Press Release Source: Westell Technologies, Inc.
Westell Technologies Reports 4th Quarter and Fiscal 2003 Results
Tuesday May 20, 4:45 pm ET
Achieves Fourth Consecutive Profitable Quarter
AURORA, Ill.--(BUSINESS WIRE)--May 20, 2003--Westell Technologies, Inc.
(NASDAQ:WSTL - News), a leading provider of broadband access solutions,
announced today the company's fourth consecutive profitable quarter and first
profitable year with the results for its fourth quarter and fiscal year ending
March 31, 2003.
Net income for the quarter was $3.8 million or $0.06 per share, compared with a
loss of $31.7 million or $0.49 per share, for the same period last year.
Revenues for the quarter were $54.8 million compared to $50.0 million for the
comparable quarter of last year. Net income for the year was $7.3 million or
$0.11 per share, compared with a loss of $167.0 million or $2.60 per share for
the last year.
"We are extremely pleased with our year over year improvement," stated Van
Cullens, Westell's President and CEO. "We accomplished our stated goal to be
profitable for fiscal 2003, now our goals for fiscal 2004 are to increase
revenue and profits. We expect to do both despite continuing problems within the
general telecommunications sector, " he added.
"We are working diligently to take advantage of the local exchange carriers
growing investment in DSL with our WireSpeed(TM) 2200 with DMH(TM) and PSD(TM)
technology. This modem allows our customers to offer superior DSL data
throughput performance to their customers being served by longer loops and
improves DSL synchronization," Cullens said.
Westell offered guidance for its first quarter ending June 30, 2003 and for its
second quarter ending September 30, 2003. Revenue expectations should be in a
range of $53 million to $56 million with EPS expected in a range of $0.06 to
$0.07 per share, for each quarter. Westell is currently responding to requests
for proposals on new customer contracts and this guidance does not take into
account any increase in revenues that may occur if Westell were to win any large
new customer contracts during these quarters.
Westell's conference call information, earnings press release and any related
earnings information to be discussed on the conference call will be posted on
the Investor Relations section of the Company's web site at
http://www.westell.com
About Westell
Westell Technologies, Inc. (NASDAQ:WSTL - News) headquartered in Aurora,
Illinois is a broadband access solutions company that provides leading broadband
products, service solutions, and conferencing solutions for carriers, service
providers and business enterprises around the world. Westell delivers
innovative, open broadband solutions that meet our customers' needs for fast and
seamless broadband connection. Conference Plus, a Westell subsidiary, offers
conferencing services including voice, video, and IP data conferencing, to
carriers and multi-national corporations throughout the world. For more
information visit www.westell.com.
"Safe Harbor" statement under the Private Securities Litigation Reform Act 1995:
Certain statements contained herein including, without limitation, statements
containing the words "believe," "goal," " on track, " "anticipate," "committed"
"expectation," "expect," "estimate", "await," "continue," "intend," "may,"
"will," "should," and similar expressions are forward looking statements that
involve risks and uncertainties. These risks include, but are not limited to,
product demand and market acceptance risks, need for financing, the economic
downturn in the U.S. economy and telecom market, the impact of competitive
products or technologies, competitive pricing pressures, product development,
excess and obsolete inventory due to new product development, commercialization
and technological delays or difficulties (including delays or difficulties in
developing, producing, testing and selling new products and technologies), the
effect of Westell's accounting policies, the need for additional capital, the
effect of economic conditions and trade, legal social and economic risks (such
as import, licensing and trade restrictions) and other risks more fully
described in Westell's Annual Report on Form 10-K for the fiscal year ended
March 31, 2002 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 Twelve Months ended
Mar. 31, % Mar. 31, %
2003 2002 Change 2003 2002 Change
---------- -------- ------ ---------- ---------- ------
Revenues
TAP $ 12,482 $15,922 -22% $57,070 $86,291 -34%
Broadband 31,348 23,647 33% 111,146(1) $105,011 6%
Services 11,012 10,523 5% 41,805 $48,521 -14%
---------- -------- ---------- ----------
Total revenues 54,842 50,092 9% 210,021 239,823 -12%
---------- -------- ---------- ----------
Gross profit
Equipment 14,536(13) (4,880) 49,067(2) 15,140
(13)
Services 4,299 3,001 14,693 18,890
---------- -------- ---------- ----------
Total gross profit 18,835 (1,879) -1102% 63,760 34,030 87%
---------- -------- ---------- ----------
Gross margin
Equipment 33.2% -12.3% 29.2% 7.9%
Services 39.0% 28.5% 35.1% 38.9%
---------- -------- ---------- ----------
Total gross margin 34.3% -3.8% 30.4% 14.2%
---------- -------- ---------- ----------
Operating expenses
Sales & marketing 3,533(3) 4,422 -20% 16,017(3) 19,883 -19%
Expense to revenue 6.4% 8.8% 7.6% 8.3%
General & administrative 5,251 6,586 -20% 17,513 24,028 -27%
Expense to revenue 9.6% 13.1% 8.3% 10.0%
Research & development 4,762 4,976 -4% 16,483(4) 22,444 -27%
Expense to revenue 8.7% 9.9% 7.8% 9.4%
Restructuring (244)(5) 4,058 1,678(6) 6,258
Expense to revenue -0.4% 8.1% 0.8% 2.6%
Goodwill & intangibles 598(7) 1,701(8) 1,766(7) 25,560(8)
amortization
Expense to revenue 1.1% 3.4% 0.8% 10.7%
Goodwill impairment - 7,000(9) - 97,500(9)
Expense to revenue 0.0% 14.0% 0.0% 40.7%
---------- -------- ---------- ----------
Total operating expenses 13,900(13) 28,743 -52% 53,457(13) 195,673 -73%
---------- -------- ---------- ----------
Expense to revenue 25.3% 57.4% 25.5% 81.6%
Operating income (loss) 4,935 (30,622) -116% 10,303 (161,643) -106%
Other income (loss) (138) 310 -145% (9) (222)
Interest expense 664 1,347 -51% 2,648 5,564 -52%
---------- -------- ---------- ----------
Income (loss) before taxes 4,133 (31,659) -113% 7,646 (167,429) -105%
---------- -------- ---------- ----------
Income taxes 372(11) -(10) NM 372(11) -(10) NM
Effective tax rate 9.0% 0.0% 4.9% 0.0%
Net income (loss) $3,761 $(31,659) NM $7,274 $(167,429) NM
========== ======= ========== ==========
Income (loss) per common share:
Basic 0.06 (0.49) NM 0.11 (2.60) NM
---------- -------- ---------- ----------
Diluted 0.06 n/a(12) 0.11 n/a(12)
---------- -------- ---------- ----------
Average number of common
shares outstanding:
Basic 64,937 64,895 64,925 64,317
Diluted 65,580 n/a(12) 65,156 n/a(12)
Footnotes:
(1) The Company earned $1.7 million in the three months ended June 30, 2002 from
a customer for product royalties.
(2) The Company reversed approximately $2.2 million of reserves primarily
related to excess and obsolete modem inventory in the twelve months ended March
31, 2003.
(3) The Company reduced warranty reserves by $782,000 and $874,000 for the three
and twelve month periods ended March 31, 2003 respectively.
(4) The Company earned $250,000 in the three months ended June 30, 2002 from a
customer to fund engineering projects which were offset against research and
development expenses.
(5) Restructuring charge of which a reversal of $855,000 of expense relates to
the Company's Conference Plus, Inc. subsidiary and $611,000 of expense relates
to the Company's Westell Limited subsidiary.
(6) Restructuring charge of which $856,000 relates to net expense of the
Company's Conference Plus, Inc. subsidiary and $822,000 relates to the Company's
Westell Limited subsidiary.
(7) Teltrend product technology intangible amortization.
(8) Goodwill and intangible amortization related to the Teltrend acquisition.
(9) Goodwill impairment charge related to the Teltrend acquisition.
(10) Due to the trend of losses, valuation allowances were recorded.
(11) Tax expense recorded for federal audit liability relating to Teltrend.
Valuation allowances were utilized for taxable income.
(12) Due to the losses incurred, dilutive presentation is not applicable.
(13) The Company recorded $1.7 million in bonus expense and profit sharing
contribution expense at it's Westell Inc. subsidiary in the three and twelve
months ended March 31, 2003. These expenses were included in gross profit and
operating expenses.
Westell Technologies, Inc.
Financial Results (continued)
(Dollars in thousands)
Mar. 31, Dec. 31,
2003 2002
--------- ----------
Cash and Short term Investments 11,474 6,926
Receivables 22,633 21,902
Inventory 11,843 12,583
Goodwill and intangibles 15,399 15,977
Total current assets 49,781 52,146
Total current liabilities 59,076 57,373
Total assets 109,474 108,595
Total liabilities 65,981 68,958
Shareholders' Equity 43,493 39,637
Days Sales Outstanding 37 46
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Contact:
Westell Technologies, Inc.
Nicholas Hindman, CFO, 630/375-4136
nhind@westell.com
or
Trade/Business Press
KGT Communications Group
Ken Trantowski, 630/469-8765
kennethg_trantowski@msn.com