an
increasingly consolidated telecommunications industry. Any heightened
competitive pressures that we may face may have a material adverse effect on our
business, prospects, financial condition and result of operations.
-7-
WE DEPEND ON A LIMITED NUMBER OF CUSTOMERS WHO ARE ABLE TO EXERT A HIGH DEGREE
OF INFLUENCE OVER US.
We have and will continue to depend on the large Regional Bell Operating
Companies as well as and other telephone carriers including smaller local
telephone carriers and new alternative telephone carriers, for substantially all
of our revenues. Sales to the Regional Bell Operating Companies accounted for
approximately 51.4%, 50.6% and 66.4% of our revenues in fiscal 2000, 2001 and
2002, respectively. Consequently, our future success will depend upon:
o the timeliness and size of future purchase orders from the Regional
Bell Operating Companies;
o the product requirements of the Regional Bell Operating Companies;
o the financial and operating success of the Regional Bell Operating
Companies; and
o the success of the Regional Bell Operating Companies' services that
use our products.
The Regional Bell Operating Companies and our other customers are significantly
larger than we are and are able to exert a high degree of influence over us.
These customers may generally reschedule orders without penalty to the customer.
Even if demand for our products is high, the Regional Bell Operating Companies
have sufficient bargaining power to demand low prices and other terms and
conditions that may materially adversely affect our business and operating
results.
Any attempt by a Regional Bell Operating Company or our other customers to seek
out additional or alternative suppliers or to undertake the internal production
of products would have a material adverse effect on our business and operating
results. The loss of any or our customer could result in an immediate decrease
in product sales and materially and adversely affect our business.
Conference Plus's customer base is very concentrated as its top ten customers
represent a large portion of revenue. Customers of Conference Plus have expanded
their requirements for our services, but there can be no assurance that such
expansion will increase in the future. Additionally, Conference Plus's customers
continually undergo review and evaluation of their conferencing and meeting
services to evaluate the merits of bringing those services in-house rather than
outsourcing those services. There can be no assurance in the future that
Conference Plus's customers will bring some portion or all of their conferencing
and meeting services in-house. Conference Plus must continually provide higher
quality, lower cost services to provide maintain and grow its customer base. Any
loss of a major account, would have a material adverse effect on Conference
Plus. In addition, any merger or acquisition of a major customer could have a
material adverse effect on Conference Plus.
OUR CUSTOMERS HAVE LENGTHY PURCHASE CYCLES THAT AFFECT OUR ABILITY TO SELL OUR
PRODUCTS.
Prior to selling products to telephone companies, we must undergo lengthy
approval and purchase processes. Evaluation can take as little as a few months
for products that vary slightly from existing products or up to a year or more
for products based on new technologies such as DSL and HDSL products.
Accordingly, we are continually submitting successive generations of our current
products as well as new products to our customers for approval. The length of
the approval process can vary and is affected by a number of factors, including:
o the complexity of the product involved;
o priorities of telephone companies;
o telephone companies' budgets; and
o regulatory issues affecting telephone companies.
The requirement that telephone companies obtain Federal Communications
Commission (FCC) approval for most new telephone company services prior to their
implementation has in the past delayed the approval process. Such delays in the
future could have a material adverse affect on our business and operating
results. While we have been successful in the past in obtaining product
approvals from our customers, there is no guaranty that such approvals or that
ensuing sales of such products will continue to occur.
-8-
OUR INTERNATIONAL OPERATIONS EXPOSE US TO THE RISKS OF CONDUCTING BUSINESS
OUTSIDE THE UNITED STATES.
International revenues represented 9.0%, 16.0% and 6.5% of our revenues in
fiscal 2000, 2001 and 2002, respectively. Because Conference Plus has expanded
its conference call business in Europe by opening offices in Dublin, Ireland, we
believe that our exposure to international risks may increase in the future.
These risks include:
o foreign currency fluctuations;
o tariffs, taxes and trade barriers;
o difficulty in accounts receivable collection;
o political unrest; and
o burdens of complying with a variety of foreign laws and
telecommunications standards.
The occurrence of any of these risks would impact our ability to increase our
revenue and become profitable, or could require us to modify significantly our
current business practices.
OUR SERVICES ARE AFFECTED BY UNCERTAIN GOVERNMENT REGULATION AND CHANGES IN
CURRENT OR FUTURE LAWS OR REGULATIONS COULD RESTRICT THE WAY WE OPERATE OUR
BUSINESS.
Many of our customers are subject to regulation from federal and state agencies,
including the FCC and various state public utility and service commissions.
While these regulations do not affect us directly, the effects of regulations on
our customers may adversely impact our business and operating results. For
example, FCC regulatory policies affecting the availability of telephone company
services and other terms on which telephone companies conduct their business may
impede our penetration of local access markets.
In addition, our business and operating results may also be adversely affected
by the imposition of tariffs, duties and other import restrictions on components
that we obtain from non-domestic suppliers or by the imposition of export
restrictions on products that we sell internationally. Internationally,
governments of the United Kingdom, Canada, Australia and numerous other
countries actively promote and create competition in the telecommunications
industry. Changes in current or future laws or regulations, in the U.S. or
elsewhere, could materially and adversely affect our business and operating
results.
POTENTIAL PRODUCT RECALLS AND WARRANTY EXPENSES COULD ADVERSELY AFFECT OUR
ABILITY TO BECOME PROFITABLE.
Our products are required to meet rigorous standards imposed by our customers.
Most of our products carry a limited warranty ranging from one to seven years.
In addition, our supply contracts with our major customers typically require us
to accept returns of products or indemnify such customers against certain
liabilities arising out of the use of our products. Complex products such as
those offered by us may contain undetected errors or failures when first
introduced or as new versions are released. Because we rely on new product
development to remain competitive, we cannot predict the level of these types of
claims that we will experience in the future. Despite our testing of products
and our comprehensive quality control program, there is no guaranty that our
products will not suffer from defects or other deficiencies or that we will not
experience material product recalls, product returns, warranty claims or
indemnification claims in the future. Such recalls, returns or claims and the
associated negative publicity could result in the loss of or delay in market
acceptance of our products, affect our product sales, our customer
relationships, and our ability to generate a profit.
-9-
INVESTORS COULD BE ADVERSELY AFFECTED BY FUTURE ISSUANCES AND SALES OF OUR
SECURITIES.
Sales of substantial amounts of our common stock in the public market could
adversely affect the market price of our securities. Westell has 64,921,934
shares of common stock outstanding as of August 19, 2002, and has the following
obligations to issue additional class A common stock as of August 19, 2002:
o options to purchase 11,617,528 shares of class A common stock,
4,053,015 of which are currently exercisable;
o warrants to purchase 909,000 shares of class A common stock for
$5.92 per share; and
o warrants to purchase 512,820 shares of class A common stock for
$1.95 per share.
These obligations could result in substantial future dilution with respect to
our common stock.
WE RELY ON OUR INTELLECTUAL PROPERTY THAT WE MAY BE UNABLE TO PROTECT, OR WE MAY
BE FOUND TO INFRINGE THE RIGHTS OF OTHERS.
Our success will depend, in part, on our ability to protect trade secrets,
obtain or license patents and operate without infringing on the rights of
others. We rely on a combination of technical leadership, trade secrets,
copyright and trademark law and nondisclosure agreements to protect our
non-patented proprietary expertise. These measures, however, may not provide
meaningful protection for our trade secrets or other proprietary information.
Moreover, our business and operating results may be materially adversely
affected by competitors who independently develop substantially equivalent
technology.
In addition, the laws of some foreign countries do not protect our proprietary
rights to the same extent as U.S. law. The telecommunications industry is also
characterized by the existence of an increasing number of patents and frequent
litigation based on allegations of patent and other intellectual property
infringement. From time to time we receive communications from third parties
alleging infringement of exclusive patent, copyright and other intellectual
property rights to technologies that are important to us.
There is no guaranty that third parties will not:
o assert infringement claims against us in the future, and that such
assertions will not result in costly litigation; or
o that we would prevail in any such litigation or be able to license
any valid and infringed patents from third parties on commercially
reasonable terms.
Further, such litigation, regardless of its outcome, could result in substantial
costs to and diversion of our efforts. Any infringement claim or other
litigation against or by us could have a material adverse effect on our business
and operating results.
WE MAY ENGAGE IN FUTURE ACQUISITIONS THAT COULD DILUTE OUR CURRENT STOCKHOLDERS.
We expect to continue to review potential acquisitions and we may acquire
businesses, products or technologies in the future. In order to fund such
acquisitions, we could:
o issue equity securities that could dilute our current stockholders'
percentage ownership;
o incur substantial debt; or
o assume contingent liabilities.
These events could harm our business and/or the price of our common stock.
Acquisitions also entail numerous integration risks that could adversely affect
our business, such as those listed as risks associated with the acquisition of
Teltrend.
-10-
CONFERENCE PLUS'S LARGE COMPETITORS COULD ADVERSELY AFFECT CONFERENCE PLUS'S
ABILITY TO MAINTAIN OR INCREASE ITS MARKET SHARE.
Conference Plus participates in the highly competitive industry of voice, video,
and multimedia conferencing and meeting services. Competitors include
stand-alone conferencing companies and major telecommunications providers.
Conference Plus's ability to sustain growth and performance is dependent on its:
o maintenance of high quality standards and low cost position;
o international expansion; and
o evolving technological capability.
Any increase in competition could reduce our gross margin, require increased
spending on research and development and sales and marketing, and otherwise
materially adversely affect our business and operating results.
OUR PRINCIPAL STOCKHOLDERS CAN EXERCISE SIGNIFICANT INFLUENCE THAT COULD
DISCOURAGE TRANSACTIONS INVOLVING A CHANGE OF CONTROL AND MAY AFFECT YOUR
ABILITY TO RECEIVE A PREMIUM FOR CLASS A COMMON STOCK THAT YOU PURCHASE.
As of March 31, 2002, as trustees of a voting trust containing common stock held
for the benefit of the Penny family and the Simon family, Robert C. Penny III
and Melvin J. Simon have the exclusive power to vote over 60% of the votes
entitled to be cast by the holders of our common stock. In addition, all members
of the Penny family who are beneficiaries under this voting trust are parties to
a stock transfer restriction agreement which prohibits the beneficiaries from
transferring any class B common stock or their beneficial interests in the
voting trust without first offering such class B common stock to the other Penny
family members. Consequently, we are effectively under the control of Messrs.
Penny and Simon, as trustees, who have sufficient voting power to elect all of
the directors and to determine the outcome of most corporate transactions or
other matters submitted to the stockholders for approval. Such control may have
the effect of discouraging transactions involving an actual or potential change
of control, including transactions in which the holders of class B common stock
might otherwise receive a premium for their shares over the then-current market
price.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of class A common
stock offered under this prospectus.
-11-
SELLING SECURITY HOLDERS
The following table lists the selling stockholders and other
information regarding the beneficial ownership of common stock by each of the
selling stockholders. All of the shares offered under this prospectus are shares
issuable upon exercise of warrants held by the selling stockholders. Holders of
class B common stock have four votes per share and holders of class A common
stock have one vote per share. Class A common stock is freely transferable and
class B common stock is transferable only to certain transferees but is
convertible into class A common stock on a share-for-share basis. Percentage of
beneficial ownership is based on 45,907,065 shares of class A common stock and
19,014,869 shares of class B common stock outstanding as of July 23, 2002.
SHARES OWNED SHARES OWNED
PRIOR TO OFFERING NUMBER OF AFTER OFFERING
-------------------------------- CLASS A -----------------------------------------------
SHARES
OFFERED PERCENT OF PERCENT OF PERCENT OF
UPON CLASS A CLASS B TOTAL
CLASS A CLASS B EXERCISE OF CLASS A COMMON COMMON VOTING
STOCKHOLDER SHARES SHARES WARRANTS SHARES STOCK STOCK POWER
----------- ------ ------ -------- ------ ----- ----- -----
Robert C. Penny III..... 170,940(1)(2) 18,268,297(3) 170,940 -- * 96.1% 59.9%
Melvin J. Simon.......... 438,910(2)(4)(5) 19,014,868(3)(6) 256,410 182,500 * 100.0% 62.4%
Florence R. Penny....... 256,410(1)(2)(7) --(8) 256,410 -- * * *
Marlene D. Foskett...... 170,940(2)(7) --(8) 170,940 -- * * *
Barbara J. Pruitt....... 170,940(1)(7) --(8) 170,940 -- * * *
- ------------------
* Less than 1%
(1) Includes warrant to purchase 85,470 shares owned by The Marlene Diane
Foskett Trust dated December 31, 1970 for which Barbara J. Pruitt,
Florence R. Penny and Robert C. Penny III are co-trustees.
(2) Includes warrant to purchase 85,470 shares owned by The Barbara J.
McDonough Trust dated December 31, 1970 for which Marlene D. Foskett,
Florence R. Penny and Robert C. Penny III are co-trustees.
(3) Includes 18,268,297 shares of Class B Common Stock held by Messrs. Penny
and Simon, as Trustees pursuant to a Voting Trust Agreement dated February
23, 1994, as amended among Robert C. Penny III and Melvin J. Simon, as
trustees and certain members of the Penny family and the Simon family. The
Trustees have joint voting and dispositive power over all shares in the
Voting Trust. Messrs. Penny and Simon each disclaim beneficial ownership
with respect to all shares held in the Voting Trust in which they do not
have a pecuniary interest. The Voting Trust contains 4,661,645 shares held
for the benefit of Mr. Penny and 437,804 shares held for the benefit of
Mr. Simon. The address for Messrs. Penny and Simon is Melvin J. Simon &
Associates, Ltd., 4343 Commerce Court, Suite 114, Lisle, Illinois 60532.
The Voting Trust also holds 47,751 shares for the benefit of Florence R.
Penny, 164,520 shares for the benefit of Barbara J. Pruitt, and 453,793
shares for the benefit of Marlene D. Foskett.
(4) Includes (i) options to purchase 139,000 shares that are exercisable
within 60 days of July 23, 2002, (ii) 9,500 shares held for the benefit of
Stacy L. Simon, Melvin J. Simon's daughter for which Natalie Simon, Mr.
Simon's wife, is custodian and has sole voting and dispositive power, and
(iii) 2,000 shares held in trust for the benefit of Makayla G. Penny, Mr.
Penny's daughter, for which Mr. Simon is trustee and has sole voting and
dispositive power; Mr. Simon disclaims beneficial ownership of these
shares.
(5) Includes warrant to purchase 85,470 shares owned by the Marlene D. Foskett
Trust under agreement Florence R. Penny Children's Trust dated December
28, 1989 for which Melvin J. Simon is trustee. Includes warrant to
purchase 85,470 shares owned by the Barbara J. McDonough Trust under
agreement Florence R. Penny Children's Trust dated December 28, 1989 for
which Melvin J. Simon is trustee. Includes warrant to purchase 85,470
shares owned by the Robert C. Penny III Trust under agreement Florence R.
Penny Children's Trust dated December 28, 1989 for which Melvin J. Simon
is trustee.
(6) Includes 95,980 shares held in trust for the benefit of Sheri A. Simon and
95,980 shares held in trust for Stacy L. Simon, Melvin J. Simon's
daughters, for which Natalie Simon, Mr. Simon's wife, is custodian and has
sole voting and dispositive power. Includes; 544,611 shares held in trust
for the benefit of Mr. Penny's children, for which Mr. Simon is trustee
and has sole voting and dispositive power. Mr. Simon disclaims beneficial
ownership of these shares.
(7) Includes warrant to purchase 85,470 shares held by The Robert Clinton
Penny Trust Number Two dated December 30, 1974 for which Marlene D.
Foskett, Florence R. Penny and Barbara J. Pruitt are co-trustees.
(8) Does not include shares of Class B Common Stock held in the Voting Trust,
described in footnote (3) above, for the benefit of this stockholder.
-12-
Melvin J. Simon has served as Assistant Secretary and Assistant
Treasurer of the Company since July 1995 and as a Director of the Company since
August 1992. From August 1992 to July 1995, Mr. Simon served as Secretary and
Treasurer of the Company. A Certified Public Accountant, Mr. Simon founded and
has served as President of Melvin J. Simon & Associates, Ltd., a public
accounting firm, since May 1980. Mr. Simon serves as a Director of the Company's
88% owned subsidiary Conference Plus, Inc.
Robert C. Penny III has served as a Director of the Company since
September 1998. He has been the managing partner of P.F. Management Co., a
private investment company, since May 1980.
Since 1984, Melvin J. Simon & Associates, Ltd. has provided accounting
and other financial services to the Company. Mr. Simon, a director and the
Assistant Secretary and Assistant Treasurer of the Company and Co-Trustee of the
Voting Trust, is the sole owner of Melvin J. Simon & Associates, Ltd. The
Company paid Melvin J. Simon & Associates, Ltd. approximately $15,475, $18,236
and $36,845 in fiscal 2000, 2001 and 2002, respectively, for its services. The
Company believes that these services are provided on terms no less favorable to
the Company than could be obtained from unaffiliated parties.
The Company has granted Robert C. Penny III and Melvin J. Simon, as
Trustees of the Voting Trust, certain registration rights with respect to the
shares of Common Stock held in the Voting Trust.
In June 2001, trusts for the benefit of Robert C. Penny III, a director
of the Company, and other Penny family members, entered into a guaranty of $10
million of the Company's obligations under its revolving credit facility. In
consideration of the guarantee, the Company has granted those trusts warrants to
purchase 512,820 shares of Class A Common Stock for a period of five years at an
exercise price of $1.95 per share (the fair market value on the date of grant)
and agreed to grant registration rights with respect to shares acquired upon
exercise.
-13-
PLAN OF DISTRIBUTION
Sales of the shares being sold by the selling stockholders are for the
selling stockholders' own accounts. We will not receive any proceeds from the
sale of the shares offered hereby. The selling stockholder will act
independently of us in making decisions with respect to the timing, manner and
size of each sale.
The selling stockholders have advised us that:
o the shares may be sold by the selling stockholders or their
respective pledgees, donees, transferees or successors in interest,
on The Nasdaq Stock Market, in sales occurring in the public market
other than such market quotation system, in privately negotiated
transactions, through the writing of options on shares, short sales
or in a combination of such transactions;
o each sale may be made either at market prices prevailing at the
time of such sale, at negotiated prices, at fixed prices which may
be changed, or at prices related to prevailing market prices;
o some or all of the shares may be sold through brokers acting on
behalf of the selling stockholders or to dealers for resale by such
dealers including block trades in which brokers or dealers will
attempt to sell the shares but may position and resell the block or
principal; and
o in connection with such sales, such brokers and dealers may receive
compensation in the form of discounts and commissions from the
selling stockholders and may receive commissions from the
purchasers of shares for whom they act as broker or agent which
discounts and commissions may be less than or exceed those
customary in the types of transactions involved. Any broker or
dealer participating in any such sale may be deemed to be an
"underwriter" within the meaning of the Securities Act of 1933 and
will be required to deliver a copy of this prospectus to any person
who purchases any class A common stock from or through such broker
or dealer. We have been advised that, as of the date hereof, none
of the selling stockholders have made any arrangements with any
broker for the sale of their class A common stock.
In offering the class A common stock covered hereby, the selling
stockholders and any broker-dealers and any other participating broker-dealers
who execute sales for the selling stockholders may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933 in connection
with such sales, and any profits realized by the selling stockholders and the
compensation of such broker-dealer may be deemed to be underwriting discounts
and commissions. In addition, any class A common stock covered by this
prospectus which qualify for sale pursuant to Rule 144 may be sold under Rule
144 rather than pursuant to this prospectus.
If necessary, the specific shares of our class A common stock to be
sold, the names of the selling stockholders, the respective purchase prices and
public offering prices, the names of any agent, dealer or underwriter, and any
applicable commissions or discounts with respect to a particular offer will be
set forth in an accompanying prospectus supplement or, if appropriate, a
post-effective amendment to the registration statement of which this prospectus
is a part. We entered into a registration rights agreement in connection with
the private placement of the convertible debentures and the warrants which
required us to register the underlying shares of our class A common stock under
applicable federal and state securities laws under certain circumstances and at
certain times. The registration rights agreement provides for
cross-indemnification of the selling stockholders and us and their respective
directors, officers and controlling persons against certain liabilities in
connection with the offer and sale of the class A common stock, including
liabilities under the Securities Act of 1933 and to contribute to payments the
parties may be required to make in respect thereof. We have agreed to indemnify
and hold harmless the selling stockholders from certain liabilities under the
Securities Act of 1933.
Under applicable rules and regulations under Regulation M under the
Securities Exchange Act of 1934, any person engaged in the distribution of the
class A common stock may not simultaneously engage in market making activities,
subject to certain exceptions, with respect to the class A common stock of the
Company for a specified period set forth in Regulation M prior to the
commencement of such distribution and until its completion. In addition and
without limiting the foregoing, each selling stockholder will be subject to the
applicable provisions of the Securities Act of 1933 and Securities Exchange Act
of 1934 and the rules and regulations thereunder, including, without limitation,
Regulation M, which provisions may limit the timing of purchases and sales of
-14-
shares of the class A common stock by the selling stockholders. The foregoing
may affect the marketability of the class A common stock.
We will bear all expenses of the offering of the class A common stock,
except that the selling stockholders will pay any applicable underwriting
commissions and expenses, brokerage fees and transfer taxes, as well as the fees
and disbursements of counsel to and experts for the selling stockholders.
LEGAL OPINIONS
Our counsel, McDermott, Will & Emery, Chicago, Illinois, has rendered
an opinion that the shares offered hereby are duly and validly issued, fully
paid and non-assessable.
EXPERTS
The consolidated financial statements and schedule of Westell
Technologies, Inc. at March 31, 2002 and 2001, and for the two years then ended,
incorporated by reference in Westell Technologies, Inc.'s Annual Report (Form
10-K) for the year ended March 31, 2002, have been audited by Ernst & Young LLP,
independent auditors, set forth in their report thereon, incorporated by
reference in this Prospectus and Registration Statement. Such consolidated
financial statements are incorporated herein by reference in reliance upon such
report given on the authority of such firm as experts in accounting and
auditing.
The consolidated financial statements and schedule of Westell
Technologies, Inc. at March 31, 2000, and for the year then ended, incorporated
by reference in this Prospectus and elsewhere in the Registration Statement have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their reports with respect thereto, and are included in reliance
upon the authority of said firm as experts in giving said reports.
After reasonable efforts, we have been unable to obtain Arthur Andersen
LLP's written consent to the incorporation by reference of such financial
statements in amendments to the Registration Statement. Accordingly, we have
omitted such consents in reliance upon Rule 437a of the Securities Act of 1933.
Because Arthur Andersen LLP has not consented to the incorporation by
reference of our financial statements in amendments to the Registration
Statement, you may not be able to recover against Arthur Andersen LLP under
Section 11 of the Securities Act for any untrue statements of a material fact
contained in such financial statements or any omissions to state a material fact
required to be stated therein.
-15-
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following are the estimated expenses (other than the SEC
registration fee) of the issuance and distribution of the securities being
registered, all of which will be paid by the Company.
SEC registration fee................................................. $ 55
Printing expenses.................................................... 1,000
Fees and expenses of counsel......................................... 3,000
Fees and expenses of accountants..................................... 2,000
Miscellaneous........................................................ 5,000
-------
Total....................................................... $11,055
=======
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Delaware General Corporation Law (Section 102) allows a corporation
to eliminate the personal liability of directors of a corporation to the
corporation or to any of its stockholders for monetary damage for a breach of
his/her fiduciary duty as a director, except in the case where the director
breached his/her duty of loyalty, failed to act in good faith, engaged in
intentional misconduct or knowingly violated a law, authorized the payment of a
dividend or approved a stock repurchase in violation of Delaware corporate law
or obtained an improper personal benefit. The Company's Restated Certificate of
Incorporation contains a provision which eliminates directors' personal
liability as set forth above.
The Delaware General Corporation Law (Section 145) gives Delaware
corporations broad powers to indemnify their present and former directors and
officers and those of affiliated corporations against expenses incurred in the
defense of any lawsuit to which they are made parties by reason of being or
having been such directors or officers, subject to specified conditions and
exclusions; gives a director or officer who successfully defends an action the
right to be so indemnified; and authorizes the Company to buy directors' and
officers' liability insurance. Such indemnification is not exclusive of any
other right to which those indemnified may be entitled under any bylaw,
agreement, vote of stockholders or otherwise.
The Company's Restated Certificate of Incorporation provides for
indemnification to the fullest extent authorized by Section 145 of the Delaware
General Corporation Law for directors, officers and employees of the Company and
also to persons who are serving at the request of the Company as directors,
officers or employees of other corporations (including subsidiaries); provided
that, with respect to proceedings initiated by such indemnitee, indemnification
shall be provided only if such proceedings were authorized by the Board of
Directors. This right of indemnification is not exclusive of any other right
which any person may acquire under any statute, bylaw, agreement, contract, vote
of stockholders or otherwise.
The Company maintains a directors' and officers' liability insurance
and corporate reimbursement policy insuring directors and officers against loss
arising from claims made arising out of the performance of their duties.
ITEM 16. EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
4.1 Amended and Restated Certificate of Incorporation of the Company
(incorporated herein by reference to Exhibit 3.12 of the
Registrant's Quarterly Report on Form 10-Q for the quarter ended
December 31, 2001).
4.2 Amended and Restated Bylaws of the Company (incorporated herein by
reference to the Exhibit 3.1 to the Registrant's Annual Report on
Form 10-K for the year ended March 31, 2001.
5 Opinion of McDermott, Will & Emery regarding legality
23.1 Consent of McDermott, Will & Emery (included in Exhibit 5)
23.2 Consent of Ernst & Young LLP
24 Power of Attorney included on signature page of the registration
statement
- ------------------
ITEM 17. UNDERTAKINGS.
1. The undersigned registrant hereby undertakes:
(a) to file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement
to include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement.
(b) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
2. The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
3. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by the registrants is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this amendment to
the registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in Aurora, Illinois, on the 17th day of March, 2002.
Westell Technologies, Inc.
By: /s/ Nicholas C. Hindman
Nicholas C. Hindman
Chief Financial Officer and
Senior Vice President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Melvin J. Simon and Nicholas C. Hindman,
and each of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments to this
Registration Statement or any registration statement for this offering that is
to be effective upon the filing pursuant to Rule 462(b) under the Securities Act
of 1933, and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission granting unto
said attorneys-in fact and agents full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that each of said attorney-in-fact
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on the 17th day of March, 2002.
SIGNATURE TITLE
--------- -----
/s/ E. Van Cullens President, Chief Executive Officer and Director
- ------------------------------------------------------
E. Van Cullens
/s/ John W. Seazholtz Chairman of Board of Directors
- ------------------------------------------------------
John W. Seazholtz
/s/ Melvin J. Simon Assistant Secretary and Assistant Treasurer and Director
- ------------------------------------------------------
Melvin J. Simon
/s/ Nicholas C. Hindman Senior Vice President and Chief Financial Officer
- ------------------------------------------------------ (principal financial officer and accounting officer)
Nicholas C. Hindman
/s/ Paul A. Dwyer Director
- ------------------------------------------------------
Paul A. Dwyer
/s/ Robert C. Penny Director
- ------------------------------------------------------
Robert C. Penny
/s/ Thomas A. Reynolds III Director
- ------------------------------------------------------
Thomas A. Reynolds III
/s/ Roger L. Plummer Director
- ------------------------------------------------------
Roger L. Plummer
/s/ Bernard F. Sergesketter Director
- ------------------------------------------------------
Bernard F. Sergesketter