Westell Technologies Reports 3rd Quarter Fiscal 2002 Results.Business Editors AURORA Aurora, cities, United States Aurora (ərôr`ə, ô–). 1 City (1990 pop. 222,103), Adams and Arapahoe counties, N central Colo., a growing suburb on the east side of Denver; inc. 1903. , Ill.--(BUSINESS WIRE)--Jan. 24, 2002 Westell Westell Technologies, Inc. NASDAQ: WSTL is an Aurora, Illinois company whose primary business is producing DSL modems for the home and small office. Westell is the last company to manufacture DSL modems in the United States; however, on May 21, 2007, Westell announced plans to Technologies, Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : WSTL) announced today its results for the third quarter of fiscal year ending March 31, 2002. Proforma Proforma A financial projection based on assumptions. net loss for the quarter was $3.5 million or $0.05 loss per share, compared with a loss of $11.6 million or $0.19 loss per share, for the same period last year. The net loss excludes goodwill amortization, a goodwill impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charge related to the Teltrend acquisition, and a recovery of $1.2 million related to the resolution of disputed expenses at the Company's Conference Plus unit. Revenues for the quarter were $67.0 million compared to $79.9 million for the comparable quarter of last year. GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). net loss for the third quarter, which includes goodwill amortization, the charge for goodwill impairment and the recovery of disputed expenses, was $100.8 million or $1.55 per share loss compared to a loss of $19.6 million or $0.32 loss per share for the comparable quarter of last year. Due to the restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). Westell implemented, current and expected market conditions in the T-1 line repeater (1) A communications device that amplifies (analog) or regenerates (digital) the data signal in order to extend the transmission distance. Available for both electronic and optical signals, repeaters are used extensively in long distance transmission. and low speed digital data products portion of the business acquired from Teltrend, it became apparent the goodwill acquired with the Teltrend acquisition was impaired. In accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with its policies, the Company completed an evaluation of the fair value of the Teltrend long-lived long-lived adj. 1. Having a long life: a long-lived aunt. 2. Lasting a long time; persistent: a long-lived rumor. 3. assets (including goodwill) during this quarter and has reported a $90.5 million non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. to reduce the carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. of these assets to their estimated fair value. The non-cash charge otherwise has no impact on the Company's business operations Business operations are those activities involved in the running of a business for the purpose of producing value for the stakeholders. Compare business processes. The outcome of business operations is the harvesting of value from assets . "Given the depressed economic environment, we are pleased to show our third consecutive quarter of proforma EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. improvement," stated Van Cullens Westell's President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "We remain committed to be profitable for fiscal year 2003 which begins April 1, 2002", he added. Westell also reported that a new registration statement would soon be filed with the Securities and Exchange Commission to register stock which can be issued upon the exercise of warrants issued to certain Westell stockholders in connection with their guarantee in June June: see month. 2001 of the Company's bank line. These stockholders were granted 512,820 warrants to purchase Westell Class A Common Shares at a price of $1.95 per share. About Westell Westell Technologies, Inc. (NASDAQ: WSTL) headquartered in Aurora, Illinois Aurora is the largest city in Kane County, Illinois. The city also lies within DuPage, Will and Kendall counties. As reported in the 2000 U.S. census, the city was home to 142,990 people, while the city's estimated 2006 population is 170,617. is a broadband access See broadband and wireless broadband. solutions company that provides leading broadband broadband Term describing the radiation from a source that produces a broad, continuous spectrum of frequencies (contrasted with a laser, which produces a single frequency or very narrow range of frequencies). products, service solutions, and conferencing See teleconferencing. 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 See broadband and wireless broadband. . Conference Plus, a Westell subsidiary, offers conferencing services including voice, video, and IP data conferencing Sharing data interactively among several users in different locations. Data conferencing is made up of whiteboards and application sharing and are often used in conjunction with an audio or videoconferencing connection. , to carriers and multi-national corporations throughout the world. For more information visit www.westell.com. "Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " statement under the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 1995: Certain statements contained herein including, without limitation, statements containing the words "believe," "anticipate," "committed" "expect," "estimate", "await AWAIT, crim. law. Seems to signify what is now understood by lying in wait, or way-laying. ," "continue," "intend" 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 equity financing Equity Financing The act of raising money for company activities by selling common or preferred stock to individual or institutional investors. In return for the money paid, shareholders receive ownership interests in the corporation. , the economic downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. in the U.S. economy and telecom market, the impact of competitive products or technologies, competitive pricing pressures, product development, excess and obsolete inventory Obsolete Inventory Term that refers to inventory that is at the end of its product life cycle and has not seen any sales or usage for a set period of time usually determined by the industry. This type of inventory has to be written down and can cause large losses for a company. 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 A trade restriction is an artificial restriction on the trade of goods between two countries. It is the result of protectionism. However, the term is not uncontroversial since what one part may see as a trade restriction another may see as a way to protect consumers from inferior, ) and other risks more fully described in Westell's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the fiscal year ended March 31, 2001 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 CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or after the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" or to reflect the occurrence of unanticipated events. Financial Tables to Follow:
Westell Technologies, Inc.
Pro forma Financial Results
Excluding Amortization of Goodwill, Restructuring
and Inventory Revaluation
(Dollars in thousands except per share amounts)
Three Months ended Nine Months ended
Dec. 31, % Dec. 31, %
2001 2000 Change 2001 2000 Change
---- ---- ------ ---- ---- ------
Revenues
TAP $ 20,198 $ 30,117 -33% $ 70,370 $ 88,835 -21%
Broadband 35,009 39,348 -11% 81,364 170,625 -52%
Services 11,805 10,406 13% 37,998 29,756 28%
-------- -------- -------- --------
Total revenues 67,012 79,871 -16% 189,732 289,216 -34%
-------- -------- -------- --------
Gross profit
Equipment 7,236 8,228 24,317(6) 44,361(5)
Services 4,984(8) 4,085 14,723(8) 11,685
-------- -------- -------- --------
Total gross
profit 12,220 12,313 -1% 39,040 56,046 -30%
-------- -------- -------- --------
Gross margin
Equipment 13.1% 11.8% 16.0% 17.1%
Services 42.2% 39.3% 38.7% 39.3%
-------- -------- -------- --------
Total gross
margin 18.2% 15.4% 20.6% 19.4%
-------- -------- -------- --------
Operating
expenses
Sales &
marketing 4,740 8,381 -43% 15,460 22,942 -33%
Expense to
revenue 7.1% 10.5% 8.1% 7.9%
General &
administrative 5,555 5,928 -6% 17,441 18,131 -4%
Expense to
revenue 8.3% 7.4% 9.2% 6.3%
Research &
development 3,543 8,655 -59% 17,469 23,602 -26%
Expense to
revenue 5.3% 10.8% 9.2% 8.2%
Restructuring - - -(7) -
Goodwill
amortization(1) - - - -
Goodwill
impairment(9) - - - -
-------- -------- -------- --------
Total operating
expenses 13,838 22,964 -40% 50,370 64,675 -22%
-------- -------- -------- --------
Expense to
revenue 20.7% 28.8% 26.5% 22.4%
Operating income
(loss) (1,618) (10,651) -85% (11,330) (8,629) 31%
Other income
(loss) (259) 104 -349% (532) 168 -417%
Interest expense 1,650 1,073 54% 4,217 1,523 177%
Loss before tax
benefit (3,527) (11,620) -70% (16,079) (9,984) 61%
Benefit for
income taxes(2) - - NM - - NM
Effective tax
rate 0.0% 0.0% 0.0% 0.0%
Cumulative effect
of change in
accounting
principle - - - 400(3)
Net income
(loss) $ (3,527) $(11,620) NM $(16,079) $(10,384) NM
======== ======== ======== ========
Income (loss)
per common share:
Basic (0.05) (0.19) NM (0.25) (0.17) NM
-------- -------- -------- --------
Diluted(4) - - - -
-------- -------- -------- --------
Average number of
common shares
outstanding:
Basic 64,887 61,427 64,125 60,697
Diluted(4) n/a n/a n/a n/a
Footnotes:
(1) Pro forma impact of excluding approximately $7.9 million and $24
million of goodwill amortization related to Teltrend acquisition
in the three and nine month periods, respectively.
(2) Due to the losses incurred, valuation allowances were recorded for
all periods presented.
(3) Impact of the adoption of SAB101.
(4) Due to the losses incurred, no dilutive presentation is
applicable.
(5) Pro forma impact of excluding approximately $1 million of
inventory revaluation related to the Teltrend acquisition.
(6) Pro forma impact of excluding approximately $4.3 million of excess
and obsolete inventory charges recorded in the three months ended
September 30, 2001.
(7) Pro forma impact of excluding approximately $2.2 million of
restructuring expense recorded in the three months ended September
30, 2001.
(8) Pro forma impact of excluding $1.2 million related to the
resolution of diputed expense at services unit.
(9) Pro forma impact of excluding approximately $90.5 million of
goodwill impairment related to Teltrend acquisition.
Westell Technologies, Inc.
GAAP Financial Results
(Dollars in thousands except per share amounts)
Three Months ended Nine Months ended
Dec. 31, % Dec. 31, %
2001 2000 Change 2001 2000 Change
-------- -------- ------ ------- -------- ------
Revenues
TAP $ 20,198 $ 30,117 -33% $ 70,370 $ 88,835 -21%
Broadband 35,009 39,348 -11% 81,364 170,625 -52%
Services 11,805 10,406 13% 37,998 29,756 28%
-------- -------- -------- --------
Total revenues 67,012 79,871 -16% 189,732 289,216 -34%
-------- -------- -------- --------
Gross profit
Equipment 7,236 8,228 20,020 43,391
Services 6,150 4,085 15,889 11,685
-------- -------- -------- --------
Total gross
profit 13,386 12,313 9% 35,909 55,076 -35%
-------- -------- -------- --------
Gross margin
Equipment 13.1% 11.8% 13.2% 16.7%
Services 52.1% 39.3% 41.8% 39.3%
-------- -------- -------- --------
Total gross
margin 20.0% 15.4% 18.9% 19.0%
-------- -------- -------- --------
Operating expenses
Sales &
marketing 4,740 8,381 -43% 15,460 22,942 -33%
Expense to
revenue 7.1% 10.5% 8.1% 7.9%
General &
administrative 5,555 5,928 -6% 17,441 18,131 -4%
Expense to
revenue 8.3% 7.4% 9.2% 6.3%
Research &
development 3,543 8,655 -59% 17,469 23,602 -26%
Expense to
revenue 5.3% 10.8% 9.2% 8.2%
Restructuring - 2,200 -
Goodwill
amortization(1) 7,953 7,958 23,859 23,874
Goodwill
impairment(5) 90,500 - 90,500 -
------- -------- -------- --------
Total operating
expenses 112,291 30,922 263% 166,929 88,549 89%
------- -------- -------- --------
Expense to
revenue 167.6% 38.7% 88.0% 30.6%
Operating loss (98,905) (18,609) 431% (131,020) (33,473) 291%
Other income
(loss) (259) 104 -349% (532) 168 -417%
Interest expense 1,650 1,073 54% 4,217 1,523 177%
Loss before
tax benefit (100,814) (19,578) 415% (135,769) (34,828) 290%
Benefit for
income taxes(2) - - NM - - NM
Effective
tax rate 0.0% 0.0% 0.0% 0.0%
Cummulative effect of
change in accounting
principle - - - 400(3)
Net loss $(100,814) $(19,578) NM $(135,769) $(35,228) NM
========== ========= ========== =========
Loss per common share:
Basic and
diluted(4) (1.55) (0.32) NM (2.12) (0.58) NM
--------- -------- -------- --------
Average number of
common shares outstanding:
Basic and
diluted(4) 64,887 61,427 64,125 60,697
Footnotes:
(1) Goodwill amortization related to the Teltrend acquisition.
(2) Due to the trend of losses, valuation allowances were recorded
for all periods presented.
(3) Impact of the adoption of SAB101.
(4) Due to the losses incurred, no dilutive presentation is
applicable.
(5) Goodwill impairment charge related to Teltrend acquisition.
Westell Technologies, Inc.
GAAP Financial Results (continued)
(Dollars in thousands except per share amounts)
Dec 31, March 31,
2001 2001
---- ----
(000's)
Cash and Short term Investments 6,228 405
Receivables 33,239 34,906
Inventory 34,654 73,068
Goodwill 25,014 139,373
Total current assets 88,552 123,983
Total current liabilities 88,861 113,605
Shareholders' Equity 68,093 197,825
Days Sales Outstanding 45 43
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